While the expression "THE SKY IS FALLING" has been thrown around for many months now, especially with regards to the Calgary Real Estate Market, the data continues to provide ample contradictions!
September sales were the strongest total since 2014. New listings were up from last month but strong sales continue and the ratio of sales to new listings still hover around 60%, a ratio indicative of a healthy balanced market. Low lending rates are driving sales but also consumer confidence indicates that the worst is over and the market has bottomed out. All markets are improving except for the row house which, while not decreasing in price as much as in the past, still has not found its legs during the recovery period these past few months. At 7% down from last year, row/town houses continue to take it on the chin. Condos are faring better, but with the huge percentage decrease over the years, it will take quite a bit before they see prices like in 2014, if ever. However, with no negligible decrease in value, I'm confident that market can not get any worse.
Recovering slightly but still showing a 1.8% drop in prices is the attached/semi-detached home, old and new. This market has seen improvement simply because of the lack of new builds (builders losing any sort of profit margin has led to a drop in permits). Prices here have generally bottomed out and begun a slow tred upward in the 400-550K range. There is still difficulty in the plus 600K range for new builds in the inner city where the price of building and lots has not caught up to what buyers are willing to pay. As supply diminishes, in this sector, prices will level off and begin a slow upward trend.
Single family detached continue to do very well, again in the sub 600K range and especially in the 400 to 500K range. Overall, this market actually saw an increase in the average price of 1%. Multiple offers and quick sales are very common in almost all locations in Calgary. However, the ones that are selling are the well-priced and spotless, somewhat or majorly renovated houses that immediately catch the eye. For a significant time now how the house shows provides an ample boost over lot value. Gone are the times when in the inner city you get a house for >lot-value< and the house relatively comes for free. Advise for sellers -- PAINT, RENOVATE (WISELY), CLEAN and present your home in the best possible light, and last, but not least, accept we are at the bottom of the market and price accordingly.
If you are a buyer in the 400 to 550K single family detached range, there is competition out there with these historically low interest rates and finding the home you like may mean putting a reasonable offer in quickly. You may have more opportunity to wait on single family and semi-detached in the 600 to 900K range, but you also will not have the greatest selection. Those house are not selling well and often at a financial loss to the owners, and as such, are not being put onto the market in great numbers.
The overall market has been steady price wise, with sales up 25% Year over year, new listings steady year over year, and inventory dropping a significant 12%.
While it is becoming increasingly clear the effects of the Covid-19 pandemic and rupture in the economy has had some effect on Calgary's (or Canada's) housing market, but not as much as first feared, there are mixed signals about future trends. On a personal note, I have been involved in several multiple offer situations in the past weeks, and shocked by some surprising quick sales as well. Well priced houses (especially in the detached sector) seem to sell quickly and close to asking price. Sales have been steadily well over the 50% ratio of sales to new listings, improving greatly over the past few years, but not at the 65% seen in July when changes were coming to mortgage lending. Interest rates are as good as they will ever be and that is certainly helping sales and modest growth in prices in the detached and row house sector.
The stats indicate a slight downward trend continues for condos though continuing to modify somewhat, and a recovering trend specifically in the detached market. Similar improvements are seen in month-to-month stats for semi-detached and row houses though this abrupt turnaround is not reflective in the negative stats in the year-to-date category. In other words, while Attached homes inventory is dropping, prices that have been dropping show signs of improving this month.
Sales have been steady in all categories over the past few months as the normally busy spring market started late (because of the lock down) and got pushed right into summer.
Compared to last year (which historically saw poor performance), things are looking better. Detached YTD (Year to date) saw 12% fewer sales but 15% newer listings, leading to a drop in supply of 17%. Month of Supply is down by 5.6% as is DOM (days on market). Prices have remained steady compared to last year. August 2020 compared to August 2019 saw even more of an improvement. Supply was down by 15% and months of supply by nearly 20%. Most importantly Average Price was up by 3.3%!
Semi-detached had been struggling lately. Total sales both YTD and during August 2019 was down about 12%. New listings are really dropping as builders have stopped building because of low earnings - down 26% from last August and 18% YTD. DOM is thankfully improving at 7% less than last August. The big discrepancy is in prices. August this year is up both in Medium Price and Average price between 7 and 9% from last August. But the YTD tells a different tale as both prices fell by over 5% over the year, meaning earlier sales were brutal this year.
Condos are continuing to suffer. Total sales down between 18 and 20% YTD and with monthly comparisons. Listings are dropping thankfully by 26% from last August and 18% YTD. DOM is also down from last August by 10% and 7% YTD. They are selling faster, but at a 3.5 to 7% drop in price compared to already brutal 2019 figures.
Row houses have leveled off with slight price drops of 3.5%, less inventory but actually INCREASES of sales by 7.5%.
There are still many challenges ahead. While it seems investor/buyer confidence in the market has improved, Calgary still has unemployment issues and no one knows just how much government subsidies have been propping the housing industry. It can be said that Calgary is still the affordable alternative to other major centers (which also have employment issues and much higher prices), the general trend still continues to show very slight upward movement.
