Chad Moore Calgary Mortgage Broker

Look at month over month and year over year data for sales, sales to new listings ratio and absorption rates to anticipate near term price movements and understand market context.

Hello again! Here is another quick statistical breakdown of three key pieces of Calgary Real Estate market data (information from CREB here).

I think understanding this data, and layering it with other macro economic data found within my blog and other news sources, will help you understand Calgary Real Estate price movements in the future.

As we are just experiencing, things happen in life and plans change. Just as fast as COVID spanked our economy, a vaccine could change things on a dime. It’s possible.

Let’s look at this data for detached and apartment homes in Calgary:

1. Sales to new listing ratio.
2. Absorption rate.
3. Average price.

Detached Homes:

Sales To New Listings Ratio:

This ratio helps put into context near term changes in housing supply. A sales to new listings ratio of 100% means for every new home coming on the market, one home leaves the market (sale or expired listing).

Lower ratios indicate more new inventory to enter the market. Higher ratios indicate less new inventory.

Calgary’s detached STNL ratio is up month over month, about the same year over year and seems to be following a long term seasonal trend. Expect less new inventory this Summer leading into the Fall market. This is helpful in price support.

Absorption Rate:

The Absorption rate tells us in months how long it would take to liquidate all of Calgary’s detached listing inventory, at the rate of sales, for each particular month.

This number factors total inventory and sales together to understand supply metrics from a different angle. Higher absorption rate indicates a “buyers market”. Lower numbers indicate a “sellers market”. Balance is between 2-4 months.

We can see the absorption rate come off the COVID blip back down to a more balanced and seasonal level. I’m holding my breath as Canada Emergency Relief Benefit (CERB) and Mortgage deferrals come to an end over the coming months. This is still looming as a uncertainty in Calgary’s housing market.

Average Price:

The average price of a detached home in Calgary is rising to a relatively normal level, relative to the past 4 years of data here. Let’s keep an eye on movements of this data point throughout the rest of the year.

Other Interesting Stats:

Sales to list price ratio: 2019: 96.8% 2020: 96.6%
Days on market: 2019: 49 2020: 50
Inventory: 2019: 3,977 2020: 3,129

Apartment Data:

Sales To New Listings:

This data point is up month over month, but down year over year and lower than previous years. Apartment condo inventory continues to build, primarily due to lower sales and slightly more total inventory.

Absorption Rate:

Apartment absorption rate is off the ridiculous COVID high of 14+ months back down to a relatively “normal” range of 7 months. Let’s not disconnect with how high of an absorption rate 7 months is, considering the back drop of a 14 month high. Condo buyers have the negotiation table slanted in their favour.

Sale to list price ratio: 2019 = 95.8% 2020 = 94.1%

Median Price:

If I link all of these lines together, in one long line, the trend is down. I think the long-term trend is flat-down, forming a long and wide “U”.

Conclusion:

Market data is returning to some semblance of “normal” after the intense first wave of COVID.

I think we are seeing the release of pent up demand of Spring buyers. It looks like there is not as much pent up seller demand, that is helping stave off huge piles of inventory (for now??).

I find there is still some uncertainty looming with the end of the Mortgage deferral program and CERB income for unemployed people.

Real Estate does lag, in a economic sense, so the effects of any negative data resulting from these two looming factors might not rear up in market data for another 12-18 months.

With the outlook of interest rates, flatter for longer, I find the rush to enter the market is really motivated from within. Some people have growing families and want to move up. Some people work in different locations of the City and want to move. Some people can’t stand their condo board and want to move? Others want to fire their landlord.

I hope this is helpful information for you. If so, please share and invite others to connect with me about helping them understand their home affordability.

Talk soon,
Chad Moore

403-809-5447
chad@canadamortgagedirect.com