I am committed to reporting Calgary Real Estate data that helps you understand what’s happening in our market.
Why?
Because I think a couple relatively simple data points can help someone grasp overall market trends and even anticipate near term price movements.
Let’s look at three statistics related to housing supply for Detached Homes and the Apartment market.
Detached Homes:
Sales To New Listings Ratio:
This ratio looks at new listings being added to the market, net of homes leaving the market (sales or expired listings).
A decreasing data point line indicates more and more new listings coming up for sale which increases housing supply. An increasing data line indicates less future home inventory, limiting supply.
Calgary’s sales to new listings ratio is unseasonably low right now, and trending lower. Expect more and more housing supply coming online. Without an equal increase in home buyer demand, this is a recipe for down pressure on pricing.
Absorption Rate:
This data point considers all housing inventory compared with the rate of sales for each particular month.
The absorption rate tells us in months how long it would take to liquidate ALL of Calgary’s detached home inventory, at the pace of this month’s sales volume.
For context, historically between 2-4 months is a balanced market. Lower absorption rates indicate a sellers market, which supports pricing levels. Higher absorption indicates a buyers market, which supports decreased pricing.
We can see an increasing absorption rate which is a function of both building inventory levels and lower sales volumes. The absorption rate is deviating from seasonal trend lines in 2017.
Average Price:
Calgary’s average detached home price is holding relativley stable, considering the previous data points we just looked at.
Apartment Data:
Sales To New Listings Ratio:
This data point is up month-over-month and about the same year-over-year. In the context of past years, the trend is still low. There continues to be more and more apartment construction projects adding to supply levels.
Absorption Rate:
The absorption rate is down month-over-month and up year-over-year. This elevated data point speaks to high inventory levels and lower sales volumes.
Median Sale Price:
Calgary apartment median sale price dropped to it’s lowest level in years.
Conclusion:
For the better part of three years I’ve been saying THE ONE thing that’s been propping up our housing market was the lack of housing supply. Based on recent data, the tide seems to be changing.
So what’s the opportunity?
For buyers, the “rush” to purchase a home or be priced out of the market forever is not present. Also, partner with a full time Realtor who will help you negotiate the best purchase price.
For sellers, be realistic. The price your neighbour sold his/her home for is in the past. Understand the overall market, and more specifically the market of your area/community/neighbourhood.
The recent Mortgage rule changes are cycling through our Real Estate market. I think these changes were implemented to ensure any new family debt (Mortgages) are well qualified. The results, in Calgary, are putting pressure on our asset prices.
I plan on writing more about the demand side of the Real Estate equation this coming month!
Talk soon,
Chad Moore
