Sales to rise at modest level this year: Economist
By Mario Toneguzzi, Calgary Herald
CALGARY — Improving economic conditions and employment growth will lead to Alberta’s recovery in the residential real estate market, says a national economist.
Warren Jestin, senior vice-president and chief economist with Scotiabank, who was in Calgary Wednesday, said housing demand in the province is underpinned by rising employment and incomes, low borrowing costs and population inflows from other parts of the country.
“Overall, we anticipate a modest pickup in home sales this year, and relatively flat average prices,” he said. “Still, this would leave sales roughly 30 per cent below the unsustainable record levels of 2006-2007.”
He said the province will experience a gradual recovery.
“Certainly the fundamentals in terms of the demographics of the economy are very, very solid,” said Jestin. “You’re inevitably going to find that mortgage rates are going to be on the rise. Short-term interest rates are going to be going up by the fall. Longer term interest rates have already begun to go up. But at the same time the economy is near the top of performance across the country and we think it’s going to stay there in the next two to three years.”
He said market conditions are gradually shifting from favouring buyers to one of greater balance, which should support home prices going forward. High home prices, rising mortgage rates and tighter mortgage lending rules will pinch affordability, especially for first-time buyers. And he said more affordable property segments, including condominiums and lower-priced single-detached homes will likely be more active than the high-end of the market.
Ted Zaharko, broker/owner of Royal LePage Foothills in Calgary, said the long winter has held back buyers in the local market.
“What we’re seeing now is that we pretty well bottomed out. It’s taken us two years to recover from that huge spike and it’s been very gradual,” said Zaharko. “And I just see things picking up slowly over the balance of the year and we’re going to have more of a balanced market for a lot of the year.
“I think you’re going to see activity on the buyers’ side and it could move to sellers’ market somewhere in the next nine to 16 months. That’s the beginning of the next cycle. That’s healthy. We’ve been in a down cycle for some reason in Alberta for a long time.”