Realtors take long-term view, see real estate as 'strong investment'

Calgary’s housing market is the hot topic of conversation these days not only in the city but across the country.

The once-sizzling real estate sector has cooled tremendously thanks to a precipitous decline in OIL PRICES and that has people, from economists to realtors to homeowners and potential buyers, speculating and wondering what that will do to housing prices.

And there is no lack of opinion on the topic, ranging from forecasts of a small increase in average prices for the year to a 10 per cent or more decline. MLS sales are expected to fall dramatically this year – TD recently said by as much as nearly 50 per cent – with new listings rising at a steep pace.

“There is no surprise that the range is so vast. Trying to forecast an average sale price change . . . in today’s market is impossible,” said Don Campbell, senior analyst with the Real Estate INVESTMENTNetwork. “Why? Simply because the most important variable is not known.

“How long oil will stay under $70 and how confident the oil industry is about it levelling at that number.  Without that knowledge, real estate market price forecasting is mathematically impossible.”

According to the Calgary Real Estate Board, year-to-date up to and including Saturday there have been 1,758 MLS sales, down 37.17  per cent from the same period last year, while new listings have risen by 24.66 per cent to 5,551. The average sale price has dropped by 2.17 per cent to $463,938.

Since 1990, the annual average MLS sale price has fallen from the previous year only four times – 1991, by 1.08 per cent; 1995, by 0.47 per cent; 2008, by 2.46 per cent; and 2009, by 4.67 per cent.

The biggest annual hike was recorded in 2006 when prices soared by 39.78 per cent from the previous year to $358,385 and then jumped another 18.25 per cent in 2007 to $423,798.

According to the Conference Board of Canada, the city’s economic growth in 2006 was 7.0 per cent – the second highest rate of growth in the past 25 years behind only the 7.9 per cent recorded in 1997.

Christina Hagerty, a realtor with RE/MAX Realty Professionals, who started in the business in 1991, said real estate in Calgary has always been a good long-term INVESTMENT.

“In fact, if you look at real estate values over the course of 10 years, all have performed double to triple their value right across the board, not just in the inner core,” said Hagerty, who specializes in that area.

“So the old-timers like us who have seen a couple of decades of activity aren’t fretting.”

Hagerty said the current rental vacancy rate in the city remains low. That combined with some of the lowest interest rates in history and still good overall consumer confidence will keep the real estate market healthy.

Read full story: Realtors take long-term view, see real estate as 'strong investment'