If you're searching for detached houses over 600K, you can afford to take your time. But nice properties in the 400-600K range continue to sell quickly. What is clear is the drop in new builds, particularly in the attached sector, that may eventually lead to a shortage of supply in the future. That may ultimately lead to a turnaround in prices in the semi-detached sector.
As always, a lot rests on the economy and how quickly things get back to "normal".
June was indeed an unexpected month in Calgary's housing market, driven perhaps by the oncoming changes in borrowing that could impact buyers with borderline credit ratings and the price of houses that they could afford. With changes to down payment rules that now have to be entirely in cash, not in credit, and a bit tighter formula of income to payment ratios, we may see a significant slowdown in sales moving forward.
As the pandemic situation winds down, what will the "new normal" be? We're in unchartered waters here but some positive signs give us reason for optimism - but the recovery, inevitable, will take time. Oil is up, rig count is way down in the US, OPEQ is cutting production and people are driving again. CREB (Calgary Real Estate Board) is giving the go ahead for social distancing measures to be followed but open houses in vacant properties are now a go, with guarded open houses in the next two weeks extended to non-vacant homes.
The market sales continue to be slow but there is definite improvement over April. Here's a summation of what happened in May (and maybe an explanation of why).
MAY WHOLE MARKET STATS:
TOTAL SALES: (TS) down 43% over last year in May (remember spring market usually peaks in May but this year is very delayed!). NEW LISTINGS (NL) - down 29% from last May which brings the overall decline in ACTIVE LISTINGS (AL) down by 22%. This is significant because while there were 7500 listings this time last year, there are only 5800 this year which is somewhat normal historically for this time period! MEDIUM PRICE (MP) is down 4.6% and AVERAGE PRICE (AP) is down more than 7% from May of last year. Again, most purchases are in the lower 300K to 400K market area. PENDING SALES (PS) is also down from the end of last May by 7.4%, again because of the delay in what would normally be a spring market. A positive sign is that DAYS ON MARKET (DOM) is also down by 7%, meaning houses are selling quicker than last year. Sales of total market is slowly climbing each day in the past few weeks, now over 60/day on a regular basis, or consistently above 30% of new listings which shows signs remarkably of a what to expect in a balanced market (though we are definitely still in a buyers market - reasons for this at conclusion of newsletter).
MAY DETACHED HOUSE STATS:
TS down 43% (on par with whole market) and NL down 32%. People are simply delaying their listings, though there are still significantly more than a 100 listings (total market) put on MLS each day, and significantly more in the past weeks. But sales are gradually improving in June. Medium price is down 4%, average price is down 7.4%. pending down a whopping 31% and with Attached, because of the higher prices normally, there is an INCREASE of DOM by 8%.
TS down 35%, NL down 21.6%, MP down 4.7, AP down 10%, PS down 11%, DOM up 16.4 percent. What this means is Attached seems to be the most affected in the market with average prices dropping more than Detached prices and DOM increasing as well. People are more cautious about buying attached as they look at potential risks of the appreciation factor long-term. However, of significance here is the fact that most of these price drops are seen in older units with little or no upgrades.
TS down a HUGE 56.5%, NEW LISTINGS also down 28%, ACTIVE down 16%, MEDIUM PRICE AND AVERAGE in the 12% drop, which again is of concern because of previous drops over the past few years. It's a half and half story, newer builds selling lower, but the older condos are bleeding. PS are down 25%, and DOM surprisingly down 5.7%. Investors are simply taking advantage of a crippled condo market with so many low priced listings and deals, they are selling faster.
YEAR TO DATE: (YTD)
TS are down 25%, lower than May's statistics, possibly because of pre-pandemic sales and a current rush of sales over the past few weeks, NL down around 20% so still lower than all active listings to date last year when we first started seeing declines in new listings, Med price down 4%, Aver price down 6.7% and pending sales down 1.7%.
What does it all mean? Obviously still a buyers market. But listing prices are scattered from double digit percentages down from 2014 levels, some even down from 2008 levels, but there are confident listings too, mainly in "go to" neighbourhoods in upgraded houses where listing prices are very high. Some sell, and some stay on the market forever, selling eventually for 10-12% lower than original asking price. House flips in select neighbourhoods are still happening but sellers are not making much profit. New builds are significantly down as well.
All in all, there are bargains. If you are a buyer, you can steal a house if you're willing to get into older houses with no upgrades on busy streets, etc. If you want a really nice house in a really nice neighbourhood, there are deals, but there are still buyers and competition for these houses so low-offers don't work.
If you are a seller and have to sell, list competitively and expect a fight. If you are a buyer, do the work and stay vigilant as there is a growing turnover in the market.
Of course the Covid-19 is adversely affecting the market and with that, the tank in oil prices leaves a lot of uncertainty in the future for Alberta. News today showed that China's economy is already on the rebound and that gives hope that things may turn here sooner than later.
