CMHC sees stable housing market

Dan Healing, Calgary Herald
Published: Wednesday, November 19, 2008

The Calgary housing market turmoil that has led to layoffs at new home construction companies, abandoned condo projects and a collapsing average resale home price will moderate and stabilize in 2009, according to the latest quarterly forecast by Canada Mortgage and Housing Corp.

One result will be the end of the current buyers' market.

The average resale home price will be $406,000, the federal agency predicts, barely above the anticipated 2008 price of $405,000 and down almost two per cent from $414,000 in 2007. Sales will slide from 32,177 in 2007 to 25,000 this year and 25,700 in 2009, coming back to near the 10-year average level.

In new construction, 4,500 single-family detached homes will be constructed in 2009, up from 4,300thisyearbutoffby42percent from7,777in2007anddown 57 per cent from the 10,482 in 2006.Multi-family starts will slide to 2,500 in 2009 from 6,800 this year.

"We're looking at a slower level of growth," said Lai Sing Louie, a senior market analyst for CMHC, after a presentation to about 500 people at the Roundup Centre.

"Employment is growing by about 1.3 per cent (about 9,100 jobs in Calgary in 2009) so it's a more moderate pace of growth."

He added Calgarians looking to buy homes have the power to negotiate now because of a glut of resale home listings and a shrinking new home order sheet.

"Overall, we are in buyers'market conditions," he said. "But buyers'market conditions do not last forever and, moving into 2009, we're looking for more balanced conditions."

Richard Corriveau, CMHC economist for the Prairies, said Alberta is forecast to post real gross domestic product growth in 2009 of 1.9per cent, after hitting 2.1 per cent this year, 3.3percent in 2007 and 6.6 per cent in 2006.

Employment growth will be 1.3 per cent provincially and net migration will reach about 51,000.The Alberta forecast calls for 15,000 new single-family detached homes, 9,000 new multi-family starts and 61,000 resale home sales at an average price of $356,000 (about the same as the record level in 2007).

Trevor Gloyne, CMHC general manager forthe region, cautioned members of the crowd not to take the CMHC's or any other forecast asgospelbecausethereissomuch uncertainty in the marketplace, especially regarding oil and gas investment.

"The(factors)Iwouldwatchare capital commitments and oil and gasprospects. Thesearechanging on us on a fairly rapid basis," he said, adding consumer spending is also an unknown quantity.

Louie forecast Calgary apartment vacancy rates would rise from 1.5 per cent in 2007 to three per cent next year and 2.5 per cent thisyear, leadingtoaveragerenton atwo-bedroomapartmentof$1,140 this year and $1,150 next year.

Meanwhile, the cost of home ownership will decline thanks to lower housing prices and interest rate cuts, narrowing the cost difference between renting and owning.

He expects new single-family detached home prices will fall by two per cent in 2009, making it easier for homeowners to move up to a new house.

"We'll likely see the cost escalationswe'veexperiencedinthepast come down, so if people are planning a project, probably 2009 is a good time to do it," said Louie.

Dhealing@theherald.CanWest.com