Happy new year! 2018 was a weird year, and I’m not just talking about the Calgary real estate market. The long winter, to the smoke filled summer and now, the strangely warm winter, and that’s just the weather!

Labour continues to struggle in Alberta, with fresh job losses amid volatile oil prices and lower capital spending. Labour has long been the driving force of the Calgary Real Estate market. We can expect another slow year for home sales, as a result, and should brace ourselves for further price constriction in certain markets.

Home sales in 2018 were down 14.5 per cent, according to CREB’s chief Economist, Anne-Marie Lurie, when compared with 2017. We’ve also seen detached home prices drop seven per cent since 2014, on average, and apartment style condos drop 16 per cent.

The over-supply in the Calgary real estate market is what is hurting prices, particularly in the new home market. Housing starts were up 6.3 per cent through  September 2018, from the same period in 2017.

The new mortgage qualification rules contributed to the sales declines in 2018, as did marginally higher interest rates. Combine those with a sluggish economic recovery and unemployment, we can expect a pretty flat year for Calgary Real Estate in 2019.

In 2018, it became a lot more expensive for lender to fund mortgages. The new qualification rules along with the increase in insurances premiums has certainly been passed onto the consumer.

The Canada Bond Yields fell to a six month low in early January, dropping over 70 basis points since its six month high in October 2018. In October the odds were 80 percent in favour of a hike. On January 9th, however, the Bank of Canada held its key lending rate at 1.75%. Variable term holders can breath a sigh of relief!

We also continuing to see evidence of a looming downturn, both in Canada and the US and possibly even globally. This could mean mortgage rates would not be significantly higher at the end of 2019, then they are now. In fact, they might even be lower. The downside to that is, of course, further economic troubles ahead.

I, for one, welcome stable rates, meaning that economically, things are holding steady not getting worse. If I had to put a level of confidence on that, I would say maybe 50%. Unfortunately I see the US falling into a recession in the next 12-18 months, based on economic forecasts, and we are always so tightly tied to the US. What affects them, affects us.

We’ve seen a number of lenders drop rates so far in January. Side note: RBC makes the news for dropping theirs, but that was almost two weeks after many other lenders were already there. Funny that!

To come full circle, on the weather front, it’s not looking like we’re going to see fewer forest fires this summer. This dry winter is certainly making those prairies look pretty brown and dry.

So, brace yourself. It is likely to be another eventful year!