Alberta's housing market continues to correct itself from the 2006 'bubble', with lower starts and lower prices. But as at least one economic outlook says the province will be the only one to see a rise in single detached housing starts next year.

As sales of existing homes moderate and new listings continue to increase, the average MLS price growth this year is expected to ease to 0.3% and experience a 0.1% increase in 2009. Housing starts this year will remain above the 200,000 unit mark for a seventh consecutive year, before dipping to an est. 177,975 units in 2009.

The CMHC outlook attributes a cooled resale market to rising house prices. Nationally, sales of existing homes through the MLS are forecast to fall 13.6% this year compared to last year's record level, then ease an additional 4.2% in 2009.

As house prices move higher, less expensive multi-family housing, including row houses, semi-detached and apartment condos, are gaining in popularity.

This year and next, Canadians will see multi-family starts outnumber single detached for the first time since 1982. Furthermore, 2008 markets the fifth consecutive year in which multiple starts have surpassed the 100,000 unit mark.

Multi-family housing starts are forecast to rise 7.8% to 117,925 units this year, while they are forecast to drop by 20% to 94,375 units in 2009.

Apartment construction has been growing for 11 consecutive years since bottoming out at just over 23,000 starts in 1996. Apartment starts are expected to grow 18.1% to 84,725 units in 2008 before declining 21.4% in 2009.

Existing home sales activity will ease 13.6% to 452,225 units this year and an additional 4.2% to 433,375 units in 2009 as rising house prices cool homeownership demand.

Altus Group also released its latest forecast, looking into the fourth quarter of 2008 and beyond, and the outlook was increasingly bleak.

In fact, the report even went so far as to say a strong likelihood of an economic recession has emerged from the global financial crisis. It says Canadians can expect sharply lower housing starts in 2009 as national markets get pummeled by these forces.

Further, there is risk that the economic downturn could be sharper and more prolonged than previously thought. The report says there is a risk the current downturn will more closely resemble that of the early 1980s and early 1990s, rather than the shorter and shallower ones of the 1950s and 1960s, despite lower interest rates. In the early 1980s, Bank of Canada interest rates spiked at nearly 20%, while in 2009 they are forecast to remain below 5%.

But if there's a beacon of light in the market next year, it's definitely in Alberta.

The CMHC fourth quarter outlook indicates Alberta will post higher single detached housing starts next year, increasing by 3.4%, while the remaining provinces will see singles move lower.

While sales have been easing throughout the first half of this year, new listings have continued to rise into record territory. Thus, the strong seller's market that has existed since 2002 has given way to balanced markets in most regions across the country.

The first half of this year has seen an easing in MLS sales and record high levels of new listings; this has brought balance to the Canadian resale market.

In Alberta and B.C., more balanced markets combined with decreased sales activity will cause growth to slow in 2008 and 2009, especially because these two provinces saw prices rise well above the Canadian average.*

The outlook states that as more new listings enter the national resale market and sales continue to ease, future price growth will be well below the price increases seen over the previous six years.*

For 2008 and 2009, the MLS® annual average price will rise 0.3% to $306,500 in 2008 and 0.1% to $306,700 in 2009.*

Posted mortgage rates will decrease slightly in the first half of 2009 as the cost of credit to financial institutions eases. However, they may rise slightly in the last half of 2009.*

Net migration is forecast to increase by 9.2% this year then remain essentially unchanged in 2009.

Although there is uncertainty, employment growth across the country is expected to be in the 1.4% to 1.8% range this year and in the 0.5% to 1.5% range in 2009.*

*Calgary Real Estate News