As your Calgary Mortgage Broker It is my great hope to help you make sense of what is currently happening in Calgary’s Real Estate market AND to help you anticipate future pricing.
I do this to help you make one of the biggest decisions in your life …when to enter the Real Estate market.
Below I am breaking down three important Real Estate statistics. They are:
- Sales to new listings ratio.
- Absorption rate.
- Average price.
I also include information on the Canadian bond market to help you anticipate where fixed interest rates might be trending.
If you have any questions on this data, your home affordability or any other topic Real Estate related, please connect with me by phone or email (see below).
Calgary Mortgage and Housing Data:
Sales To New Listings Ratio:
This ratio looks at the amount of homes sold (leaving the market) compared with the number of new listings for sale (added to the market). Tracking and understanding this ratio helps anticipate the future supply of homes for sale.
A perfect 100% ratio means for every home sold, there was one new home added to the market for sale. A decreasing ratio indicates more homes are being added to the market, increasing future home supply.
Real Estate price movements are more easily anticipated by understanding SUPPLY and DEMAND.
In Calgary, we are facing decreased housing demand because of our commodity driven economy and the troubles we face in the price of oil. Monitoring housing supply, the other side of the equation, also helps us anticipate future home prices.
I am seeing no gain in December’s sales to new listings ratio month over month. However, this ratio is significantly down year over year. I think this is troublesome because seasonally we are adding more inventory to the market than previous years. I think this will trickle into continued downward pressure on home prices in Calgary.
Absorption Rate:
This statistic, tells us in months, how long it would take to liquidate all of Calgary’s single family detached homes for sale, at the pace of the current months sales.
Typically, a balanced market is between 2 and 4 months. A higher absorption rate is (in months) is an indicator of more housing inventory for sale, lower sales volume and downward pressure on home prices. This is considered a “buyers market”. Just the opposite is true with a low absorption rate. In this case of a lower absorption rate, there is less inventory for sale, higher sales volume and upward pressure on pricing.
In December, our absorption rate jumped to 4 months. I think this, and considering our seasonally lower sales to new listings ratio, continue to put downward pressure on future prices in Calgary.
Average Sales Price:
Below is an image of month over month and year over year tracking of the average sales price in Calgary. At first glance, I might think the market has bottomed out in October 2015. I think the previous two statistics we covered together might suggest otherwise. The average sale price is vulnerable to price skewing due to high priced Real Estate sales (or lack thereof).
Interest Rate Barometer:
Fixed interest rates typically move with the bond market in Canada. The game is this: people deposit money as an investment. As part of that investment they are paid a return. Banks take this deposit money and lend it out as a Mortgage. Banks charge you an interest rate to borrow this money. Below you’ll see a blue line. This is the yield cure. The direction of the yield curve offers us a chance to anticipate increases or decreases in fixed interest rates. A decreasing yield curve indicates upward pressure on rates. An increasing yield curve indicates downward pressure on rates.
Thank You!
Thank you for reading this post. As an indication you wish to continue to see this data, please click the Facebook Like button at the top of this post. Please also consider emailing this link to your friends, family or co-workers interested in this data. Thank you in advance.
Talk soon,
Chad Moore
