Calgary homes changed hands at a brisk pace in June, according to statistics mostly reflecting pre-flood market conditions.
The month leading up to Calgary’s flood disaster saw 2,317 sales in the city, a six per cent increase from June 2012.
“While sales and prices continue to show improvement, the city and residents of communities impacted by the recent flooding will face significant remediation challenges over the coming months,” said Ann-Marie Lurie, CREB®’s chief economist. “Until the extent of the damage is known, it is difficult to accurately assess the full impact this will have on the city’s housing market.”
Through the first six months of 2013, MLS® sales in the city were five per cent higher than levels recorded in the first half of 2012. The rise in sales comes despite a nine per cent drop in new listings from June 2012, and a 20 per cent drop in active listings compared to last year.
With 660 of the 4,584 active listings in the city situated in flood-affected areas, CREB® President Becky Walters said the effects on the market will depend greatly on the choices made by those most affected.
“In the coming months, flood victims, particularly those who were planning on selling their homes, will have some big decisions to make,” she said. “Will they take a discounted price? Or will they stay and fully remediate the property? Either way, in the short term, housing supply will likely be relatively tight.”
CREB®’s mid-year forecast update, released June 28, predicted a rise in prices and sales through the remainder of 2013, primarily because of higher-than-expected demand for condominiums.
“The tighter market conditions are placing upward pressure on pricing in all city sectors,” said Lurie. “While the areas affected by the flood may face some short-term impacts on pricing, any adjustments occurring are unlikely to outweigh the impacts on the overall city wide price growth.”
Overall sales will grow by 4.3 per cent this year, up from the 2.2 per cent CREB® predicted at its annual forecast in January. This is driven by the condominium market, which has recorded a year-to-date increase of 15 per cent. By the end of the year, condo growth is expected to reach 12 per cent, while single-family home sales are expected to increase by one per cent.
As for the longer-term outlook for home sales, Walters praised the resiliency of a market recently singled out by TD Economics as one of the few “outperformers” in Canada.
“Calgary’s overall resale market is strong enough to weather this terrible event,” said Walters. “While the flood damage is taking a heavy toll on affected communities, Calgary’s real estate market has clearly been outperforming expectations this year. Overall sales growth for the city is not expected to stall.”
Evacuated communities represent about 14 per cent of the city’s housing stock, of which about 700 units were listed on the resale market before the floods, said Lurie.
“It is not clear how many homes were damaged, how extensive the damage was or how long residents will be displaced,” she said. “If flood damage is severe, it could restrict resale inventory, as impacted individuals look for alternative housing.”
Research is inconclusive on the long-term price prospects of flooded communities, Lurie added. Price trends will depend on the frequency of flooding and relative damage, desirability of the area, insurance or government remediation support, current state of the market and any infrastructure changes made to reduce the risk.
“In the short term, we anticipate that the levels of listings will fall, and any transactions that do go ahead in the impacted areas will face some price discounts,” Lurie said. “However, increased demand in the unaffected areas, combined with already tight supplies would support further price gains. This will offset any declines recorded in the impacted areas.”