This Market Has A Pulse....Even If It's Just Barely Alive
It's the second last month of the decade...the home stretch to 2020. Think about that!!!
It's been a long 5 years for the Calgary real estate market in this down cycle of our erratic Boom/Bust market. It looks like we are going to end 2019 with some positive news however...
OCTOBER 2019 SALES WERE ACTUALLY UP BY 10% OVER OCTOBER 2018
Now, that is not pricing, it is the total number of homes sold in the month, but that's still a really positive sign. It says that people are starting to feel comfortable pulling the trigger on home purchases, and that some of the fear around the market has dissipated. People are starting to accept that this is the new normal for our city, and that we can't wait for things to change, as that may never happen.
Total Units Sold in Greater Calgary For 2018 and 2019
As we look closer at the numbers, most of the sales growth is happening in the $500,000.00 and less market, which is the affordability level of the job growth in recent months. The city is going through a major shift in which sectors the jobs are and what the pay scales now look like.
"Employment has shifted in the city, with job growth occurring in our non-traditional sectors and often at a different pay scale. This is consistent with the shift to more affordable housing product," said CREB® chief economist Ann-Marie Lurie.
It's a lot different than it used to be. So, what about that $500,000.00+ market that used to be so strong? At the higher end of the market, inventory is actually rising, and sales are slow. This is causing prices to be extremely unstable, with more downward pressure to come.
RELATED: What is your Home Worth? Get a Free, No Obligation Home Assessment Report to Find Out Your Value In Today's Market
Median Price Comparisons 2018/2019
Our take on the market....
Look, it is what it is. We have to play with the cards we are dealt. There is no magic pill that is going to send us back to the glory days of 2014. The new normal is what we are experiencing right now. Without major increases in employment in Calgary, this market will be status quo. It feels an awful lot like 2010-2011 where the prices were flat for 24 months without much movement either way. If we don't get an injection of full time jobs in the city that will attract more people to move here, we're going to have to accept the fact that waiting this out may prove to be fruitless. So many people that are asking us for market evaluations are waiting until the spring because they think it's going to be better. Unless the magic pill arrives, I just can't see it happening.
Check out the housing market quick-facts for the month below, and the full stats report here. Have a great week! We'll chat again in December
Team Lead - Ken Rigel Group
Office: 403 207 1748
Cell: 403 835 6338
HOUSING MARKET FACTS
- Sales activity this month came in just above last year's levels, thanks to growth in all districts except the North East and North. However, year-to-date citywide levels remain comparable to last year's levels and over 19 per cent lower than longer-term trends.
- New listings continued to ease this month, but at a slower pace than levels recorded over the past eight months.
- Improvements in sales and easing new listings brought down inventory levels by 15 per cent. With 3,391 units in inventory, the months of supply is just under four months. This is a decline compared to last year, but it is still high based on longer-term trends. Months of supply eased across all districts except the North, likely due to the increased pressure coming from the new-home sector.
- Unadjusted benchmark prices eased over the previous month due to declines in all districts except the South East and East. Overall, prices in October remained nearly two per cent lower than last year's levels and nearly eight per cent lower than previous highs.
- Apartment sales continued to improve this month and new listings eased. This helped reduce inventory levels and brought the months of supply down just under 6 months. Despite improvements, the market remained firmly in buyers' territory.
- Year-to-date improvements in sales were driven by gains in the North, West and South East sectors.
Inventory declines have occurred in all districts except the South East.
- Overall, year-to-date prices remained over two per cent lower than last year's levels and nearly 17 per cent lower than peak pricing. However, there are some signs of stabilization in prices this year, with prices in the North East, South East and East remaining comparable to last year.
- The attached market continues to show the largest increase in sales, with year-to-date growth of nearly seven per cent. Improvements occurred across all districts except for the North West and North East.
- New listings have eased by eight per cent so far this year, causing inventory declines and reductions in the amount of oversupply.
- Like most sectors, this segment remains oversupplied, which is causing price adjustments. As of October, semi-detached and row prices remained two and four per cent lower than last year's levels, respectively. Prices continue to ease across nearly all districts and remain well below previous highs.
REGIONAL MARKET FACTS
- Apartment, row and semi-detached sales activity improved over the previous year, pushing total year-to-date sales up by three per cent, which is just below longer-term averages.
- New listings have eased to the lowest levels recorded over the past five years, helping reduce inventory and the months of supply to levels lower than the previous year.
- The improvements are helping reduce downward pressure on prices, but it is not enough to erase previous declines. Overall, year-to-date average benchmark prices remain over three per cent lower than last year's levels.