Total sales in Calgary last year in April were 1544, this year 572 or a drop of 63%. May so far is looking even worse at -76.32%. New listings continued to drop in April by 54% and so far 62% in May. Active listings in April are down 21.4% from last April; down 22.3% so far in May. Not surprisingly, people are refraining from listing or pulling unsold homes from the market. Average Price in April was down 8.25% and pending sales were down 60%. Days on Market (DOM) increased slightly in April by 2%, but were up 24% so far in May, insinuating the sales occurring in the past few days sees buyers scooping up long standing listings.
Annual YearToDate (YTD) stats show -21% in total sales, -22% in new listings, average price of all homes dropping 2.8%, Med. Price no change, Pending Sales down 29%, and DOM down 5% from last year. As unnerving as these stats are, the fact that 2019 was not a great year makes it even more concerning. But to put it all in perspective, this is all about Covid-19 and the impact it's having on housing markets across Canada and around the world.
Breaking things in Detached, Attached and Condo/Townhouses, here are the Stats:
Detached - TS (TOTALS SALES) versus one year ago:
April down 63%, May down 72%; NL (NEW LISTINGS) Apr down 56%, May down 65%; Medium and Average price -3 to --8%, more slightly cheaper homes being bought with a higher drop in the average price. Pending sales down 78% in April and fortunately a huge drop in DOM of 40%.
Attached - TOTAL SALES - Apr down 63%, May down almost 83%! NEW LISTINGS - down 50% in April; Active listings down 21%; Med Price down 2.5%; Ave Price down 6.5%. Pending sales down 70% and DOM up 5%.
Condo/Townhouse - TOTALS SALES down 62%; NEW LISTINGS down 54%; Active down 13%, Med. Price down ONLY .87 or less than 1%. Ave Price down 7%, Pending Sales down 27% and DOM DOWN 6%.
Benchmark price, the TRUE INDICATOR of what home prices are doing are down only 1% for detached homes, and down slightly more than 2% for attached and Condo/Townhouses. With DOM also decreasing on Average in April, it does mean what is on the market is selling fasting. While, in general, listings coming onto the market are competitive in price, they are not being listed at bargain prices. It means what is selling is usually after a drop in price or at a much lower percentage of asking price than is normal (historically about 2-4% below asking). On higher end homes, in the 800 to million price range, sale prices have been 50k to 80k below original list price or drops of nearly 10%, while many in the million have seen sales 200K plus below original asking.
The challenges for sellers is obvious at this time. But there are challenges for buyers as well, with restrictive rules on showings, no open houses, and generally less listings on the market.
Most experienced Realtors agree that while the Spring Market is a write-off, if the Covid situation gets under control soon, we will have a surge of activity towards the late summer and into the fall. How much prices fall between now and then depends on the economic fallout and the necessity of sellers to sell.
For now, it's a hunker down situation and what happens could be anyone's guess. I'm taking it slow now myself and adhering to social distancing rules as much as possible. My sincerest hopes that all will make it through these trying times relatively unscathed. If you need further explanation as to the interpretation of market movement, please feel free to contact me. If you know anyone that is keen to sell (or even buy), we'd be happy to advise them. Thanks for your attention.
City of Calgary, April 1, 2020 –
After a strong start to 2020, economic conditions have dramatically changed, as COVID-19 is impacting all aspects of society.
The economic impact is starting to be felt across many industries. This includes the housing market.
March sales activity started the month strong, but quickly changed, as concerns regarding the spread of COVID-19 brought about social distancing measures. This had a heavy impact on businesses and employment.
“This is an unprecedented time with a significant amount of uncertainty coming from both the wide impact of the pandemic and dramatic shift in the energy sector. It is not a surprise to see these concerns also weigh on the housing market,” said CREB® chief economist Ann-Marie Lurie.
By the end of March, sales activity had fallen 11 per cent compared to last year. This is 37 per cent lower than long-term averages. The drop in sales pushed March levels to the lowest recorded since 1995.
“The impact on the housing market will likely persist over the next several quarters,” said Lurie. “However, measures put in place by the government to help support homeowners through this time of job and income loss will help prevent more significant impacts in the housing market.”
New listings dropped by 19 per cent this month. This decline in new listings compared to sales caused supply levels to ease and helped prevent a larger increase in oversupply. Overall, the months of supply remain just below five months, similar to levels recorded last year.
Prices were already forecasted to ease this year due to oversupply in our market. In March, the citywide benchmark price was $417,400. This is nearly one per cent lower than last year’s levels. The reduction in both sales and new listings should help prevent significant price declines in our market.
However, price declines will likely be higher than originally expected due to the combined impact of the pandemic and energy sector crisis.
HOUSING MARKET FACTS
REGIONAL MARKET FACTS
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As February's sunshine throws a renewed warmth on the city, there is also clarity of a burgeoning "New Normal" in Calgary's housing market. It's been clear that the market has been at the bottom for many months, but January is bringing signs there is a "very slow" crawl to recovery - key word - "crawl". If things are improving, they will do so in a very slow steady fashion. It's unlikely there will be any kind of "boom" in the near future as the best the next year has in store is likely a balanced market.
