Chad Moore Calgary Mortgage Broker

Hey Guys!

This is my monthly state-of-the-union market update!  

If you’re a homeowner, this will help you understand why your City assessed home value is up. 

If you’re looking to purchase in the next 6+ months, this data will become more and more relevant to you. 

Let’s cover off detached and apartment homes data.  Let’s look at several simple numbers:

1.  Sales to new listings ratio. 

2.  Absorption rate. 

3.  Average/median price.

Detached Homes:

Sales To New Listings Ratio:

The sales to new listings ratio combines sales with new inventory.  Percentages closer to, or over 100%, indicate less near term housing supply.

Lower numbers, below the 100% line, indicate a build up of near term listing inventory.

We can see how a spring market will likely play out because of the set up in each November and December of the previous calendar year.  This has proven true over the past three years.  

The sales to new listing ratio was trending very high, cresting over 100% in each December.   The following spring markets were severely undersupplied.  

Seasonally, we can see the summer sales to new listing ratio hover between 60-80% offering some supply relief. 

For those of you planning to purchase, and waiting until next spring, keep an eye on this data point ending the calendar year—this will help you plan for the coming spring market. 

Absorption Rate:

The absorption rate tells us in months how long it would take to liquidate all listing inventory, at the pace of that months sales.

This is why the absorption rate showed a huge covid spike, and the sales to new listings ratio did not.  

Sales plummeted in April 2020, and inventory stayed about the same.  This combo spiked the absorption rate. 

During this same time period, sales tanked but so did new listings which is why the sales to new listings ratio did not spike. 

Today, Calgary’s detached absorption rate is still at emergency low levels—less than 2 months.  

Seasonally, the absorption rate has trended higher through the summer months these last couple years.  

At best, Calgary has seen a chronically undersupplied detached market for close to four years now.

Average Price:

In the face of generationally higher interest rates, Calgary detached values have leaped higher!

Over the years I’ve written several reasons as to why: 1) belief prices will continue to rise, 2) pent up demand from a severe economic downturn, 3) strong employment/income prospects, 4) extreme low cost of borrowing (2020-2021), 5) in-migration, 6) remote workers with high incomes, 7) comparatively low cost housing. 

With a sales to new listing ratio at 70% and absorption rate still below 2 months, and 6 of 7 factors still relevant to Calgary housing (minus low borrowing cost)—the outlook for price stability, or upward pressure on prices continues. 

Apartment Homes:

Sales To New Listings Ratio:

For three months in a row, the sales to new listings ratio has trended lower month over month.  Also, the sales to new listings ratio is about 10% lower year over year.  

This downward trend is offering a hint of near term supply relief.  A 70% sales to new listing ratio is still comparatively high in Calgary. 

Absorption Rate:

Calgary’s apartment absorption rate remains extremely low, and 1.5 months!  This data point is by-far is one of the biggest contrast points between two Calgary Real Estate market cycles.

Median Price:

Apartment median price is back rising, after a one month lateral move.  

With a slightly lower sales to new listings ratio, and extremely low absorption rate, price stability and upward price pressure remain the outlook.

Conclusion:

Two themes are holding on in Calgary’s Real Estate market: 1) low housing supply, and 2) strong/sustained housing demand. 

Supply is coming.  Both charts are from Alberta Economic Dashboard (link to housing starts).  

In Alberta, housing starts are up ~52% year over year with a total of ~17,000 new units. 

Population growth continues to surge in Alberta!  Year over year, Alberta is seeing 4.4% population growth, roughly 200,000 people (link). 

We can see how this dynamic alone can push housing prices, and rents, higher. 

Let’s be reminded, all things eventually cycle—my favorite sports team, political parties, and Real Estate.  What else cycles for you?

I hope this information is helpful!

Talk soon,

Chad Moore

P.S.

The deck!  No more injuries, so that’s a win!  No monumental mistakes during the build either—and that’s a win!  I know of little issues with my deck, that if I had a re-do I would change.  I’ll just keep those to myself ;-). 

P.P.S. 

Stampede is upon us.  Who’s going hard this year …I know some of you have big plans!  

My deck build is taking up a lot of my time, but once that is complete—it’s canoe season!  Stampede is on the back-burner for me this year. 

P.P.P.S. 

For those of you thinking about moving, I have something for you!  It’s called The Ultimate Home Transition Blueprint—Checklist (link)!

I’ve found my best clients start planning their home transition anywhere from 6-18 months ahead of time.  And that’s the best window of time to loop me in, to help you!  Why?  We can look forward to plan, instead of looking backward at your data.  It’s all covered here (link).