Increased Sales for Affordable Housing Has Not Reduced Oversupply
Overall, there was a slight decline in sales activity across the city in March, compared to 2018. However, sales have increased for the more affordable attached and detached homes.
Shifts occurring at the lower end of the housing market have not been enough to outweigh the softening that is occurring in higher priced homes. First-quarter sales plunged to 3,108 units, which is 9% lower than last year and 28% lower than usual activity levels.
Declines in prices and slower sales activity are affecting how many new listings come on the market. This is the second month in a row that new listings softened compared to 2018 levels and trends long-term. But, this level of softening was not enough to avoid an inventory growth.
Ann-Marie Lurie, CREB® chief economist said, “If the number of new listings continues to be relatively low compared to sales, there could be an improvement in the oversupply situation that is putting a damper the housing market.”
“Because the inventory is still so high, it will be some time before our market returns to a more balanced situation that includes more stable pricing.”
With 6,695 units still available in March, the number of months of oversupply softened to five months. While this reflects an improvement over the last few months, we continue to have an oversupply situation when compared to March levels recorded over the years.
This level of oversupply in Calgary has led to further price declines. Benchmark prices in March softened to $413,900, which is 5% lower than 2018 levels and slightly lower than last month’s recorded levels.
UPDATES IN THE HOUSING MARKET
· The decline in first-quarter sales was almost 9% compared to 2018 and 30% lower than the usual sales activity.
· Sales of detached homes are varied, depending on price range and location. We’ve seen gains among the most affordable homes in each district.
· Across the city in March, sales of detached homes improved for those priced below $500,000
· Despite the softening of new listings, there was an increase in inventories over 2018, which pushed the months of oversupply to the highest level that has ever been recorded for March. When looking at sales activity by district, the East and North East districts have experienced a softening compared to 2018.
· Oversupply of detached homes continues to dampen prices in all districts across the city with benchmark prices softening 5.4% compared to 2018, bringing the benchmark price to $475.800.
Condominiums & Apartments
· Sales of resale condominiums dropped by 14% in March, which caused first-quarter sales to come to 464 units, which is 17% lower than 2018. This decline didn’t happen in every district because there was an increase in sales activity in the West and North districts. Despite these signs of improvement in these districts, overall sales activity is still much lower than long-term trends.
· Supply of condominiums and apartments is showing signs that it is adjusting to lower demand. There was a softening of new listings in March compared to 2018. Unlike other types of properties, this is affecting inventory levels. March inventory was at 1,488 units, which is 12% lower than 2018 levels.
· The number of months of oversupply has moved down from earlier this year, but since sales have been weak, it is still higher than 2018 levels.
· Condominium and apartment prices across the city dropped 0.7% from February and 2.6% over 2018. However, in the South East and North East districts, prices recorded a slight gain over 2018.
· March experienced a slight increase in attached sales due to improvements in the row and semi-detached sectors. While there were gains in March, sales year-to-date are still 4% lower than 2018 levels and 16% lower than long-term averages.
· There has been a softening in year-to-date sales, but things have improved in the South East and South districts.
· Months of oversupply remain high citywide, despite some increased sales activity.
· Prices kept going down for semi-detached homes with a benchmark price of $391,000 in March. This is almost 6% lower than 2018 levels and 0.4% lower than the prior month. However, things were different in the North district as months of supply has been tightening, supporting a slight price gain compared to the prior month and 2018.
· Row prices for the Month of March were still pretty flat compared to the prior month, but are still more than 4% lower than 2018 levels and more than 13% below previous highs.
REGIONAL MARKET UPDATES
· Sales in the first quarter were 7 units below 2018 levels. There was also a first quarter decline in the number of new listings of 47 units, so there was no significant change in the market when it came to inventory levels. The months of oversupply stayed elevated and averaged 5 months at the end of the first quarter.
· The continuing oversupply has a negative effect on prices. Benchmark prices across the city in the first quarter softened by 1.7% compared to the prior quarter and continue to be 4.6% lower than first quarter levels in 2018. Although prices softened across all types of property, the steepest declines were in the condominium and apartment sector.
· First quarter sales in Cochrane were 114 units and new listings came to 330 units. For both these numbers marked a decline over 2018 levels. The fairly steep pullback in sales resulted in a rise in inventories with months of oversupply reaching 8 months.
· Continuing oversupply in the housing market has dampened prices. Benchmark prices softened by 1.6% after the first quarter compared to 2018 and 1.5% compared to the prior quarter. The attached sector experienced year-over-year declines of 2.7% compared to 1.5% in the detached sector.
· Sales and new listings both slowed down in the first quarter compared to 2018. However, the slowing of new listings was not drastic enough to lower inventory levels. Months of oversupply continued elevated at an average of 7.7 months this first quarter.
· The continual oversupply has affected prices. Benchmark prices for detached homes averaged $413,733 this first quarter, which is a 4.8% decline compared to 2018 and 3.8% lower than the prior quarter. Price declines of attached homes were a little higher with benchmark prices coming to $376,433 in the first quarter, which is 5% lower than 2018.