Hey Guys!
Where do you think prices are headed in the next couple of months? Check out the data below to help formulate your own thoughts.
Real Estate, as a commodity, is governed by the laws of supply and demand. Below is an update primarily related to housing supply, which is:
1. Sales to new listings.
2. Absorption rate.
3. Ave/Median price.
Let’s break down detached and apartment style housing.
Detached Homes:
Sales To New Listings:
This is a ratio of homes exiting the market (sales or expired listings) combined with homes entering the market (new inventory).
I’ve included a new image below that illustrates the relationship to inventory, sales and price direction. We can see the effect on sales outpacing new inventory (Dec ’21—March ’22) has on pricing.
Today, we are seeing sales numbers come well off peak levels, with a simultaneous reduction in new inventory. This is helping with price stability.
Calgary’s sales to new listings ratio is clustered in a “normal” range relative to the pasts 5 years. We should see a lift in this ratio to finish off the year, but no where near as steep of a curve higher as last year.
Absorption Rate:
Absorption tells us how many months it would take to sell ALL of Calgary’s detached housing inventory, at the pace of the current months sales.
A traditionally “normal” absorption rate is between 2-4 months. We can see, Calgary detached absorption rate is STILL on the lower end of normal.
Here are the numbers for this ratio:
September 2021 Sales: 1,264
September 2022 Sales: 971
(down 23% y/y)
September 2021 Inventory: 2,502
September 2022 Inventory: 2,218
(down 11% y/y)
With sales returning to a historically “normal” range, and without an influx of new listings to indicate a building of inventory, Calgary’s detached absorption ratio is likely to remain flat, or trend slightly higher, to cap off 2022.
Average Price:
All of this data is detached homes throughout the City of Calgary. Let’s be reminded, Real Estate is very local. I do see value in witnessing these broad market trends, in addition to drilling down local statistics with your Realtor.
I find the second image interesting because median price is coming off at a bit different angle than average price. Again, these are aggregate numbers.
Apartment Homes:
Sales To New Listings:
A combination of year over year sales improvement, along side a reduction of inventory is helping this ratio.
Seasonal increases in this ratio should continue to trend higher, and remain above the previous 4 years of data.
Absorption Rate:
Apartment absorption rate has sustained in the “normal” (2-4 months) range for nearly 12 months now.
Apartment absorption rated was dogged with high inventory levels for years. I’m seeing, and hearing of apartment sellers experiencing negotiations in their favor.
Median Price:
The apartment segment has about 1/4 of the sales volume the detached market has—so the average and median price do fluctuate more.
Take note of directional trend lines.
Conclusion:
Calgary continues to be a destination of people and money which is buoyant for the broad Real Estate market (all segments, including rentals etc).
People are attracted here for employment opportunity and a lower cost of living. ATB published an update to the inter-provincial migration numbers—Alberta is UP!
Home prices are off their stimulated peak as the cost of borrowing has jumped, so the market is adjusting. With positive net migration, strong Canadian immigration, expanding tech-sector and stable oil market—Calgary’s housing market is exiting COVID era activity as best it can.
I hope this information is helpful!
I have a post coming about purchasing a second property. The article is more of a how-to, and not a recommendation.
Reach out with anything Mortgage or Real Estate related!
Cheers,
Chad Moore
P.S.
My short term diet ahead of Thanksgiving got blown up with day-old muffins (x2) at a coffee shop. Oops :-).
P.P.S.
I’ve been volunteering on the Calgary Colts Junior Football Organization board of directors for 7 seasons now!
We have a casino coming up on Oct 14th & 15th. If you’re able to volunteer, that would be appreciated!
I know some folks just love this kind of thing, so I wanted to offer up this opportunity! Reach out if you have any questions. Thank you in advance.
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