It’s a buyer’s market moving into 2016, and sellers are urged to be realistic in a struggling economy.
The Calgary Real Estate Board (CREB) released its annual forecast report on Jan. 13, which indicated sales in Okotoks declined by 27 per cent in 2015 over the previous year. It’s a common trend in the region, as sales in Calgary dropped 26 per cent.
Decreased sales activity comes as a direct result of the oil slump and economic decline felt through 2015, which CREB researchers predict will last until the end of 2016.
In Okotoks, this has resulted in a five-months’ supply of inventory in the housing market and a much slower real estate industry than previous years, according to Jacky van der Ven, a realtor with CIR Okotoks.
“Some buyers are waiting for prices to come down more, but others are waiting because they’re worried about their jobs,” she said. “They’re scared. There’s a lot of fear out there.”
However, she said the market is “not entirely doom and gloom.”
Okotoks homes priced less than $500,000 continue to sell, Do you know the average home price and number of days on market in Okotoks and has the average price changed as the economy slumped? she said, and the majority of homes sitting on the market for longer periods are priced higher.
Though they may be on the market longer than they would have been two years ago, homes and condos in the lower price range sell easier, she said.
“Acreages just sit there, and anything over that $500,000 mark is a tough sell,” said van der Ven. “I just sold one home over $500,000 and there were 30 comparative homes in that price range, so it’s pretty saturated in that market.”
The key to selling a home in 2016 is to price it realistically, she said.
Many people tend to price their home according to how the market was acting last year, she said, but 2016 will be a different situation with a slower market, and sellers need to keep this in mind.
“They have to price the home right, that’s crucial,” said van der Ven. “There are less buyers and more inventory.”
Despite a slow start to the year, coming off a decline in sales in the fourth quarter of 2015, she said it’s still too early to determine what the rest of the year will look like.
It is not unusual for the market to pick up in the spring in Alberta, she said.
“I don’t know what this year will bring, but I’m hopeful,” said van der Ven. “Hopefully we will see our usual spring market pick up, but we still have to be realistic.
“Buyers who are waiting now are keeping an eye on the market, waiting for the first sign things will improve so they can make their move at the right time.”
CREB predicts increased inventory and decreased activity throughout the Calgary region will decrease benchmark prices of single detached homes by 3.2 per cent as supply outweighs demand.
Don Campbell, senior analyst with the Real Estate Investment Network, said this is the result of a real estate market riddled with fear.
“Fear from the seller’s side, hence the increase in properties for sale, and fear from the buyer’s side thus limiting the number of sales,” said Campbell. “This situation will get worse before it gets better.”
He said buyers are likely to remain on the sidelines through much of 2016, as they wait out the effects of oil prices and see what the provincial government does with the industry.
Buyers began awaiting a market correction in 2015 while sellers held on to their expected prices, he said, and the skewed inventory level will impact the market in 2016.
“We will see the fear increase and thus begin to see sellers making more dramatic cuts in their expected sell price,” said Campbell. “The average sale price will move downwards more quickly than we witnessed in 2015.”
A lack of market confidence is the main cause for decreased sales activity, he said, and it will not be restored until there is evidence of oil recovering to at least $50 per barrel.
He said the market correction is not likely to happen until 2017.