The stats so far this year are showing a major improvement over last year but in the context of historical values, they still indicate a slight edge to the buyer. However, a lot of very slow activity last year also indicates pent up purchase indicators. I'll explain through the stats.
January this year saw 7.74% sales improvement over last January while new listings were actually down -8.3%. Active listings are down to about 5000, again dropping by -8% from last year, but still slightly over January historic averages.
Medium prices are up by 2.5% over last January while days on market (DOM) is also up by 5%, again indicating buyers are taking their time. Year to date (YTD) indicators show a strong trend upward as pending sales are up a whopping 40%.
In the detached homes sector, sales are up 6.38%, new listings are down -10.75% and total active listings are down significantly by -15.23%. Both the medium and average sales price has actually recovered by around 4%, indicating that buyers are going for the more expensive houses, possibly because prices are so attractive right now.
Attached sales are also up by 4%, new listings down a whopping -17.45%, and active listings also down -10.45% from this time last year. Medium prices are up just over 3% while average prices have dropped a bit at -1.67%. More sales and more interest in higher priced attached homes; but prices are still down by a bit.
The condo/townhouse market is another kettle of fish altogether. It is a bad/good news story for sellers. Sales are up significantly at 18.55% but new listings are also up at 10.5% and active listings are also up 12.3%. These new and active figures in this sector were already very high last year and they are still increasing. It all leads to explain why medium prices have dropped -6.23%, the average price a whopping -12.74% drop. However, the bright side is the higher sales and the amazing PENDING SALES which has sky-rocketed to 48% increase over this time last year. It looks like buyers are finally jumping into the condo/townhouse market and taking advantage of the ridiculous prices.
All in all, there is a fairly pronounced distinction between the detached/attached market and the condo/townhouse market, but all seem to be showing signs of improvement. So, to conclude, it looks likely that this Spring's market might be the busiest we've seen in years.
While we just witnessed the turnaround into a new Decade, we might have symbolically seen a turnaround in the real estate market. December sales, especially leading up to the holiday season, were quite strong as compared to last year and years in general. Often, sales to new listings were almost equal, compared to well below 30% values we've seen recently. New listings were down once again. All in all, sales were up 1% from last year though the year thanks to a strong first quarter, spring and December finish. Prices over all still were about 3% below last year. It is estimated that the overall price of properties has dropped by about 10% since the peak of 2014, though much more with condos and townhouses, but balanced with less detached and attached homes price drops.
However, the most significant part of December's statistics are the fact that there is definitive signs of improvement in an otherwise very slow time of the year. It all seems to be pointing to a potentially busy spring. It's likely going to be a buyer's market for at least another year, but the tide is slowly turning.
With the aftermath of an election that did not bode well for Alberta and the repercussions of that, with companies pulling out of Alberta resulting in layoffs, one cannot overstate the profound impact that has had on the Calgary housing market.
Of course the immediacy of the bad news stories overshadow a lot of good news stories. The Enbridge Line 3 opens up and TMX begins construction are among the many news stories putting a positive spin on Alberta's economy moving forward. Some financial analysts put Alberta's economy to lead Canada's norm for the next few years.
However, the psychological weight of the current state of affairs keeps us firmly in a buyer's market, despite signs we're slowly moving to a balanced one. This is reflected in November's stats, which in terms of sales is one of the lowest Novembers in recent history even with the 5 years of stagnant sales overall.
The overall benchmark sale price on all houses averages about 4% lower than last year, making it one of the biggest drops in the detached sector since the recession began. While the number of sales actually were up over last year, they were around 20% lower than historic averages, despite the general growth of Calgary's population and the wealth of product on the market.
As has been the case for the past 5 years, most sales in the detached sector were in the 400 to 500K range, and much lower for townhouses and condos. Despite a lot of those being pulled off the market by sellers, newly built condos are adding to the inventory and oversupply.
In the attached sector, row houses in the East section have taken a huge hit, down 8% in sales compared to 2018, bucking a trend that has generally kept prices in Calgary east resistant to recession. Elsewhere, sales are up 6% over 2018. New listings and inventory average 8% lower than last year but are also higher than historical averages. ays on the Market (DOM) have increased by 10.5% and prices are anywhere from 3 to 4.5% down from last year's averages.
Detached sales are down 4.55% compared to 2018. New listings are down 12.57 dropping detached inventory almost 10% from last year; but still high compared to historical averages. DOM continues to increase by a staggerng 15% and in general sale prices on detached (Average, Benchmark, Medium) range from a drop of 3.5% to 4.5%.
In the condo/townhouse market, sales are down 6.5% due to the pullback of new listings of around 10% from last year's highs. DOM is up 12.5% and prices vary from 2.45 all the way to 6% lower overall from last year. The condo market continues to hurt badly and is subject to other negative external forces besides demand. Major banks are pulling out of financing older buildings with POST TENSION construction and there's even word some insurance companies are not renewing on certain units. If you plan on buying a condo, it is IMPERATIVE you check all factors that might affect the building's future.
