The forecast price of homes in Calgary and Edmonton for the rest of this year will be dependent on when business activity resumes due to the COVID-19 (coronavirus) pandemic, according to the latest Royal LePage House Price Survey and Market Survey Forecast which was released on Tuesday.
Royal LePage said if business activity resumes by late spring the fourth quarter aggregate price of $463,000 in Calgary will be down 1.5 per cent from year-ago levels while in Edmonton it will dip by 1.0 per cent to $370,800.
However, if business activity doesn’t resume until late summer the fourth quarter aggregate price in Calgary will fall by 4.0 per cent to $451,300 and by 3.0 per cent in Edmonton to $363,300.
While sales were more brisk in the first quarter of 2020 compared to last year, the aggregate price of a home in Calgary remained relatively flat dipping 0.1 per cent year-over-year to $469,156, said the report.
Broken out by housing type, the median price of a two-storey home increased 0.9 per cent year-over-year to $514,713, while the median price of a bungalow was flat at $485,984. The median price of a condominium decreased 7.2 per cent to $261,778 compared to the first quarter of 2019, it added.
“Sales are up year-to-date despite the dip in activity during the last two weeks of March,” said Corinne Lyall, broker and owner, Royal LePage Benchmark, in a news release. “With a decline in listing inventory, we had expected to see modest price gains this spring. Now we are waiting to see how long the pandemic lasts and how much damage the economy sustains.”
Lyall said that while low oil prices will also have a negative impact on Calgary’s real estate, the risk is lower than the 2014 oil crisis. This is primarily because the region’s real estate market has been adjusting to declining oil prices over the years and the current low level of housing inventory, she added.
“Oil companies have learned how to operate very efficiently since 2014 and with the pipeline going ahead, there is optimism that Calgary’s real estate market will find the momentum that was building before the pandemic took hold. We are hoping in Alberta that everyone will take the correct measures so we will plank the curve sooner rather than later,” said Lyall.
In Edmonton, the aggregate price of a home decreased 1.4 per cent year-over-year to $371,118 in the first quarter of 2020, said the report.
Broken out by housing type, the median price of a standard two-storey home increased 1.5 per cent year-over-year to $430,732. The median price of a bungalow and condominium decreased 6.3 per cent and 5.3 per cent year-over-year to $351,481 and $215,223, said Royal LePage.
“Edmonton’s softened real estate prices and continued low interest rates were attracting buyers to the market as they saw good value in larger homes,” said Tom Shearer, broker and owner, Royal LePage Noralta Real Estate. “Now that the market has been paused by the pandemic, consumer confidence and employment levels will determine the new norm when market activity resumes.
“Investors watch the market closely because their decisions are purely financial. They saw prices come down to a level where the likelihood of profitability was good.”