By Matthew Boukall, Vice President, Product Management | 14 mai 2020

Calgary new home market: what to watch for in the next few months

Like all markets across the country, the Calgary new home market was impacted as the COVID-19 pandemic forced non-essential businesses to close and consumers to stay home. The transition to work-from-home and social distancing happened quickly, and caught the new home market right as the traditional spring market – typically the busiest sales season of the year – was beginning to take shape. Our expectations at the start of the year was that the 2020 market would see more stable and consistent demand and sales activity; however, given the impact of COVID-19, as well as renewed challenges in the energy sector, forecasts made three months ago need to be revisited. As we revise our forecasts for the year, here are our thoughts on things to watch as the pandemic and the economy evolve over the coming weeks and months.

First, the Calgary market was doing reasonably well going into the crisis, which is important to note as the economy and businesses start to open up. While the first quarter new multi-family condo home sales were down year-over-year, the sales seen during the four weeks prior to the shutdown were stronger than in 2019 with the market seemingly set for a strong spring market. Given how quickly things shut down, there is expected to be some level of pent-up demand in the market that will come back when consumers become less distracted. Calgary also has very good housing affordability, particularly compared to other major markets in Canada. Short term price shifts are not anticipated during the COVID-19 crisis, with longer term price direction more influenced by the economy and incomes.

Calgary new home condo sales Q1

We are still in early days of the pandemic and impact to the economy. The first quarter sales activity was only directly impacted for less than three weeks and other lagging indicators have not fully captured the effects of COVID-19. Additionally, with many sectors of the economy effectively on hold, we could see sales during the second quarter down by 50% or more compared to earlier expectations. However, these sharp declines are expected to be temporary as social distancing measures are relaxed.

The outlook for the year will be framed by how long COVID-19 impacts the local economy and activity, but ultimately, the impact of the pandemic on the local and national economy will determine the direction of the housing market. As restrictions are loosened and businesses begin to re-open, the recessionary pressures will weigh on employment and incomes. Alberta will face specific challenges in the near term given the decline in energy prices and the impact on the energy sector. Understanding the impact that higher unemployment, shifting work environments, and how restaurants and retail will evolve, is critical to understanding how the housing market will look. With that said, there will be continued demand for new housing in the Calgary market, and opportunities to launch, build and sell new single-family, townhouse and apartment units still exist. Where the opportunities are and how best to market and develop housing for the rest of the year, and into 2021, will become more clear when we better understand how the economy will react, and consumer preferences and demands change, to the rapidly evolving COVID-19 situation.

 

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