Sales Growth & Fewer New Listings in May Led to Decline in Inventory Levels
Last month’s growth in sales, combined with fewer new listings led to a softening of inventory levels, resulting in 7,467 units at the end of May. This represents a 12% decline compared to 2018.
Growing sales softened the months of oversupply to slightly under 4 months. While Calgary is still in an oversupplied situation, this represents an improvement over May 2018, which had 5 months of supply.
Sales across the city in May came to 1,921 units, which is 11% higher than this time last year. Unfortunately, this is still 10% lower than long-term trends. Homes priced below $500,000 largely drove the surge in sales.
Ann-Marie Lurie, CREB® chief economist said, “Sales activity is still low based on historical norms for May. With prices softening, people are gradually returning to the market. At the same time, others continue to delay listing their homes.”
“This is pushing the market to become more balanced. If the trend persists, it could relieve some of the pressure to lower prices.”
Benchmark prices across the city in May were $423,100. Although prices are signaling improvement month-over-month, they are still 4% below 2018 levels.
UPDATES IN THE HOUSING MARKET
· Sales of detached homes in May came to 1,182 units. This represents a 12% increase over May 2018, while still 13% lower than long-term averages. The increase in sales was predominately the result of gains in detached homes priced below $500,000.
· May experienced an increase in sales across most districts. But, year-to-date sales showed an increase in just the East, North East and South districts. Citywide sales are still 1% below 2018 levels.
· New listings in May were significantly lower than in previous years. When you combine that with the increase in sales, the result is inventories going down from 4,504 units in May 2018 to 3,921 in May of this year. The last time year-over-year inventories went down was in May 2017.
· Softening inventory combined with increased sales led months of oversupply to soften to 3.3 months. Historically, this is still considered elevated, but it does indicate some improvement from last year.
· Over the last few months prices seem to have stabilized, with some slight improvements. But, the oversupply situation leaves prices 4% below 2018 and 7% below 2014 highs.
Condominiums & Apartments
· The increase in monthly sales failed to offset the previous declines. Sales of condos and apartments year-to-date remain at 1,030 units. This figure is 7% below 2018 and 28% below long-term averages. Softening sales combined with fewer new listings resulted in a reduction in market inventory. This increased months of oversupply to just over 5 months.
· If the oversupply situation continues to go down, it should at some point put a lid on price declines. In the meantime, this market is still oversupplied, which means prices will continue going down.
· Benchmark prices in may came to $246,900, which is 0.6% below last month and almost 3% below 2018 levels. The result is a total adjustment in prices of more than 17% since 2014.
· Sales of attached homes continued increasing in May. Sales year-to-date increased by 2%, which makes this the one sector in Calgary to show a year-to-date increase. These increases occurred in most districts, except for the West, North West and City Centre.
· The city experienced a softening of new listings compared to sales activity. This led to an lowering of inventory levels compared to 2017, as well as a softening in months of oversupply.
· Benchmark prices for May are still 5% below 2018 levels, but slight gains are appearing month-to-month. Despite signs of improvement, prices are still 10% below 2014 highs.
REGIONAL MARKET UPDATES
· Sales activity for May was pretty much the same as 2018, resulting in 514 units sold year-to-date. This is a bit higher than 2018. However, Airdrie has been experiencing a steep decline in new listings at the very same time. The result is declining inventories, which should lead to a more balanced market.
· Despite a bit of a reduction in oversupply, prices continued the struggle to improve after the declines of 2018. Benchmark prices in Airdrie in May were $331,900, which is much like April, but almost 4% lower than 2018.
· Sales activity year-to-date in Cochrane is still a bit lower than 2018, but higher than sales throughout the recession. There continues to be a softening of new listings, which has been reducing inventory levels from the highs of 2018.
· Cochrane is starting to experience supply adjustments in this market, while conditions still favour buyers, which weighs prices down. Benchmark prices in May came to $404,700, a little lower than April’s and more than 4% less than 2018 levels.
· Sales year-to-date in Okotoks are at 208 units, which compares to 2018 levels, but below long-term averages. As in many other areas of Calgary, new listings are still softening, which is lowering inventory levels. The result is months of oversupply falling below 4 months.
· This oversupply reduction compared to sales is limiting the pressure on prices. Benchmark prices for May came to $408,200 and are still 5% below 2018 levels.