September 2018 – Market Update

High Rate of Unemployment is Slowing Recovery in Housing Market

CALGARY – The city’s housing market continues to suffer from oversupply due to an uptick in new listings and an easing in sales. These factors continue to be a drag on the housing market recovery.

Persistently high inventory levels in the Calgary market continued to pull prices down in August. Benchmark prices across the city dropped 0.8% over previous months, which mean they are 2.4% lower than last year’s price levels.

Ann-Marie Lurie, CREB^® chief economist said, “The unemployment rate in Calgary has been persistently high at 7.9%, plus the city has recently been suffering an increase in the loss of full-time jobs. Unemployment is just one of the factors affecting the local housing market.”

“Other factors include stricter lending conditions, the energy sector being slow to recover, and the competition being faced by the new home sector.”

Sales across the city in August totalled 1,490 units, which was nearly 7% down from this time last year and 14% lower than long-term trends.

Declines in sales and prices were inconsistent across all housing types and districts. Prices have been going down recently across most areas of the city when you examine year-to-date numbers, but remained similar to last year’s prices in the West districts and the City Centre.

Tom Westcott, CREB^® president said, “Buyers and sellers alike must be realistic about the situation and their objectives. Buyers have to understand that price changes will depend on what type of home it is and its location. Just because sales have been declining, you cannot assume that prices will go down across the board.”

“If sellers expect to compete they must be well informed. They need to know what’s been selling in their neighbourhood and how well their home and property compares to those that have sold.”

UPDATES IN THE HOUSING MARKET

Detached Homes

• Year-to-date sales of detached homes slowed down in each district. Inventory levels remained high for nearly five months by August, which continued to drag down prices in all districts.
• Benchmark prices for detached homes reached $497,000 in August. This represents a 0.74% decline over July, which is 2.6% lower than in 2017.
• Across all districts prices trended down in August, but when you examine year-to-date figures they remain higher than 2017 in both West districts and City Centre.
• Average benchmark prices year-to-date for detached homes have gone down 0.56% over last year, which reduces some of last year’s price recovery.

Condominiums & Apartments

• Sales year-to-date came to 1,892 units, which is 7% lower than 2017. However this was not prevalent across all districts. In fact, North East and North West district sales were a bit higher than sales levels were last year.
• New listings slowed down in the apartment sector compared to 2017, which prevented higher gains in supply. However, inventory levels persistently remain high in this sector, which just leads to more declines in price.
• Citywide prices have gone down by nearly 3% year-to-date, with the most significant declines occurring in the South, East and North East districts. All in all, prices are now almost 14% lower than the highs of 2014.

Attached Homes

• Sales have also slowed down in the attached sector. However, there is some good news in that year-to-date sales in the West and North West districts for row houses and semi-detached homes have improved.
• Sales of row houses have remained fairly consistent in the East and North East districts.
• The semi-detached sector has been suffering from oversupply, which has pushed prices downward this year, but the average benchmark price year-to-date is still higher than 2017 in the City Centre, East and North East districts. These gains proved enough to offset the declining prices in other areas of the city. Overall, prices for semi-detached homes were 1% higher year-to-date than last year.
• Year-to-date prices for row homes are down 1.5% over 2017. However, prices have not been moving consistently across the city. Prices have been fairly stable in the North West and City Centre while declining nearly 7% in the North East district.

REGIONAL MARKET UPDATE

Airdrie

• Sales in Airdrie have continued to soften when compared to 2017, with just 851 units being sold so far in 2018.
• While there have been fewer new listings in recent months, new listings so far this year remain slightly above last year’s, with inventories at 597 units.
• The perpetual oversupply in the housing market has started to bring home prices down. Average prices for detached homes were $366,990, which is 0.7% lower than last month and 3.4% lower than last year. The benchmark average price year-to-date is 1.5% lower than last year’s levels.

Cochrane

• Home sales year-to-date in Cochrane are at 431 units, which represents a decline over last year. However, sales activity does compare to recorded sales activity over the last five years. This shows that Cochrane has not experienced the same reduction in demand that other areas are experiencing.
• The challenge facing Cochrane is the continuous rise in inventory. New listings are on the rise and at a level that is above normal for the area. Inventories are at new highs and supply just continues to rise.
• The continued oversupply is now starting to have an adverse affect prices. Benchmark prices for detached homes dipped down to $426,100 in August, which was lower than in July. Despite the recent softening, prices in Cochrane overall remain comparable to average prices year-to-date in 2017 and for the month of August.

Okotoks

• Inventory levels have risen to 280 units in Okotoks due to a softening in sales and an increase in new listings.
• The recent increases in inventory, along with fewer sales have begun to adversely affect prices in the area. Despite these factors, the softening was not enough to bring year-to-date prices below 2017 levels.
• Average benchmark prices for detached homes are $436,350 year-to-date, which is slightly higher than 2017 levels.

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