- Further gains in October contributed to a three per cent year-to-date increase in sales. An 11 per cent pullback in new listings caused supply to ease and the months of supply to fall.
- The reductions in the amount of oversupply are not influencing monthly price movements yet. Like most other municipalities, benchmark prices remain over three per cent lower than last year's levels and well below previous highs.
- Following a sharp pullback in sales activity last year, sales activity continued to recover this month. This caused year-to-date sales to improve to levels just below what was recorded post recession.
- New listings continue to ease, helping lower the inventory in the market and bringing the months of supply to just under five months. This is an improvement of nearly six months from last year's levels.
- With less oversupply in the market, we are starting to see some easing of the downward pressure on prices. Overall, year-to-date benchmark prices were $410,090. This is four per cent lower than last year's levels.
The good news this month is the market feels like we are at the bottom of the sink...we've been sliding down the side for a while, but the drain has been plugged. For three consecutive months, we have seen sales grow over the same months last year.
Looking at the graph above, can you guess which month the stress test was announced in 2017?
However, we still have a long way to go to recover back to levels seen just 3 short years ago. The total number of sales have improved, but the reality is that sales are still extremely weak, even at slightly elevated levels. There are close to 7000 homes for sale in the city right now. At the current pace, it would take 5 months to sell all of those homes if nothing else came on the market. We need to see that number down below 3 before we can get excited.
My take is that the market is going to remain stunted in Alberta. People ask me all the time "are prices going to go up?" Sure they will...but it's a matter of when, and by how much. The thought that "If I wait to sell until the spring, the market will have rebounded" is unrealistic. This market will not turn that fast. This is like turning around an ocean liner as opposed to a speed boat. It takes a lot longer, and you can see it coming from farther away. This month we saw the benchmark price drop another 2% over the same time last year to $424,000.00
The wildcard here is the upcoming federal electon. Housing policies are going to play a huge part in it. We've already seen policy changes this fall that really did nothing except get headlines. Make sure you know what is important to you, and vote accordingly.
Check out the housing market quick-facts for the month below, and the full stats report here. Have a great weekend! We'll chat again in November.
Ken Rigel Group
403 207 1748
HOUSING MARKET FACTS
- Improvements in sales over the past three months were not enough to offset pullbacks that occurred earlier in the year, as year-to-date sales remain nearly one per cent lower than last year’s levels. Despite citywide declines, sales improved in both the North West and South districts, thanks to significant gains in sales of homes priced below $500,000.
- The months of supply remains elevated at over four months, although this is an improvement compared to the same time last year.
- Benchmark prices in September ranged from a year-over-year decline of more than four per cent in the South district to general stability in the North East, North and West districts.
- Sales improved by 16 per cent this month, making it the best September recorded in the past three years. Despite recent improvements in sales, year-to-date levels remain stable compared to last year, but well below longer-term trends.
- Condominium apartment sales were varied across the city. Significant growth was reported in the North and South East districts. Both districts have seen significant new-home development which could be influencing resale activity.
- Oversupply continues to weigh on prices in this segment, as unadjusted prices remain 17 per cent below 2014 highs.
- Sales increases for both semi-detached and row product have improved year-to-date attached sales by more than five per cent compared to last year. It is the only product type that has recorded significant gains year-over-year.
- New listings continue to ease, reducing inventory and the months of supply.
- Despite some annual reductions in the months of supply, buyers’ market conditions persist and prices continue to ease. Year-to-date benchmark price declines ranged from a high of nearly six per cent in the City Centre to a low of three per cent in the North East.
REGIONAL MARKET FACTS
- Conditions in the resale market continue to show signs of growth. Sales activity improved in September, pushing year-to-date sales up by nearly three per cent. New listings eased, which helped reduce inventory in the market.
- The market remains slightly oversupplied, but the months of supply is edging down from last year’s high levels. This is supporting more stability in monthly price movements. As of September, the unadjusted benchmark price was nearly two per cent lower than last year’s levels.
- Sales in the area continue to improve and year-to-date levels remain the third-highest on record. The area faces fewer challenges with demand than the Calgary market, but elevated inventories continue to weigh on prices.
- Inventories are starting to trend down. If this continues, the market should move into more balanced conditions and, eventually, support some price stability.
- Sales activity continues to recover from the low levels recorded last year. Improving sales and easing new listings are causing year-over-year inventory declines and reducing oversupply in the market.
- The market has been trending into balanced conditions, but prices have been slow to react. Year-to-date benchmark prices remain just over four per cent lower than last year’s levels.