While the stats and current layoffs, election result and company pull outs have an impact on the market, buyers should be aware that these stigmas eventually dissipate - in other words - NOW IS A PERFECT TIME TO GET INTO THE MARKET. Interest rates are coming down, some lenders are offering STRESS TEST FREE loans, and Income to mortgage ratios in Alberta beat every other urban sector in Canada. We've hit bottom, we're at bottom and there's no other place to go but up. Something for us to ponder over the holidays (which also historically is one of the best times to buy).
The monthly newsletter does come with a sprinkle of challenges the market is facing post-election. We're all aware of companies laying off, companies leaving town, a minority liberal government and great disenchantment in the province. Sometimes this perfect storm of bad news stories overshadows the good ones. The TMX is going forward with the hiring of 2200 jobs, Warren Buffet's Rattlesnake Ridge wind project is a 1.2 billion NatGas pipeline expansion about to begin, the keystone XL pipeline is moving forward, tech jobs are coming to the city and so the list goes on.
That said, it continues to be a strong buyers market and many opportunities are out there for those willing to go in before the exodus of listings (which has already started) begins to take shape. Sellers, not getting the price they want, are turning back to the rental market or simply taking their product off the market. A 12% drop in listings year over year has now occurred, with about 6400 listings on the market, inching every closer to a normal market. That said, there is a reticence for buyers to commit and days on the market (DOM) continue to increase by nearly 16%.
When we look at monthly sales statistics versus YEAR TO DATE (YTD), there is a great dichotomy. For example, October shows significant price increases in nearly every type of home, averaging about 9% above last year's average, with detached houses showing more than 12% increase. Does this mean home prices are going up? No. It shows that buyers are buying into more expensive homes at near bargain prices than they were last year. YTD prices are actually down right across the board, ranging from about 3 1/2 to 4 1/2%.
If one would make anything of this contradiction is that most recently, a few savvy buyers/investors are charging into the market and scooping up higher priced homes that show potential appreciation value in the future. Nuts and bolts logic pervades: houses are affordable compared to historic markets; there is still a surplus; it's still significantly a buyers market especially moving into the holiday season; and time has shown that buying when confidence is low is much better than when a turn-around is just around the corner.
If I copied and pasted last month's newsletter, the details would not be too far off. We've had a third straight month improvement in sales from last year, though figures are still tame and in favour of buyers. What is definite, not to repeat myself too much, is that the market is in "plateau" mode; a period of time after hitting bottom wherein not much changes and prices stay relatively stable month to month.
Year to year, there is a consistent improvement from 2018. Inventory is 13% lower than this time last year, sitting around 6700. That however, is still above the long term average of 5500-6000. This makes for a slight overabundance of listings which of course leads to downward pressure on prices. Also, significantly, it leads to buyers taking their time in making decisions; as a result DOM (days on the market) remains higher even than last years levels. With Condos, it has increased the least (only 11% from last year), however levels have been high there for years. Detached days on the market has significantly increased by a whopping 17%, matching increases felt by attached housing. Reasons are likely the higher prices which are impacted by a continual trend by buyers to move towards low priced homes.
For detached homes, supply compared to last year is down 6.54% and like last month, there's been a collective 3-5% reduction in Benchmark, Medium and Average prices year over year. To reiterate, this loss reflects higher in the average/medium range because of a lot of first time buyers jumping in a lower prices and investors taking advantage of lower prices.
Attached home listings, despite new ones popping up in the inner city everywhere, are still down year over year at 9.4% with current inventory 6% less than what it was last September. Price wise, detached matches the 3 to 5% reduction that's felt with attached homes. Condo/Apartment listings have taken a huge price drop since 2014 but only slipped around 2-3% since this time last year, thereby taking less of a drop than attached and detached homes. This smaller drop is indicative that the condo scene, while still in rough waters, may have finally bottomed out.
Poor weather might continue to hamper sales in the coming months. Buyers also seem fixated on the upcoming election. We may see some significant shifts in the market in the months to come. October sales will be very unpredictable though, with good weather, might see increased activity.
Conclusively, the market is slow, showing improvement, but still in a somewhat stagnant state and still in favour of buyers.
With summer behind us, a few new trends are affecting the Calgary market which otherwise has maintained a somewhat dormant state.
One of the marked increases is the number of new listings over the spring and summer months which brought total listings from a January low of 5000+ to just over 7000. While this figure is well below last year’s high of 8900, it surpasses what was happening leading into the fall of 2016 and 2017. As a result, days on the market (DOM) now has increased across the board. Less so for condos/which were high already, but more for the 500K+ detached and semi-detached homes. The average is about 60 days, slightly above average, but for houses in the 70 - million+ range it rises incrementally with million+ houses staying on the market for 8 months. The major sales continue to be in the 300-400K range with first time home buyers jumping in and taking advantage of a buyer's market. Another trend that seems to be continuing is the "house flip" trend, buying of cheap houses, renovating and flipping.
