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A man walks past a the Calgary, Alta., skyline as steam rises from downtown office towers Monday, Jan. 31, 2011.

Jeff McIntosh/THE CANADIAN PRESS

Calgary's housing market is in for another tough year as the region's economy slowly rebounds from its worst recession in decades, the local real estate board said in a new forecast.

The Calgary Real Estate Board predicted home sales in the city would rise by 3 per cent this year to 18,335, but would remain slightly below 2015 levels and well below the more than 25,000 resale homes that changed hands in 2014. Benchmark resale prices, which fell 3.84 per cent last year, should begin to level off with just 0.3 per cent growth this year, the board said.

"There are people that have been looking at this market who have stable [job] positions and they're going to consider moves at this point," said the board's chief economist, Ann-Marie Lurie. "But overall, even though we're expecting sales to improve, this is still a low level of sales activity for our city."

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Much of the improvement in Calgary's housing market will come from a drop in the supply of homes for sale, as new home construction slows and fewer homeowners list their properties, rather than from a surge in interest from prospective buyers, Ms. Lurie said.

"It's not necessarily that demand all of a sudden is increasing by a lot, because it really is still low based off longer-term averages," she said. "But the shift we're starting to see is that pullback in supply."

The picture is also likely to be vastly different for detached homes compared to condos.

Benchmark prices of detached homes fell 3.23 per cent last year to $502,242, with the biggest drop coming from high-end homes, a reflection of early job losses among higher-earning oil and gas workers, the board said. It predicted the detached market would see a modest 0.8 per cent price growth in 2017.

Calgary's condo market, however, has been suffering from a glut of supply thanks to construction projects launched during the 2014 property boom, as well as intense competition from rental apartments. Condo sales have plunged more than 40 per cent from 2014 highs and prices fell nearly 6 per cent last year to $277,217, as prospective condo buyers opted for freehold homes instead. The board expects more pain for the condo market in 2017, with prices falling another 2 per cent.

The real estate board's predictions of a modest recovery in the housing market are pinned to hopes for an end to devastating two-year recession in which Calgary has shed more than 40,000 full-time jobs.

Most significantly, oil prices, which have plunged nearly 60 per cent since 2014, are expected to remain above $50 U.S. a barrel this year, bringing a potential increase in business investment and hopes that job losses may have finally peaked. "That price level might indicate that there will be no further contraction in the energy sector," Mr. Lurie said. "With no further layoffs, you can actually start to see some stabilization in the housing market and that's really the key."

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A slowdown in the B.C. and Ontario housing markets this year could become a drag on economic growth in those regions, discouraging Albertans from leaving the region and helping to support home sales.

Yet the board warned that Calgary's housing market rebound will likely be slow and that much could derail the region's fragile economic recovery.

In particular, the prospect of rising mortgage rates and changes to federal mortgage-insurance regulations may make it harder for the city's first-time buyers and could threaten to become a drag on the region's housing market, as could fear over U.S. energy and trade policies after Donald Trump becomes president, the board said.

"If local economic conditions do not improve in terms of employment, then Calgary risks a second consecutive year of out-migration, which could place further downward pressure on housing activity, including a rise in distressed sales," the board wrote in its forecast.

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