August 2018 – Market Update

It Will Take Time for the Housing Market in Calgary to Fully Recover

With the recent rise in interest rates and a continually soft job market, potential homebuyers seem to be holding off on the decision to move forward with a purchase.

In July, 1,547 units were sold in Calgary, which was nearly 5% lower than July of 2017. There were a total of 2,964 new listings in July, bringing the inventory to 8,450 units on the market. Clearly, supply is outpacing demand, so prices are inching down, with the average across the city at $435,200. This comes to a month-over-month decline in prices of 0.30%, which brings the year-over-year decline to 1.89%.

Ann-Marie Lurie, CREB^® chief economist, said, “Despite the upward momentum in some industries, our job market is continuing to struggle. Although there has been some relief in the past two to three months, unemployment rates are still too high.”

“Furthermore, in July the Bank of Canada decided to raise interest rates. Rising costs on top of a sluggish economic recovery are easing the demand in Calgary for resale homes. Supply continues to be high, which has caused the market to be oversupplied.”

Across the city the inventory has been going up for months now in all property types. For nearly five consecutive months the supply has risen in the detached sector and now for seven months running it’s gone up in the apartment sector.

Benchmark prices for detached homes in July came to $501,300, which was 0.4% lower than in June, but more than 2% higher than July 2017. In the detached home sector, benchmark year-to-date average prices remained slightly below last year’s levels.

We continue to see the sharpest declines in the apartment ownership sector, with the year-to-date average benchmark prices at $257,343, which is 3% below July 2017 and nearly 14% lower than the 2014 highs.

Tom Westcott, CREB^® president, said, “When you’re in a buyers’ market, both buyers and sellers must have the most recent information in order to make the smartest decisions.”

“A highly qualified REALTOR^® can be very helpful in determining what price to list a home for. When they’re representing buyers, an experienced REALTOR^® will know whether a home is priced too high.”

UPDATES IN THE HOUSING MARKET

Detached Homes

• Benchmark prices in City Centre are averaging $693,243, which is almost 3% lower than previous highs. Prices for detached homes in most districts continue to be more than 4% lower than previous highs.
• City Centre and areas in West Calgary year-to-date are recording higher prices than this time last year, which means they are moving in the direction of a price recovery. In the West, benchmark prices are averaging $733,329, which is in the range of previous highs.
• Unfortunately, oversupply is still a problem in each district of Calgary when you compare it to 2017. But, the truth is that in 2016 conditions were worse in both City Centre and West districts.

Condominiums & Apartments

• Supply in the condominium/apartment sector is higher when compared to sales, which has caused year-to-date prices to be 3% lower than 2017 levels and almost 14% lower than previous highs.
• A slowdown in new listings has stalled any additional gains in terms of inventory.
• Inventory across Calgary is still slightly below 2017 levels. July inventories inched down in the South, East, North, North East and North West areas of Calgary compared to 2017 levels.
• When you look at historical figures, levels remain high, but any decreases in inventory will certainly help lower the oversupply.

Attached Homes

• More new listings cause an increase in inventory and months of oversupply compared to 2017.
• Sales of attached homes, similar to other sectors, have slowed down this year. There have been 2,225 sales in 2018, which represents a 15% decline from 2017.
• Across the city, year-to-date prices for semi-detached homes have eased by almost 1% when compared to 2017. Changes in benchmark prices have ranged from 3% lower in North West Calgary to 6% higher in South Calgary.
• Even though there was an annual gain in 2018 in South Calgary, prices for semi-detached homes remain nearly 5% below the district’s peak.
• Benchmark row prices year-to-date have been on the upswing citywide, due to gains in North and North West Calgary as well as City Centre. This annual gain indicates that a recovery is underway. However, row prices are still far below previous highs across the entire city.

REGIONAL MARKET UPDATE

Airdrie

• Residential sales in Airdrie so far this year have come to 732 units, which is 11% below last year’s sales at this time. In fact, home sales in Airdrie are at their lowest over the last six years for the same time period.
• New listings year-to-date are still slightly more than 2018 levels, coming to 1,600 units, which is a new high when you compare it to previous years for the same time period. Inventories in Airdrie are averaging 544 units so far this year, which is about 100 units more than in 2017 over the same time period.
• With inventory rising and sales easing, there has been 5.2 months of oversupply on average, for the year, which affects prices.
• Benchmark prices for detached homes are averaging $372,386 in 2018 so far, which is 1.29% lower than this time last year.

Cochrane

• Sales for residential homes year-to-date in Cochrane are now 380 units, which is lower than last year at this time. However, the total number of sales is still more than long-term averages and the 2015-16 levels.
• New listings for residential units continue to be strong and in fact are at historical highs, reaching 862. This has caused year-to-date inventory averages to reach 390 units monthly, which has resulted in an average of 6 months oversupply for the year.
• Benchmark prices for detached homes in Cochrane continue to be relatively stable, despite all the gains in supply. Prices for detached homes are averaging $425,714 year-to-date, which is slightly more than 2017, but these figures are still nearly 4% lower than peak levels.

Okotoks

• In Okotoks, so far this year sales of residential homes have reached 320 units, which is lower than last year at this time and lower than long-term trends.
• New listings are still higher than this time in the past few years, which is keeping inventories way too high. Average levels year-to-date are at 248 units.
• So far this year there has been an oversupply averaging 5.4 months, which is more than historical standards. Interestingly, even though levels are high, this has not prevented a slight recovery in prices. Benchmark prices overall year-to-date for detached homes are averaging $436,786 so far this year, which is slightly above 2017, but nearly 3% lower than peak levels.

Want some more area-specific information for your current or next home? Contact us and let us know which area(s) you would like more information on!