Average price year over year has stayed at about -2 to -3%, with little change month to month, summer from spring. The benchmark price has begun to increase as buyers are starting to take advantage of lowered prices on houses on the high end. The sales to listing ratio has decreased from a spring high of about 67% to about 51% now, meaning as more houses are being listed, sales are not keeping up with them. While the summer has been quite slow, August was VERY SLOW. With the upcoming Federal election looming, it seems a lot of buyers continue to sit on the fence until the results are known.
Looking forward is very difficult. There might be a slight fall surge after such a slow summer. Positive news on the jobs front have helped with some new industries both in and outside of the oil patch getting a kick start. Employment numbers are slowly increasing in Calgary and the imminent return to work on TransMountain should help.
Sellers continue to hold onto their prices. Though decreases are seen every day, listing prices seem to be on the high side, edging close to where they were in early 2013. We've been bottomed out for months, we're not crawling out yet, but there is a sense of moving forward. Next month will tell more clearly.
Sales activity increase led by lower-priced homes
City of Calgary, September 3, 2019 – Increased sales and easing new listings reduced housing inventories in August. Sales were primarily driven by homes priced below $500,000.
“Employment numbers have been improving, but mostly in industries that are traditionally lower paid,” said CREB® chief economist Ann-Marie Lurie. “This is contributing to the shift that we are seeing in the housing market, with growth being limited to product priced below $500,000.”
Rising sales for homes priced under $500,000 offset sales declines in the higher price ranges. This caused August sales to improve by six per cent compared to last year.
Sales activity improved for all product types. The growth was largest for apartment-style and attached properties.
Attached sales increased for the sixth consecutive month compared to the previous year. This is also the only property type with year-to-date sales higher than last year’s levels.
New listings continued to ease this month, which caused inventory to decline. This is helping the market shift toward more balanced conditions.
The amount of downward pressure on prices is also easing. At $426,000, the unadjusted citywide benchmark price this month remained comparable to last month, but 2.6 per cent lower than last year’s levels.
Despite improving sales and reductions in inventory, housing market recovery will take time. Inventory levels remain elevated and sales activity is still well below historical norms. The market continues to favour the buyer, with over four months of supply.
HOUSING MARKET FACTS
REGIONAL MARKET FACTS
With the highly publicised price drops in housing in recent weeks, Calgary seems to be quickly heading to a balanced market as purchases (both investors and mostly first time home buyers) seem to be getting off the fence. For the past few weeks, there have been a healthy ratio of sales to new listings, coming in around the 60-70% mark.
Price drops across the board have levelled off and in the case of apartments, improved. Starting with detached homes, sales have dropped off slightly by 2%, but new listings are down a whopping 13%. Days on the market (DOM) has increased by 23%, mostly due to buyers knowing they can take their time to make decisions. Price drops of 5% year over year are carried forward, but definitely levelled off. Most detached homes in good areas have lost no more than a total of 8-10% since the peaks of 2014. So the bulk of the decrease happened in the last year. Again, much of this is due to the stress test forcing buyers to buy lower priced houses. That and a combination of first time buyers getting into the market with starter homes have lowered the medium price of houses sold.
Condos and townhouses are definitely fairing better. While sales are still down 14.5%, inventory has dropped a significant 12%. While we were seeing price drops nearing the double digits in recent years, it has now levelled off to detached rates of 5-7%. Some of this could also be attributed to new builds coming on the market at highly competitive rates.
Attached homes seem to be doing even better with sales UP 4% and new listings DOWN 10%. On my drive abouts, it seems there is plenty of inventory but the statistics do not support it. DOM for detached has increased though by 8.5% and prices year over year are down about 4 to 5%.
The CALGARY REAL ESTATE BOARD is predicting 2020 to be a recovery year based on the direction of the market. Again, depending on outside forces (Federal Election), the market can swing to a balanced market even sooner than that. Most of the 5% price drops happened between last summer and this winter and has throughout the spring basically stopped. So all indications are the market has already levelled off. And with the reduction of inventory and new builders building, it is likely we will see steady prices until next spring.
As Calgarians and visitors celebrate The Stampede, the month of June shows a lot more activity in the housing market then the months preceding it. As it has become clear earlier this spring that the market has bottomed out, slowly but surely the market has seen increasing percentage of sales with respect to new listings. Most of this improvement has happened in the past month.
The significant stats breaks down as follows: In June there were 13% more sales than June of last year while new listings during the month dropped by nearly 21% leaving 16% less active listings than last years' high of nearly 9000 units on the market (currently around 7480 on the market). Over all prices from last June (only for the month) have dropped around 12% owing to the recent listings being priced well below the average price. This of course points to a lot of first time buyers entering the market with entry price purchases. A small but significant number of renovated houses are making a comeback. Buyers are looking more and more for contemporary updated styles and are willing to pay the price for a job well done.
