April 2020 – Market Update

COVID-19 Having Detrimental Effect on Housing Market

After a solid first quarter of 2020, the economy has suddenly reversed direction due to the dire impact of COVID-19, which is being felt across a huge number of industries including real estate.

Sales in the month of March started out strong, but that didn’t last due to the need for social distancing to combat the spread of COVID-19. Because so many businesses depend on human interaction, many have had to shut their doors, leaving employees without work.

Ann-Marie Lurie, chief economist at CREB® said, “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.”

By the time March came to an end, sales had fallen 11% compared to 2019. This is 37% below long-term averages. This drop resulted in March levels being the lowest on record since 1995.

Lurie said, “The impact on the housing market will likely persist over the next several quarters. 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”

The number of new listings were 19% lower this month and this decline relative to sales caused a softening of supply levels, which prevented a larger rise in oversupply. All in all, the months of supply are still just below 5 months, which is close to 2019 levels.

Prices had already been forecasted to soften this year because of the oversupply in Calgary. The benchmark price citywide in March was $417,400. This is almost 1% below 2019 levels. With the number of sales and new listings both being lower, we shouldn’t see any major price declines in Calgary.

However, the price declines are apt to be higher than originally forecasted due to the pandemic combined with the crisis in the energy sector.

UPDATES IN THE HOUSING MARKET

Detached

• Sales of detached homes softened by 15% in March, resulting from pullbacks in all districts apart from the North, which stayed flat compared to 2019.
• Declining sales were met with more declines in new listings, leading to a drop in inventories by 17%, which kept the months of supply a bit below 2019 levels.
• Benchmark prices for detached homes stayed pretty much the same compared to 2019, at $480,800. Declines in prices for March continued to be highest in the West, North East, and City Centre districts.

Condominiums & Apartments

• Sales of apartments in March came to 217 across the city, which was the only category recording a year-over-year increase. A lot of this increase came from increased sales in the North West, South East, and East districts.
• New listings in March softened, which helped support a slight decline in inventories.
• Continued oversupply has caused persistent dampening of prices. The benchmark price citywide in March softened by over 2% compared to 2019 and came to $243,700.

Attached Homes

• Sales of both row houses and semi-detached homes declined in March compared to 2019. Just like other types of properties, a significant decrease in new listings also occurred.
• Fewer new listings helped lower inventory levels for both types of property, but not enough to avoid an increase in the months of supply.
• However, attached homes were oversupplied before the recent issues affecting prices. As of March, prices were still almost 1% below 2019 levels for both row houses and semi-detached homes.

REGIONAL MARKET UPDATES

Airdrie

• Like so many other areas, Airdrie experienced a decline in sales, along with fewer new listings and a reduction in inventory. With less supply and demand, there were no significant changes in the months of supply.
• While we have not seen the full effects of the COVID-19 outbreak in the housing market, prices in March were still comparable to 2019 levels.

Cochrane

• Sales and new listings both fell in March compared to 2019, leading to a reduction in inventory levels to the lowest in 5 years. Like a lot of other areas, Cochrane is still oversupplied, with prices softening.
• The benchmark price in March was $398,700, which is almost 2% below 2019.

Okotoks

• Trends made an abrupt change in March, with sales being flat and fewer new listings. The reduction in new listings led to a major reduction in supply, causing the months of supply to fall below 5 months.
• Every month prices are going down, but they’re still comparable to 2019 prices, with a benchmark price in March of $405,000.

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