Get the latest summer forecast and weather knowledge from Cindy Day
Want to become a member? Check out the benefits here.
SaltWire's cartoonists bring heart and humour to the news.
Visit SaltWire.com for more of the stories you want.
SaltWire Selects: Stories you don't want to miss
What you need to know about COVID-19: August 13, 2020
After five consecutive years of sales declines, the Calgary housing market was improving in the early stages of 2020.
Sales at the end of February were up 23 per cent, year over year, but in mid-March the COVID-19 pandemic, coupled with a sharp decline in oil the prices, drastically changed the real estate landscape in the city.
At the end of March, sales had declined 11 per cent, year over year; by the end of April, sales had plunged 64 per cent.
Earlier this week, Ann-Marie Lurie, chief economist at the Calgary Real Estate Board, revised her 2020 economic outlook for Calgary.
“The uncertainty surrounding the COVID-19 pandemic and the energy industry is expected to cause a dramatic decline in housing demand over the second quarter,” said Lurie. “With social distancing expected to soften by the third quarter, the pace of the decline in sales will ease by the third and fourth quarter. However, a turnaround in sales is not expected by the end of the year, as the financial implications for many households will have lingering effects.”
The city’s entire economy has been affected, including retail, transportation, education, accommodation and food, arts, entertainment, recreation and other services, which account for 17 per cent of the Alberta economy, said Lurie.
“The energy sector accounts for nearly 30 per cent of our economy and is struggling with a significant drop in demand and oil prices falling to record lows,” she said. “Supply curtailments are occurring, but most analysts believe this is not enough to lift energy prices in the short term. Most expect social distancing measures will start to ease by the end of the second quarter, but the challenges in the energy sector are expected to persist for several years.
“Recent estimates point to an eight per cent decline in GDP and employment loss of nearly 19 per cent. Double-digit unemployment rates are expected to persist into 2021.”
The immediate effect on the housing market has been felt. Lurie predicts, with a softening of social distancing measures in the third and fourth quarters, overall sales for 2020 will be 20 per cent below 2019.
Lurie doesn’t expect prices to see declines as large.
“Supply levels are also expected to adjust, which will prevent a significant decline in prices,” she said. “On an annual basis, prices in 2020 are expected to decline by nearly three per cent.”
Lurie expects new listings to decline at a similar pace to sales over the second quarter, as homeowners delay putting their homes on the market.
“In addition, mortgage deferrals will help prevent the rise in new listings that can occur in situations of rising unemployment caused by job loss, which will help prevent a steeper rise in supply levels once social distancing measures are relaxed,” she said. “If additional government policies and programs are enacted, it could help soften the economic burden faced by Albertans.
“However, if oil prices do not rise to higher levels or government support is not provided, the situation for the already weakened energy sector could get far worse. This will create more fallout throughout Alberta’s economy and the housing market.”
Copyright Postmedia Network Inc., 2020