The average MLS sale price for a singlefamily home in the city will drop by two per cent this year while for condos it will decrease by five per cent, says the Calgary Real Estate Board in its annual forecast released Wednesday.

The board also said single-family listings will remain the same as in 2008 but sales will increase by 10 per cent. In the condo market, it forecasts listings to increase by five per cent in 2009 but sales to fall by five per cent.

Despite a “significant slowdown,” Calgary is transitioning to a more stable and balanced housing market, said newly elected board president Bonnie Wegerich at the organization’s annual Forecast Conference and Trade show at Stampede Park.

“The market has softened, but there is no free fall here. With housing prices reaching record highs in 2006 and 2007, there are many sellers out there that still have an opportunity to make respectable gains,” she said, adding that low mortgage rates and more selection in the market will get people buying again.

But national real estate author Garth Turner called the local board’s forecast very optimistic.

“While the average price in Calgary in 2008 did not go down all that much from 2007, most of the price decline was in the second half of the year,” said Turner. “Average numbers don’t take into consideration momentum and the momentum of the market right now is quite negative . . . and there’s a huge amount of inventory on the market. I find it hard to believe that prices (of single-family homes) will drop by only two per cent.”

Turner said another big factor is the oil industry, now facing low commodity prices, cutting investment and laying off people.

“I don’t understand where the impetus is going to come from in the Calgary market to basically have a 10 per cent sales increase (for single-family homes) and essentially a flat stable market in terms of prices. I just don’t get it,” said Turner, adding changes need to take place in the local economy and in people’s incomes before they’re going to change their minds about buying.

A number of factors will affect the local real estate market this year, but consumer confidence is at the top of the list, said David Allwright, associate dean of the Bissett School of Business at Mount Royal College.

“My gut feeling is that a lot of people downtown are looking at a bunch of the layoffs that are occurring around the fringes and thinking, ‘I’m going to start stockpiling food in the basement and I’m not going to do anything radical this year until I see what’s going on,’ ” he said. “People don’t like uncertainty.”

Regardless of low unemployment rates and low interest rates, “the fact of the matter is people are a little nervous, particularly people who have been around here for a couple of the boombust cycles,” said Allwright.

The real estate market is all a question of supply and demand, said Leonard Waverman, dean of the Haskayne School of Business at the University of Calgary.

“The question is where is the demand going to be for the next little while,” he said.

“Relatively high-paying jobs will be lost from the Suncors of the world and engineering firms.”

The real estate board’s forecast called for the average MLS sale price for single-family homes to fall to $451,120 for the entire year of sales in 2009 compared with $460,327 in 2008. The average sale price for a condo is expected to drop to $287,300 compared with $302,408 the previous year.

To reach those forecast numbers though, average prices will have to climb from current levels. In December, single-family homes were selling for an average of $417,398 while condos were selling for an average of $274,919.

The market has dramatically shifted from what it was just a year and a half ago. Average sale prices for both condos and single-family homes have fallen by more than 17 per cent from their peak in 2007.

Average sale prices for single-family homes peaked at $505,920 in July 2007 and for condos at $332,237 in May 2007.

Sales were slow last month and so far in January they are following the same trend as the economic malaise continues. In January 2008, the real estate board in its annual forecast said average prices for single-family homes that year would increase by five per cent to $495,800 while condo prices would jump by six per cent to $335,300. The organization also predicted total sales would dip by five per cent in both markets.

But in 2008, the average MLS sale price of a singlefamily home in Calgary fell by 2.5 per cent compared with t he previous year, while the average price of a condominium dropped by 4.4 per cent.

Single-family sales in 2008 were 13,455, down 27 per cent from the 18,438 recorded in 2007, while condo sales dropped by 31.3 per cent to 5,661 units.

Total sales in 2008 were the lowest they have been since 1996.

The average price decline in 2008 led the country and the overall sales number was the second biggest percentage decline in the country behind Vancouver.