Let’s look at the latest data from Calgary’s Real Estate Board (CREB). CREB puts together a statistics package summarizing all of Calgary’s Real Estate data.
I put several key data points into graphs that I hope simplify interpretation of the information.
Remember, the overarching theme of these blog posts are understanding supply and demand metrics. Supply and demand are the governing forces that move price change in Real Estate. The x-factor in Real Estate supply and demand forces is human emotions. I don’t have a graph for that :-).
Last month, I wrote you a summary of pandemic happenings that started March 2020. Many of these forces remain present in today’s Real Estate market. Read that here.
Let’s look at detached housing and apartment numbers!
Detached Housing
Sales To New Listings:
This ratio combines home exiting (sales or expired listings) the market, with homes entering the market (new listings). This gives us a window into what near term changes to housing supply might look like.
September 2021 shows a major divergence of data compared to previous years. This could lead to a busy Winter/Spring market of 2022. The Fall of 2020 provided the writing was on the proverbial wall indicating a busy Winter/Spring 2021 market – and that turned out to be true!!
The tendency for Sales To New Listings data is to sink through the Fall months, only to pick up in the Winter. August 2021 actually show an increase of this percentage, indicating a lower supply of detached home. If demand is to remain at least constant, this is supportive of home pricing – interesting.
Absorption Rate:
This number tells us in months, how long it would take to liquidate all of Calgary’s detached homes for sale, based on the current invetory and sales volume.
A traditional absorption rate indicative of a balanced market Real Estate market is between 2-4 months. Lower absorption rates suggest negotiation strength for the seller. Higher absorption rates present negotiation strength for the buyer.
We can see the absorption rate for August 2021 is flat month-over-month and way down year over year.
High sales volume, and low inventory for detached homes are the driving forces to low absorption rates.
Below is a year over year comparison of sales and inventory data. We can see a dramatic rise of sales over the Spring 2021 and a gradual easing from that peak. If inventory continues the downward trend, and the sales to new listings ratio indicates that, we could see prices continue rising.
Average Price:
Calgary’s detached average price ticked higher month over month and is significantly higher year over year (oh buyers could roll back the clock :-)).
Historically, we can see average price reduce over the Fall and Winter months. As mentioned above, if there is at least constant demand and dwindling supply – average detached home prices are set to hold constant.
Apartment Data:
Sales To New Listings
Apartment sales to new listings ratio has seen a nice grind higher throughout 2021 with higher highs and higher lows. August data is showings signs of a seasonal easing of this ratio.
I’m hearing more owner occupied buyers and investors purchasing condos in Calgary. The data is reflective of that …year-to-date condo sales are up 82%!
With rents rising, condo prices suppressed, and Mortgage rates where they are – more people are purchasing apartment condos.
Absorption Rate:
Apartment condo absorption rates seem to be flattening and off prior year highs. This is helpful for price stability.
Median Price
Median price is seemingly flattening throughout 2021. We could be on the cusp of a longer term move higher in condo prices after years of price pressure.
Conclusion:
Similar demand forces continue to drive Calgary’s detached market:
- Use/utility of home widening.
- Pent up/pull forward demand.
- Artificially low interest rates.
- Government support programs (CERB, EI, CEBA, wage subsidy etc).
- Fear of missing out.
- TINA (there is no alternative).
Detached supply is simultaneously trending down as sales numbers pull back from their spring ’21 peaks. This relationship retains market tightness which is supportive of sustained pricing at elevated levels. In fact, with detached sales to new listings ratio increasing this early in the Fall months, another busy Spring ’22 market is reasonable to expect.
I hope this analysis is helpful for you. Please layer my comments, with other trusted people’s thought, and come to your own conclusions as to the direction of Calgary Real Estate.
Call me to discuss your next Real Estate or Mortgage related event.
Cheers,
Chad Moore
