The 2018 Housing Market Outlook, released Tuesday, said continued employment growth, firmer oil prices, and lower new home inventories are factors in the recovery.
Canada Mortgage and Housing Corp. says the country's real estate market is expected to moderate over the next two years as the growth in housing prices begins to slow to be more in line with economic fundamentals. Alberta's housing markets are expected to transition to more balanced conditions over the forecast period.
Around the province, housing starts are expected to slow going into 2019, through to the next year, "moving back towards the 10-year average pace of new construction", the CMHA says.
"However, slower employment and GDP growth, as well as gradually increasing mortgage rates, will restrain the increase in demand for existing homes by 2020", said the report.
Further gains are expected in 2020 as economic conditions improve, according to CMHC, however it cautioned rising mortgage rates will remain a constraining factor on resale activity. However, in suburban areas, like Peel, Durham and York Regions, there will be higher concentrations of single-family detached sales and listings, and that will slow price appreciation.
For the resale market, the agency is forecasting MLS sales this year of between 51,600 to 56,000 compared with 57,211 in 2017. For 2019, sales are expected to rise slightly, coming in between 478,400 and 497,400 units. "Meanwhile, average rents for objective built apartments are anticipated to continue to see increases stronger than inflation in both 2019 and 2020". As older units turn over, their rents will be increased to reflect the new price level. CMHC forecast range is: $387,100 to $390,500 this year; $390,000 to $393,700 in 2019; and $394,000 to $398,600 in 2020.
Those rental units are finally starting to hit the market, helping propel the vacancy rate up.
"MLS sales in Alberta are projected to be lower in 2018 compared to 2017. Market conditions are not expected to substantially lift the average MLS price in 2020 and price growth will continue to be relatively flat". But as builders continue to work on new high-rises vacancy rates might also rise. "The average rent in Alberta is projected to stabilize in 2018 with rent increases likely below the rate of inflation in 2019 and 2020", added the report.
When the region's vacancy rate started to fall from 1.5 per cent in 2014, it pushed local governments to start new construction on rental housing.