January 2019 – Market Update
Oversupply Continues to Affect the Housing Market in Calgary
Home prices in Calgary were down 1% in December compared to November and are more than 3% below December 2017, due to the ongoing oversupply.
Sales came to a total of 794 units in December, which is a stark 21% decline over December figures last year. Year-to-date home sales in Calgary were 16,144 units. This represents a 14% decline from 2017 and an almost 20% decline when you look at long-term averages.
The number of units in December’s inventory was 4,904, which is much higher than last year at this time and 30% higher than levels typically seen in December. Higher resale inventories last year resulted from gains in the sale of detached and attached homes.
The months of oversupply stayed elevated during all of 2018, averaging 5.2 months. This was a contributing factor on the annual average decline in the benchmark price of 1.5%. Sales figures throughout Calgary to remain more than 9% lower than the recorded monthly highs of 2014 due to price declines across all types of housing.
Tom Westcott, president of CREB® said, “Anyone buying or selling a home in Calgary this past year had to adjust his or her expectations. Sellers had to face the fact that the resale market offered more choice, plus they had to compete with the new-home market.”
UPDATES IN THE HOUSING MARKET
- Sales of detached homes declined throughout Calgary in 2018, with a total of 9,945 units being sold. This level of activity is 21% below what would be typical for the year.
- Inventories of detached homes remained higher than 2017 levels and this was the reality every single month of 2018, including December. A slowdown in sales resulted in the oversupply in the market throughout the year.
- Benchmark prices in December for detached homes came to $481,400, which was 1% lower than in November and 3% lower than in 2017. Overall, prices declined in 2018 by 1.5% when compared to 2017.
- Detached home prices in 2018 have softened in most districts with the largest declines occurring in the North, North East and North West districts.
Condominiums & Apartments
- Sales of condominiums and apartments in 2018 came to a total of 2,663 units. Although the decline is not as steep as other types of housing experienced, levels are still 22% lower than long-term averages.
- Sales in this sector have been hampered with oversupply for nearly three years and this situation continued in 2018.
- However, the oversupply situation has been letting up since 2018 inventories averaged 1,584 units, which is 1% lower than 2017 levels.
- While supply growth slowed down, the market continued to be oversupplied, which led to further declines in price. Benchmark prices for condominiums and apartments were $251,500 in December, which was more than 2% lower than in 2017. Annually, we saw a decline of nearly 3%, contributing to a total decline in prices of 14% since 2014.
- Price declines in 2018 have gone from a high of almost 6% in the East district down to a 2% low in the North West and City Centre districts.
- There were declines in sales for row as well as semi-detached homes, which resulted in sales of attached homes totalling 3,536 units in 2018. This represents a decline of 15% over 2017 and was 14% lower than long-term averages.
- Due to the slowdown in sales activities, there were fewer new listings, however, this affected the row sector only. New listings for row homes declined by 4% and new listings for semi-detached homes were up by almost 15% in 2018.
- Despite some new listing adjustments, inventory continued to be elevated, which means it remained a buyers’ market and that means prices being pressed downward.
- The benchmark price for semi-detached homes in December came to $397,500. This represents a monthly decline of 0.8% and a year-over-year decline of 3.8%. Due to recent price declines, the gains made in this sector last year have been eliminated with 2018 prices slightly lower than 2017 levels. At the end of the year, 2018 prices were 1.4% lower than peak levels in 2014.
- Prices for row homes are continuing to soften. Row prices in December were $288,400, which is a 1.5% decline from November and almost 4% lower than 2017 levels. At the end of the year, 2018 prices were 2% lower than 2017 levels and almost 10% lower than previous highs.
REGIONAL MARKET UPDATES
- The housing market in Airdrie throughout 2018 suffered from oversupply and indications of a buyers’ market. Compared to 2017, inventory levels and the number of months of oversupply have been much higher. When you combine this with fewer sales the result was a lower benchmark price when it came to detached homes.
- Annual sales of residential homes experienced a 14% year-over-year decline and were nearly 19% lower than sales over the previous 5 years. This continuous decline affected all types of homes.
- 2018 experienced record highs when it came to supply levels. The number of new listings marked a new peak year-to-date for most of 2018. Inventories continued to increase throughout 2018 and are 12% higher than was seen in 2017. The number of months of oversupply went up steadily, averaging 5.6 months for the year.
- This continuous oversupply situation has caused Airdrie home prices to decline. Benchmark prices for detached homes in 2018 averaged $369,042, which was more than 2% lower than in 2017.
- 2018 home sales in Cochrane declined by 64 units, which was below 2017 levels. But, yearly sales of 599 units is comparable to sales activity over the previous 3 years.
- Cochrane experienced 1,288 new listings in 2018, which was a record high. More new listings and softening sales caused a rise in inventory levels and months of oversupply averaging almost 7 months.
- Higher supply levels has led to prices of detached homes to move down during the last two quarters of 2018, but not enough to offset gains made earlier in the year. Benchmark prices for detached homes in 2018 have remained comparable to 2017.
- Residential home sales in 2018 in Okotoks totaled 463 units, which represents a decline over 2017 and actually compares to 2010 sales.
- New listing gains, along with a slowdown in sales cause inventory levels to rise, which means an oversupply in the market.
- Despite the oversupply and soft sales, prices for detached homes in Okotoks showed slight increases in 2018. The average benchmark price for detached homes came to $434, 875, a 1% increase over 2017.
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