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Housing market expected to be stable in 2015


While the recent drop in oil prices has caused speculation about implications for the housing sector, stable conditions are expected given current forecasts for employment and migration.

“While employment and migration are expected to support housing demand, estimates could change depending on the extent and duration of oil price declines,” said Ann-Marie Lurie, CREB®’s chief economist. “However, concerns over the potential impact will influence consumer confidence. This is expected to cause supply and demand to ease in 2015, maintaining resale market balance and keeping prices relatively stable.”

According to Lurie, the risk lies with the potential severity and duration of the pullback in the energy industry, which would have a lagging effect on the housing sector. While the current situation has some comparing today’s market to 2009, there are some differences. 

“Following the financial crisis, many countries including the United States were struggling. In Calgary, new home starts outpaced household formations, contributing to an oversupplied market,” said Lurie.

While CREB® has not yet completed its forecast for 2015, based on the current range of economic expectations, Calgary’s housing market is not expected to see the same level of pullback recorded from 2008 to 2010.

It is important to note there can be significant differences between segments of the Calgary market. Bill Kirk, president of CREB®, clarifies that there are many factors to consider when buying or selling a home, outside of market conditions.

“Market influencers are wide-ranging and may include anything from price range to the type of home and availability in a particular market segment,” said Kirk. “A REALTOR® can help determine how these factors will impact a given property in a given area, allowing consumers to make an informed decision.”

 CREB®’s 2015 forecast report will be available January 14, 2015.

 
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North America’s industrial real estate market, including Calgary’s, is firing on all cylinders these days.
 
A report by commercial real estate firm Colliers International said positive demand drivers should lead to continued industrial occupancy gains into 2015 even with the large amount of supply slated to come online.
 
Calgary has 132 million square feet of industrial real estate inventory. The report said 1.1 million square feet of new supply was added in the third quarter of this year while 2.2 million square feet has been added year-to-date until the end of September. Also, 2.4 million square feet is under construction.
 
The third quarter absorption – the change in occupied space – in Calgary’s market was 975,054 square feet while it was 3.9 million square feet year-to-date. And the vacancy rate was 4.43 per cent at the end of September, up slightly from 4.39 per cent at the end of June.
 
“While the economic recovery in the U.S. is gaining momentum and positively affecting their industrial markets, the frenzied pace of activity in the Calgary market is relentless,” said Joe Binfet, managing director of Colliers International in Calgary.
 
“Calgary’s fundamentals for growth are solid as our industrial market is driven by distribution which is directly correlated to consumer confidence and consumer spending. Our industrial leasing team is seeing strong interest from e-commerce companies and logistics facilities looking for a presence in the High Plains Industrial Park. Industrial land remains in demand with little inventory in the primary markets and limited land available in the secondary markets outside of Calgary.”
 
The Colliers International North American Q3 Industrial Report said the vacancy rate in the U.S. is 7.5 per cent, down 0.2 per cent from the previous quarter, while Canada’s remains flat at 4.0 per cent.
 
Third quarter absorption was 60.4 million in the U.S. and 4.3 million in Canada. New supply was 36.3 million in the U.S. and 5.3 million in Canada. There is 140.2 million square feet under construction south of the border and 15.7 million square feet in Canada.
 
“The North American industrial market continued to fire on all cylinders in (the third quarter) driven by ongoing expansion in the manufacturing sector, strong auto sales, rising housing starts and robust growth in e-commerce, bolstering demand for bulk industrial and logistics facilities,” said the report.
 
“Projections for the key industrial economic indicators portend continued growth in the industrial sector through 2015.”
 
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