Home prices stable in 2016 and 2017

THINK OUTSIDE THE BOX:  Both Calgary and Edmonton are expected to see prices stabilize this year and show modest improvements in 2017.

For those who are concerned about the value of their house plunging in the current economic downturn, the Canadian Mortgage and Housing Corporation’s (CMHC) most recent forecast should offer some comfort. According to its forecast, homeowners in Alberta’s two largest cities face little risk of a major housing price collapse.

The average MLS® selling price of an existing home in Calgary peaked in 2014 at $460,584 (this figure is based on an average of all properties, including single detached and multi-family homes). CMHC’s low-case scenario for 2016 would see prices tumble to $444,500, whereas the high-case scenario puts prices at $449,500. In the low-case scenario, then, the MLS® average price in Calgary drops only 3.5 per cent from the peak in 2014 to the low in 2016.

Edmonton homeowners should get by in even better shape. After peaking in price at $369,536 last year, the CMHC forecast predicts a low-case average price of $360,900 this year—a drop of only 0.5 per cent.

Both cities are expected to see prices stabilize this year and show modest improvements in 2017.

However, these price trends and forecasts are based on averages. Clearly some homes in both Calgary and Edmonton could see either larger price drops, or perhaps no price drop at all. But given the severity of the economic challenges, the price dips are actually fairly moderate. That stands in contrast to the 1980s when high mortgage rates were sending default rates to record highs. That resulted in a 20 to 25 per cent drop in housing prices.

Todd Hirsch – Chief Economist    May 24, 2016

 

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