By Mario Toneguzzi
It won’t be another record year in 2022 for Calgary’s resale housing market but MLS activity is expected to remain stronger than levels experienced in recent years.\
Ann-Marie Lurie, the Calgary Real Estate Board’s Chief Economist, is forecasting overall prices in the residential market to increase by 4.46 per cent in 2022 compared to last year’s hike of 8.25 per cent with overall sales dipping to 25,598 from the record high of 27,686 in 2021.
In her annual forecast report, Lurie says the residential real estate market in the Calgary region is being supported by strong economic fundamentals.
Citing the Conference Board of Canada, Lurie says Alberta can expect annual GDP growth of 4.7 per cent this year while it will be even stronger in the Calgary region at 6.0 per cent. The Conference Board also forecasts employment in the Calgary area to rise by 4.98 per cent and population to increase by 1.77 per cent. Net migration is also expected to increase to 19,553 from 17,331 last year.
“Economic improvements are also expected to support both job and population growth, adding new sources of demand for housing. Overall, all of these factors point toward relatively strong sales in 2022. Throughout the pandemic, supply has been a struggle for many industries, including the housing market,” says Lurie.
“New listings have improved, but it has not been enough to offset high sales levels, keeping inventories relatively low and likely limiting sales growth in the market. As we move through 2022, new listings in the resale market should remain relatively strong thanks to higher home prices. At the same time, the new-home sector recorded a surge in starts last year. The completion of those starts should help add to overall supply choice in the market.
“Supply levels are expected to improve relative to demand this year. However, conditions are expected to remain relatively tight throughout the spring market, supporting further price gains. As the market balance gradually improves, upward price pressure in the housing market should ease.”
Lurie says rising lending rates are expected to cool some of the demand later this year, but rates are still exceptionally low, supporting strong housing sales, especially from those who experienced increased savings and equity gains throughout the pandemic.
“There is significant uncertainty in the economy, as the impact and duration of ongoing supply issues in the market are unknown and somewhat dependent on further disruptions caused by COVID-19. At the same time, energy prices are expected to rise. Higher energy costs, along with longer-than-expected supply disruptions, could result in higher-than-expected inflation. Persistent and higher-than-expected inflationary pressure would not only impact the cost of living, but could also cause an earlier and higher increase in lending rates. This would pose the most significant downside risk to housing demand,” she says.
“Supply levels are expected to improve relative to demand. However, renewed confidence in the energy sector, plus new industry growth, could result in stronger than-expected housing demand. If housing demand remains persistently strong and building delays and costs continue to increase, the housing market could take longer to return to balanced conditions, causing stronger-than-expected price growth in the resale market.”
