Chad Moore Calgary Mortgage Broker

Here are a couple key data points from the Calgary Real Estate Board. I think this information helps you understand current market conditions and can help anticipate hear term price movements.

How?

Understand that Real Estate is traded as a commodity. And commodities are governed by the laws of supply and demand. It’s that simple.

I think you’ll also agree with me, Real Estate is emotional. Lord knows when I become emotionally attached to the “thing” I’m buying, I am susceptible to make emotional decisions.

That all said, let’s look at the following information for detached and apartment style housing in Calgary.

PSA: If you’d like help with your next home purchase, Mortgage renewal or a Mortgage refinance, reach out to me.

Detached Home:

Sales to new listings ratio:

This ratio combines new homes entering the market (new listings) combined with homes leaving the market (home sales or expired listings).

What’s important to understand is the direction of this data trend and layering in past seasonal trends. Also consider the near term outlook on other leading indicators to anticipate this trend.

An increasing sales to new listings data point means less net new housing inventory is entering the market place.

A decreasing sales to new listings data point means more net new housing inventory is entering the market place.

Calgary’s sales to new listings ratio is relatively clustered year over year with an obvious seasonal trend appearing. The trend is to have more listings in the Fall months, with inventory thinning out over the Winter.

Absorption Rate:

The absorption rate tells us in months, how long it would take to liquidate all of Calgary’s detached homes for sale, at the pace of that months sales volume.

A “balanced” market is between 2-4 months absorption rate. Lower absorption rates generally give the seller strength in negotiations. Higher absorption rates generally give the buyer strength in negotiations.

Calgary’s absorption rate has seen a large variance over the past couple of years. In 2018 listing inventory was at an all time high and home sales were at an all time low which saw our absorption rate spike. This year, inventory pressures are easing and sales volume is improving.

I anticipate the year to finish with a similar seasonal trend between 3 and 4 months absorption.

Average Price:

Calgary’s average price has been dropping month over month and year over year. This is due to the average being pulled down by increased sales volume of home prices below $450,000. Higher priced homes are seeing more down pressure and less inventory turn over.

I post the average price for context of the overall market. Please understand that pricing a home is largely based on type, location, condition, comparable home sales and more. Take this with a grain of salt, but do understand the overall market.

Apartment Data:

Sales to new listings:

Apartment sales to new listings ratio is relatively high compared to previous years. I think this bodes well for near term price support, or is at least an indicator of price support.

Similar to detaches housing trends, the fall sees more inventory for sale with more inventory leaving the market during Winter months.

Absorption rate:

I think Calgary’s apartment absorption rate number is still high BUT has been lower relative to recent years.

Seasonally this number has a tendency to increase leading into the Winter months which offers buyers a strong negotiating position.

Median sale price:

The median sale price is the middle number of all condo sales in Calgary. I think this takes away from some of the fluctuation in price swings that might result from apartment sales (low volume can skew numbers).

Overall, 2019 has seen Calgary’s apartment median price trend lower than previous years with expected month-over-month volatility. Should this trend continue, I view this as market consolidation and working our way to finding the bottom floor of pricing. Once this is established I think that will bring some certainty to buyers who might be waiting to enter the market?

Conclusion:

I’m not seeing any new or shocking data that is cause-for-pause. Calgary’s housing market is adjusting to past years Bank of Canada interest rate hikes, the new stress test, market values, income and more.

I plan on publishing content on the interest rate outlook, coming soon. However, I find interest rates to be relatively inelastic as a measure of pulling home buyers into the housing market.

QUESTION: Have market interest rates influenced your decision to purchase a home?

Talk soon,
Chad Moore