Here is what I think are important fundamentals to understand when contemplating the direction of Calgary Real Estate.
This might be valuable to you for a couple reasons:
1. You’re a home owner.
2. You’re considering entering the market.
3. You’re considering listing your home for sale.
The data I’m about to share with you will help you understand supply (or looming changes in supply) as a method of anticipating near-term price movements.
Later, I’ll be writing to you about macro-economic happenings and recent economic data to help put your finger on the pulse of Real Estate demand changes.
I think combining these two narratives (changing supply & demand) will be helpful in allowing you to formulate your own opinion on what the future of Calgary Real Estate holds.
Onward.
Calgary Detached Housing:
Sales To New Listings Ratio:
This helps anticipate the amount of new listings coming on to the market for sale.
A decreasing ratio indicates more homes will be entering the market for sale. An increasing ratio indicates less homes will be on the market for sale.
Increased housing supply levels, without a corresponding increase of home-buyer demand, result in down pressure on prices.
Below, I’m seeing our Sales To New Listings ratio seasonally decrease, falling month-over-month. This data point is also lower year-over-year indicating additional home inventory.
Absorption Rate:
The absorption rate combines new housing inventory, total housing inventory and total sales volume together.
The absorption rate answers this question for us …“How long would it take to liquidate ALL of Calgary’s detached housing inventory, at the pace of this current months sales”?
Higher absorption rates are indicative of higher supply and or lower sales volume. Lower absorption rates indicate lower housing supply and or higher sales volume.
For context, traditionally, absorption rates between 2-4 months are considered a “balanced market”.
I’m seeing a major distinction of absorption rate in 2018 relative to the past four years. I think this is a result of lower detached sales volume (down 16% year-over-year) and higher detached listing inventory (up 38.6% year-over-year).
Average Price:
Despite what we are discussing as leading indicators of down pressure on pricing, average prices in Calgary are up month-over-month and year-over-year.
Apartment Data:
Sales To New Listings:
Positive news here! Apartment sales to new listings is trending up month over month and year over year. This indicates less future apartment unit supply.
Absorption Rate:
The absorption rate is seasonally up month-over-month and just slightly down year over year.
I think this is due to high total inventory and smaller sales year-over-year.
FYI – Year to date apartment sales volume is down 7% and total inventory up 3%.
Median Price:
Median price of apartments in Calgary is down month-over-month and year-over-year.
Bank Of Canada Rate Announcement:
The Bank of Canada (BoC) held the key lending rate at 1.50%. Remember, any movement, or lack thereof, in this interest rate trickles into a change of the retail Bank’s Prime lending rate.
Adjustable and variable rate Mortgages are linked to the Prime lending rate. With the Bank of Canada not making an interest rate change, the Prime lending rate also remains constant at 3.70%.
More to come …
Please reply with your thoughts and comments on Calgary’s housing market or any economic developments you’re watching/interested in.
Thank you for your very kind referrals.
Cheers,
Chad Moore
