Chad Moore Calgary Mortgage Broker

A heat dome engulfed much of North America resulting in scorching hot weather. A heat dome is also over much of North America’s Real Estate market. Let’s zoom in and focus on Calgary’s market data.

June typically caps off the busy Spring market, and this year did not disappoint. What might this Summer and Fall Real Estate market look like? Likely about the same as our market now.

There are three statistics I like to discuss here:

1. Sales to new listings ratio.
2. Absorption rate.
3. Average/Median price.

Let’s look at each segment of data for detached and apartment housing. All data from Calgary Real Estate Board (CREB).

Detached Housing:

Sales To New Listings Ratio:

This ratio combines new housing inventory with current housing inventory leaving the market (sales or expired listings) to gauge the direction of net new inventory building or depleting in the near term.

Real Estate prices move primarily based on supply and demand fundamentals. This ratio helps anticipate future supply.

For June 2021, we can see this data point move slightly higher month over month. Compared with previous years, this ratio is also higher indicating net lower future inventory levels which are supportive of pricing.

June 2021 data seems to buck the previous 4 year trend of sales to new listings sinking over Summer months. This is supportive of prices (assuming demand remains constant).

Absorption Rate:

The absorption rate combines total inventory and sales to give us a indication of how many months would be required to liquidate ALL current listings for sale.

For context, lower absorption rates indicate either high sales volume and or low listing inventory. Low absorption rate markets favor the seller in negotiation and supports constant or rising prices. Higher absorption rates are the opposite.

Calgary’s detached absorption rates are rising off rock bottom levels from the Spring. We are seeing an three month trend higher in absorption rate, but are still significantly lower to years past.

Below is a image showing the level of inventory and sales for detached homes. Let’s continue to watch to see if a trend of lower sales and rising inventory continues. March and April 2021 could turn out to be “peak” activity months?

Average Price:

We can see the average price has risen sharply, plateaued and we now have the first bit of data pointed lower. Looking at the recent history of average price for detached homes in Calgary, this number can be erratic.

I do take note of trend lines instead of more granular monthly data. Try and imagine this chart laid out length way, and not stacked on top of each other. This is how I visualize average price trends.

Apartment Housing Data:

Sales To New Listings:

We can see higher highs, and higher lows as the apartment sales to new listing ratio grinds on! I think this is hopeful news for apartment owners or sellers.

Remember, higher sales to new listing ratios indicate fewer listings near term.

Absorption Rate:

A sideways consolidation pattern seems to be forming for the apartment absorption rate. The past several years have seen sideways movement of this figure, with a seasonal trend lower into the Spring markets. Let’s continue to watch if the apartment absorption rate continues to settle lower year over year.

Let’s continue to see if inventory and sales level off for the remainder of the year.

Median Sale Price:

June 2021 median sale price puts us in a goldilocks range, based on historical pricing. Not to high, not to low. Just right (just in the middle of recent historical numbers).

Conclusion:

The race to purchase Calgary Real Estate is still ON! Artificially ultra low interest rates continue to be a big reason driving people’s purchase decision.

When I look at historical sales figures in Calgary Real Estate, I think there is a pattern of pull forward and pent up buyer demand forming.

Pulling demand forward means people decide to move up their purchase decision versus waiting. Pent up demand means people were putting off their purchase decision until now.

Do you think we are seeing the release of pent up purchase demand? Could Calgary home buyers also be bumping up their purchase decisions, instead of waiting? Or is this a new normal and prices go to the moon!?

I hope you find this content helpful. Make sure to reach out if you are selling, purchasing, renewing or refinancing your Mortgage. Thank you in advance!

Talk soon,
Chad Moore