How To Anticipate Near Term Price Movements In Calgary Real Estate:

Here’s my plan in reporting Calgary Real Estate market data to you:

1. Fundamental knowledge.  There are a couple key Real Estate fundamentals that once you learn to understand them it will open up insight into anticipating future price movements, leaving behind media hype and water cooler hearsay (both at the peak of down or up markets). 
   
   
2. Commodities. Commodities move in the market based on supply and demand fundamentals.  
   
   In today’s email we’re discovering supply side leading indicators to anticipate future prices. 
   
   I also write you about Real Estate demand economics for a full picture of the supply & demand curve (BoC rate decision, GDP numbers, employment, wage growth etc).
   
   
3. No hype.  I personally find in Real Estate marketing there are what I call “pumpers”.  They just pump Real Estate up, never talking about the other side of the coin.
   
   My philosophy in Real Estate marketing is the opposite.  I like to present data, offer my thoughts, and invite you to come to your own conclusion.  
   
   (Neither method is right or wrong.  Just different). 

My ultimate plan is to build your trust through educational based marketing to earn your future and repeat business.  

I also appreciate when my people go-out-of-the-way to refer their friends, family and co-workers. (fist bump) 

Here’s What I Have For You Today:

I have a supply side analysis of Calgary’s Real Estate market for the Detached housing segment and the Apartment condo segment.  All info is from the Calgary Real Estate Board. 

This will help you understand anticipate near term price movements.  Please couple this with my economic reports (most recent one here). 

Detached Housing Update:

Sales To New Listings Ratio:

This ratio is a combination of new listings entering the market and listings leaving the market (sold, expired or de-listed properties). 

This helps us get a sense of future inventory levels. 

Calgary’s detached housing sector has its’ lowest sales-to-new-listings ratio in the past four years.  However, this data point is also seasonally trending up.

What does this mean?

First of all, this is somewhat positive.  An increasing sales-to-new-listing ratio indicates fewer new listings coming.  

The down side here is the data is lower than years past so we can expect more homes coming up for sale than years prior. 

Absorption Rate:

This data point combines sales volume, new inventory and existing inventory together.  The output is a monthly data point.

Here’s how to interpret it …ask the question: how many months would it take to liquidate ALL of the detached listing inventory in Calgary, at the pace of current sales?

The absorption rate is your answer!

The story of 2018, thus far, has been high inventory and low sales.  I think home builders added more detached inventory to the market, as resale homes also came up for sale at a regular pace. 

The issue has been sales have not absorbed the new inventory.  

Why?

Two major reasons.  First, I think interest rate hikes are spooking people from purchasing.  

And second, tighter Mortgage rule changes make purchasing a home more expensive.  

On top of this, our oil and gas sector, the heart and soul of Alberta’s economy, is facing economic headwinds. 

Average Price:

Average price is found throughout all price levels in Calgary.  This will provide a general context for the market.  

However, I think it’s important to note that different quadrants, areas, price segments etc be considered for a more relevant indication of price movements. 

Apartment Condo Data:

Sales To New Listings:

Good news!

Do you see the spike in the apartment sales to new listings ratio?  This is a strong indicator that near term apartment supply levels will be shrinking.  This bodes well for price gains!

Haliloulia!!!

Before we go popping champagne to this, let’s ask “why”.  Has construction ground to a halt?  Has there been a big uptick in sales reducing supply?  Are people begrudgingly de-listing their units?  Are sellers turning their units into rentals?

I don’t know exactly.  Here’s what I do know, if I planned on selling my condo, or I’ve tried in the past, this might be a window of opportunity to sell it again because I’ll compete against fewer alternative units for sale.

Absorption Rate:

Low and behold, the apartment absorption rate is falling like a rock.  

This is a combination of stable sales with less inventory which bodes well for price stability.  

Could the bottom of the apartment market be behind us?  Or is there a shadow inventory of apartments waiting in the wings to return with vengeance?  Time will tell.

Median Price: 

To take the wind out of our sails, median price is at a four year low.  However, based on above data, I anticipate upward pressure from here. 

Conclusion:

I hope you use this data, in combination with other pieces of information you consume, to formulate your own opinion on Calgary’s Real Estate market. 

I’m keeping a close eye on the detached market for indicators of how the Spring 2019 market will play out.  

Look for further updates on Calgary’s apartment segment and if this months data does result in price growth (net of the oil & gas headwinds our City is currently facing). 

Thank you again for your time reading my content!

Is there anything you would like to learn about our markets?  Let me know.

Talk soon,

Chad Moore