How is Calgary’s Real Estate market performing this Summer?
Here’s a quick breakdown of what’s happening, and some trends to anticipate pricing headed into the fourth quarter of 2019.
All data from the Calgary Real Estate Board (CREB).
Detached Home Data:
Detached homes are not attached to any other unit(s). The detached home sector is a general barometer for the entire market. The majority of sale data is derived from this segment of the market.
Sales To New Listings Ratio:
This data point factors new home inventory entering the market, combined with inventory exiting the market (sales or expired listings).
Rising sale to new listing ratios indicate less near term inventory for sale. This limits market supply.
Lower ratios indicate more inventory for sale. This increases market supply.
The direction of this ratio helps anticipate near term “pressure” on home values.
Calgary’s detached segment is seeing higher sales to new listings ratios from last year (last year’s sales to new listings ratio was epically low).
We’re seeing less new inventory coming on to the market AND slightly higher sales numbers, year over year.
I think this is an indicator to support price stabilization.
Absorption Rate:
This ratio combines total inventory with sales. This tells us how long it would take, in months, to sell all of Calgary’s detached homes listed for sale.
Higher absorption rates indicate a “buyers market”. This means buyers have the edge in negotiating. Lower absorption rates indicate a “sellers market” where they have the negotiating edge.
Calgary’s detached absorption rate has been trending higher, but is still way down year over year. Let’s look for the 2019 absorption rate to flatten out or decrease this Autumn (ideally).
Sales numbers are up 3.63% year over year at 1,003 for July 2019.
Total inventory is down 17.21% year over year at 3,806.
Days on market is about the same year over year at 50.
Average Price:
Calgary’s average price is lower month-over-month and year-over-year.
Let’s dig a little further into this data for context:
For the price range $200,000 – $499,999 the volume of transactions is higher year over year.
This could be a function of first time home buyers entering the market, older people down sizing to this market, people’s real income being lower and or the stress test reducing people’s affordability.
I’ve personally assisted many first time buyers into this price range this year. A couple with two reasonable incomes, with 5% down payment and limited debts are able to afford this segment of the market.
The segment of home sales volume between $500,000 – $999,999 are down year over year. I think this contributes to lower overall average price.
Apartment Data:
An apartment is a unit within a high rise or low rise condominium building with access through an interior hallway. Huh, who knew :-).
Sales To New Listings Ratio:
Since January, there has been a seasonal upward trend that indicates fewer apartment units for sale this fall.
If the regular seasonal trend continues, we could see this ratio fall lower in the coming months as apartment sellers try to capture the Fall buyers market.
Absorption Rate:
Again, smoothing out this data point gives me a general seasonal trend line that might continue for the remainder of this year?
I can see the absorption rate for 2015. That was a much different condo market.
Sales are up 14.57% y-o-y at 291 for July.
Total inventory is down 17.21% y-o-y at 3,806 units for sale in July.
Days on market is up from 62 to 79 in July.
Median Price:
Apartment condo prices are down relative to past years and basically flat from the beginning of 2019.
Without really any apartment demand fundamentals changing (income, net migration, easing of Mortgage qualifying etc) I am not anticipating any real change in this market segment. Buyers have selection.
Conclusion:
From either of these two sectors, I can take away positive or negative thoughts. This depends on my frame of thinking.
Really, our market is grinding away.
In my Real Estate office, there are many people who wish to sell their homes to re-purchase.
When some sellers are confronted with the reality of their selling price, they choose one of a couple paths:
- List their home at the reality of the market so it sells.
- Test their sale price and eventually go through the pain of price reductions to sell it.
- Test their sale price but are unwilling to lower their price. This listing might sit and eventually expire.
- People do not list their home due to negative equity (they pay out of pocket to sell the home).
The market just grinds on.
Eventually, people will pay their Mortgage down to create enough equity to ease the pain of selling at a lower price point.
Or market values pick back up, at least matching inflation year-over-year, so people regain their confidence to sell.
I think this is a result of erratic home values in Calgary. We see swings up and down. In our past, values have bounced back rather quickly. We’re going on 5 years of this grind now.
You must talk about the housing market with your friends, family and or co-workers. What are you hearing? Let me know.
Talk soon,
Chad Moore
P.S
Happy icekafius! ;-)
P.P.S
So, the long weekend. Looking back, I tried to jam in 3 months of Summer into two days. I mountain biked Saturday morning, went to the Stampeders home game and then summited Mount Allen Sunday.
My legs are so sore, I might have bruising. I can’t help but laugh at myself walking.
Hope you had a good one!
