The real estate board in Calgary says although the full impact of the massive flooding in southern Alberta won’t be known for some time, price and sales growth in will likely remain in line with expectations.
“Calgary’s overall resale market is strong enough to weather this terrible event,” says CREB president Becky Walters. “While the flood damage is taking a heavy toll on affected communities, Calgary’s real estate market has clearly been outperforming expectations this year. Overall sales growth for the city is not expected to stall.”
Research is inconclusive on the long-term price prospects of flooded communities, says Ann-Marie Lurie, CREB’s chief economist. Price trends will depend on the frequency of flooding and relative damage, affluence of the area, insurance coverage, current state of the market and any infrastructure changes made to reduce the risk, she says.
“In the short term, we anticipate that the levels of listings will fall, and any transactions that do go ahead in the impacted areas will face some price discounts,” Lurie says. “However, increased demand in the unaffected areas, combined with already tight supplies, would support further price gains. This will offset any declines recorded in the impacted areas.”
Lurie says the areas hit by flooding in 2005 did not see a price impact. “Although the current flooding is much more severe, if the frequency of flooding does not increase and measures are taken to reduce flood risk, many of these desirable communities are not expected to face a long-term price discount.”
Evacuated communities represent about 14 per cent of the city’s housing stock, of which about 700 units were listed on the resale market before the floods, Lurie says. “It is not clear how many homes were damaged, how extensive the damage was or how long residents will be displaced,” she says. “If flood damage is severe, it could restrict resale inventory, as impacted individuals look for alternative housing.”
CREB says the Calgary-area resale housing market was in sellers’ territory before the floods. Prices are expected to grow at a faster pace this year than previously predicted, CREB says in an update. Sales volume has also grown faster than predicted, primarily because of higher-than-expected demand for condominiums.
The board says overall sales will grow by 4.3 per cent this year, up from the 2.2 per cent CREB predicted at its annual forecast in January. This is driven by the condominium market, which has recorded a year-to-date increase of 15 per cent. By the end of the year, condo growth is expected to reach 12 per cent, while single-family home sales will grow by one per cent.