Year over year sales are down slightly, 1.84%, owing to a brutal fall and winter with very low sales volume. Though this drop seems slight, it must be noted that last years sales were also low compared to the average over decades. Significant though is that listings were also down nearly 14% year over year as sellers seemed to get the message last year was not a good time to put their homes on the market. Average price for all homes was down 5%, reflecting the most significant drop over the years in all types of listings. Of special note here is the days on the market increased a whopping 20%. The tug of war continued with sellers holding onto their list prices and buyers continuing to search for bargains.
In the detached market total sales were down 2.5% while attached (mostly driven by new builds and investors) were actually UP 3.56%. Both home types suffered year over year price drops of 3-5%. The biggest losses continue to be the condo/townhouse market which saw sales drop by nearly 7% and average price drops of 8.6%. It must be noted that these saw the most significant price drops in the years leading up to 2018 so while SF (single family) homes might have only lost 8-10% in value since the peak in 2014, some condo units (particularly the older dated ones) have lost as much as 30% since that same time.
As for the future, there continues to be great debate. There are signs of confidence and perhaps cautious optimism with some, but when the market is in the bottom it sometimes takes factors outside of the market to pull it out. As lately, it remains a buyer's market but the seller resistance to offer bargain prices continues to take hold.
I wish all a very merry Stampede week.
Summer is within reach and the Spring market has picked up (particularly after the provincial election) but not nearly as much as historical normals. Yet sales are consistent going forward, indicating that summer might not be as dormant as usual.
Better employment numbers might be driving sales and a slight improvement in buyer confidence moving forward. There is still a lot of catching up to do and the numbers still indicate a solid buyer’s market.
There is general consensus amongst the industry, and from the general buying public that we have hit bottom sometime during the early part of spring. I have been watching listing prices recently which remain somewhere between the 2008 peak and 2014 peak in most communities, which indicates that sellers have either refused to drop prices further, or that they are confident they will find buyers. This is indicated by the number of days on the market, which has diminished recently for the lower priced homes, particularly in single family detached. That said, undesirable houses, in undesirable locations, still sit stagnant on the market.
Interest rates are on the decline and indications that the BOC will drop rates as well rather than increase them. The most notable piece of the puzzle occurs on June 18, with the TransMountain Pipeline decision. Should the project be approved, it may not immediately affect employment, but will have a profound affect on buyer psychology. Motivated buyers waiting until after this decision can be affected both positively or negatively depending on the news. We may actually see a return to multiple offers on good investments in the case of positive news, or the reverse if the pipeline is delayed further.
Sales growth in May was met with a decline in new listings. Inventory was 7,467 units, a decline of 12 per cent compared to last year. While still oversupplied, this is an improvement from the five months of supply recorded last May. Citywide sales in May totalled 1,921 units, 11 per cent higher than last year’s levels. However, sales remain 10 per cent below longer-term trends. As has been the case for years, this sales growth was primarily driven by homes prices under $500,000.
The condo townhouse market remains oversupplied yet surprisingly is over 8% LESS than last year, likely due to a recent termination of listings more than actual sales. Semi-detached homes on the other hand, took a year over year hit of 4 - 6% in medium price decrease, with an increase of 18% of inventory leading to an increase of 21% of days on the market. The oversupply was led mostly by newly built Duplexes.
There is positive news for detached houses which saw a 12% decrease in listings, but sales there are still 10% below historical averages. What is notable, is the price decreases stopped as of last few months, which just a fraction of percentage registering with most sales. Year over year, prices remain anywhere from less than a percent (N.E) in losses, versus the hardest hit City Center (-6.5%) and the deep South (-5.25%).
The buyer's market continues. Though listings have eased to well under 8000 over the past few months, they are still at very high levels. Inventories and sales totalled 7,345 and 1,322 in October. This has resulted in months of supply of 5.6, above levels typical for this month.
Citywide benchmark prices totalled $426,300 in October, resulting in a year-over-year decline of 2.9 per cent. As we enter into a winter market, it's likely some listings will be pulled and/or further price reductions will occur on "stale listings". I might add that this is typical of the season and more cyclical than a suggestion that the market has further decreases ahead.
For each of the property types, sales activity has improved in the lower price ranges, leaving most of those segments relatively balanced. However, the upper end of the ranges has seen significant gains in supply compared to demand, which is likely having more of an impact on prices in those ranges.
The struggle between sellers who firmly believe prices have bottomed, and buyers who are either opportunists or still sitting on the fence continues. It won't likely stop throughout the winter.
Summer seems to have cooled off recently but the housing market seemed to stay cool all summer long. August was very slow even in comparison to last year with sales dropping by 6%, The number of listings has also dropped as people are thinking twice about listing during an overly saturated market. Listings have dropped to the low 8000s from over 8600 earlier in the summer. Sales have helped, but some properties have just been taken off the market. There is still a lingering reticence from some sellers to "give their houses away".
The Kinder Morgan TransMountain Pipeline issue is sure to impact the fall and winter months but it will be hard to say how much as we are already entrenched in a buyer's market. There are bargains out there for those looking, but well priced homes in good areas still seem to fetch decent prices for sellers who are patient.
