Demand in housing will be weak in 2016 in the city with no economic change on the horizon, the Calgary Real Estate Board reported at its annual forecast event on Wednesday.

The board said the annual benchmark price in Calgary – which it says tracks typical properties sold in the market – will drop by 3.44 per cent this year from 2015 to $438,652.

MLS sales are also expected to decline by 2.2 per cent year-over-year to 18,416.

Sales will be at the lowest level since 2011 when they were 18,405 for the year. It will also be the first year-over-year price decline since 2011.

“As we move into the second year of this environment, we expect to see additional housing supply pressure and further price declines,” said Ann-Marie Lurie, CREB’s chief economist, in a statement.

“Weakness in the energy sector is overshadowing all aspects of this economy and with more people looking for work and fewer opportunities, we could see some families making adjustments to their housing situation.”

CREB said in its forecast report that weak demand and supply gains will add to already elevated levels of supply in the local real estate market.

It was a rocky 2015 for the market as it struggled to cope with the precipitous drop in oil prices, the weakened economy and thousands of layoffs in the city. MLS sales in 2015 of 18,830 were down 26.3 per cent from 2014 – 16 per cent below the 10-year average – and the benchmark price finished the year up 1.1 per cent at $454,267.

But CREB said the benchmark price for the month of December of $448,800 remained 2.24 per cent below levels recorded in January and 2.33 per cent below December 2014.

“While price declines are forecasted in each of the detached, attached and apartment markets, steeper declines are anticipated in the higher density segments, a trend which already started in the fourth quarter of 2015,” said the board.

“This is related to the near record level of multi-family units under construction. As these units are completed, there will be more product available for a smaller pool of buyers.”

The forecast calls for benchmark price declines of 3.2 per cent for detached homes, 3.5 per cent for attached homes and 4.2 per cent for apartments.

CREB said the overall market will start the year off with higher-than-usual inventory levels, making it difficult to absorb additional supply.

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Calgary Herald