Will Calgary real estate get hit hard by falling oil prices?
It all depends on who you ask …
Re/Max realty says the effect will be minimal, predicting price increases will only be cut in half to three per cent next year.
But the Bank of Canada claims housing is overvalued by up to 30 per cent nationally, and lower oil prices could burst that real estate bubble.
“Although there is considerable uncertainty around this question, various approaches including our own, suggest that there is some risk that the housing market is overvalued,” said Stephen Poloz, Bank of Canada governor.
This oil price crash is not so bad, so far; other downturns were much worse according to some long-time realtors.
“Well I have been around since 1975, so I have seen some good, bad and ugly,” said Lowell Martens, Calgary Re/Max realtor.
“Again this is way to early to be able to judge what’s happening from that standpoint; ‘08 was a global situation; ‘82 we were dealing with national energy. Those are the two biggies.”
The Calgary Real Estate Board (CREB) says 2015 could see the red, hot market cool down, but not turn ice cold as long as jobs and net migration stay strong.
“We could expect to see that consumers will be wary, and they might start to see some of that demand pull off,” said Ann-Marie Lurie, CREB chief economist.
“We will see sales levels fall, but at the same time they are unlikely to list their homes as well and change, so we’ll see listings also fall”.
For now, builders remain cautious.
No one is panicking.
They continue to fill the housing demand.
If Calgary’s real estate market achieves a price equilibrium next year, supply has a lot to do with it.
There is neither overbuilding of new home construction; nor are there an excess number of resale homes up for grabs.
There is one wild card: interest rates.
If they rise and push up mortgage rates, that could be a much bigger game changer for all real estate.
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