Overall the market is somewhat stagnant as the oil Industry is slow to recover, unemployment stays relatively high and new mortgage rules continue to have an impact. While 2017 was slow in terms of total sales, 2018 is even slower with a 16% drop Year to Date volume of sales. New listings have dropped recently, helping with some recovery but the days on market for all homes have increased by 22% for detached homes and roughly 12% for condos/townhouses and attached. The benchmark price and average price have stayed relatively stable for single family homes with only a minute drop in price, while condos/townhouses have seen a further 3% decline. Attached homes have fared in between with an average drop in price of around 1.5%. The positive news is that condos and attached houses have dropped far less than in previous years and new attached houses are selling at increased prices in the inner city from the years previous.
While houses have stayed on the market for a while, in some instances there have a sudden interest in well priced, well located homes and we've been privy to yet another multiple offer situation. It seems late August brought about a micro-burst of activity as summer winds down. It may or may not continue depending on the impact of the court ruling on Kinder Morgan.
In the meantime, Cochrane has become a mini tech hub suddenly for a growing company, Garmin Canada, and it may take a few of these alternative businesses to kick start our real estate market before a full fledged recovery is in sight. We stay entrenched in a plateau where a relative lack of activity indicates the buyer's market is far from over.
As we enter into the "dog days" of Summer, it is beginning to be clear that the housing market continues to take a holiday as well. Overall prices are down just under 2% with some sectors up somewhat, and others down a lot. But the main factor is a somewhat lack of interest from buyers despite a whole lot of improvement in the economic sector and a surprising 22,000+ surge in immigration to Calgary. Most seem to be renting, or staying in the rental market for now as the vacancy rate has dropped from 4% down to 3%. It seems to be a watch and wait attitude.
This and yet another interest rate hike seems to dampen sales and prices look to be adjusting to the current reality.
Citywide months of supply have risen for each property type and currently range from nearly five months in the detached sector to seven months in the apartment sector. These elevated levels have been placing pressure on prices in the city.
Detached benchmark home prices totaled $501,300 in July, down 0.4 per cent from last month and over two per cent from last year's levels. Year-to-date average benchmark prices in the detached sector remain just below levels recorded last year.
The apartment ownership sector continues to see the steepest declines, with year-to-date benchmark prices averaging $257,343, three per cent below last year and nearly 14 per cent below 2014 highs.
Oversupply issues continue to worsen in each district of the city compared to last year. However, compared to historical conditions, conditions today remain better than in 2016 in both the West and City Centre districts. Year-to-date, the West and City Centre areas have recorded prices higher than last year's levels and continue to edge towards price recovery. Benchmark prices in the West have averaged $733,329 this year, comparable to previous highs. City Centre benchmark prices have averaged $693,243, nearly three per cent below previous highs. Most districts have recorded detached prices that remain over four per cent below previous highs.
Easing new listings in the apartment condominium sector have prevented any further gains in the amount of inventory in the market.
Like the other sectors, attached sales have been easing this year, with 2,225 sales this year representing a 15 per cent decline over the previous year.
As the inevitable recovery period seems to be anyone's guess, there is good indication that once "bargain hunters" and sellers who are holding tight at their prices give way to one or the other, we will start to see either a further short term drop in prices during the coming 3 to 6 months, or the very laborious and gradual crawl to a long term recovery.
Buyers can be assured the market has been at bottom, or is near bottom right now and there are bargains out there as the number of multiple offers seems to have dissipated in the summer heat. Sellers again have to be cognisant of the market reality when they list, and of the benefits of listing a clean, presentable house.
Well, July is upon us and it looks like the summer will bring hot weather again. Unfortunately, the housing market continues to be anything but hot. Sales continue to be slow and now that school's out, sales are plunging. For a brief few weeks in June, it looked like things were beginning to ramp up, but it was very short lived.
Listings are now at an all time high of 8800, and prices are slowly moving downward. This is NOT an indicator of house values falling, only that the stress test has affected more buyers' bottom lines than previously anticipated. People are buying less expensive houses; at least the people who are buying.
Pockets of over million dollar houses are selling in popular inner city and newer south west communities. Those buyers seem to be taking advantage of low prices on the high end homes. New builds in the inner city are selling at near 2014 levels because, while many are still under construction, very few are available for possession in the spring/summer market. New homes in the outskirts are seeing very modest sales.
Condos and townhouses are still struggling. New listings are slowly diminishing but there is still a glut of more than 4000 on the market, mostly holdovers from 2017. Sale prices have been a staggering 32% less than this time last year.
While oil pushes upward and unemployment pushes downward, one would think it's only a matter of time before consumer confidence is restored. With the apparent corrections happening in Toronto/Vancouver and Ontario in general, it seems that confidence is being challenged by outside forces.
This will likely be a sluggish summer, which bodes well for buyers, followed (hopefully) by some activity in the fall. Another interest rate is pending which might motivate some buyers to get off the fence.