Oversupply is Easing, but a Buyers’ Market Still Exists in Calgary
The decline of new listings continued throughout June, helping to ease the oversupply of homes for sale in Calgary.
New listings year-over-year experienced a decline of almost 19% with sales slowing in June by 6% compared to 2018. The easing of new listings caused inventories to decrease by 13% compared to the elevated levels of 2018.
Ann-Marie Lurie, CREB® chief economist said, “This year so far, the housing market is acting as we expected. Sales are just below 2018 levels, and with prices softening, supply is beginning to adjust to fewer sales.”
“However, homes priced below $500,000 are the only ones that seem to be moving towards a more balanced situation.”
Calgary has 4.3 months of supply, so it is still a buyers’ market even though oversupply conditions have softened, slowing down the decline in prices. The benchmark for prices was $425,700 in June, almost 4% lower than 2018 levels and comparable to the unadjusted prices in May.
UPDATES IN THE HOUSING MARKET
· June sales of detached homes went down 9% compared to 2018, which caused sales year-to-date to soften by almost 3%. Declining sales occurred mostly in homes listed for more than $500,000.
· Sales of detached homes listed below $500,000 showed improvement, which helped to reduce the oversupply. The tightening in this sector of the market will hopefully begin to encourage a price growth in detached homes.
· Despite sales declines across Calgary, sales did increase in the North West and South districts. While sales did soften in other districts, the supply-to-demand ratios in the East and North East, which tend to be where the most affordable housing is, improved over 2018. This is moving those districts towards a more balanced situation.
· Despite sluggish sales, inventory went down by almost 18%, with the reduction occurring in all districts.
· The past several months has seen relatively stable prices, with some slight monthly increases. But the oversupply situation has left prices almost 4% lower than 2018 levels.
Condominiums & Apartments
· Sales of condos and apartments softened in June, with sales year-to-date at 1,292 units. This is more than 7% lower than levels in 2018. During June, new listings softened by more than 15%, which lowered the resale inventory in this sector.
· While inventory levels are in decline, months of oversupply are still high at 6.8 months. High inventory levels in the competing new-home and rental markets continues to dampen prices in the resale market.
· The benchmark price in June was $250,200, which is 3% lower than 2018 levels. This has resulted in a price adjustment of more than 17% since 2014.
· As opposed to other types of property, sales of attached homes continued to increase in June. Sales year-to-date came to 1,955 units, which is almost 3% higher than 2018. This increase was prompted by a higher demand for semi-detached homes. Sales of attached homes increased in almost all districts, but not in the West and North West.
· Compared to 2018 levels, new listings have softened. This is beginning to lower the oversupply in this market. As with all other sectors, oversupply continues to be a problem when it comes to prices.
· Benchmark prices in June for semi-detached homes were $399,700 and for row houses it was $286,300. Year-over-year, this represents respective declines of 3.3% and 5.4%.
REGIONAL MARKET UPDATES
· Sales are relatively stable now that we’ve entered the second half of 2019. There has been a decline in new listings, which helps in lowering the inventory level and move the market to a more balanced situation.
· While the market is becoming more balanced, oversupply continues to dampen prices. In June the benchmark price came to $334,800, which compares to May, but it is still almost 3% lower than 2018 levels.
· Sales have been relatively stable in Cochrane, compared to 2018 and in line with longer-term trends. There has been a softening of new listings, which helps reduce inventory levels as well as the oversupply.
· Despite recent adjustments, it is still a buyers’ market, which dampens prices. The benchmark price in June came to $404,000, much like May and more than 5% lower than 2018 levels.
· Compared to 2018, sales have stayed relatively stable, but remain lower than longer-term averages. As new listings continue to adjust, inventory levels go down and this helps the market move forward to a more balanced situation.
· As market conditions become more balanced, this should result in more stable prices. Benchmark prices in June came to $414,900, which is 1.6% higher than in May, but still 4.1% lower than 2018 levels.