Prices steady, but struggles in Alberta economy weigh on housing

Changes to the lending industry and a challenging economic recovery are weighing on sales activity in Calgary’s housing market.

Supply levels have not adjusted to the weaker demand environment, and that is preventing price recovery.

“Slower sales do not come as a surprise, given the economy has not yet improved enough to offset the impact of changes in the lending industry,” said CREB® chief economist Ann-Marie Lurie.

“While the rising inventories are being monitored, prices have remained relatively flat as gains in some areas of the city have been offset by declines in other areas.”

The easing sales trend persisted through April in Calgary’s housing market. Calgary sales totaled 1,518 units in April, which is 20 per cent below last year and 25 per cent below long-term averages.

“The reality is that there’s selection heading into the active spring market.” – Tom Westcott, CREB® president

The detached sector has seen the largest decline, with year-to-date sales totaling 2,991 units, 27 per cent below the 10-year average.

Inventory levels in April totaled 7,324 units. This is a 32 per cent rise over last year, but well below the monthly high of 10,129 units recorded in 2008. Supply compared to demand has risen, but city-wide prices have remained relatively stable, totaling $436,500 in April, a monthly and annual gain of 0.21 per cent.

“The reality is that there’s selection heading into the active spring market,” said CREB® president Tom Westcott.

“For many sellers, they have to decide what price they are willing to accept for a lifestyle change. At the same time, buyers need to understand the supply dynamics and price movements in the specific area, as they may not align with their expectations.”

So far this year, apartment and attached sales have eased to levels that are comparable to 2016. However, rising supply in both markets have pushed months of supply to the highest levels recovered over this four-month period, which is preventing any significant shifts in pricing trends.

HOUSING MARKET FACTS

  • Detached sales activity slowed across each district in the city, causing inventory gains. Inventory levels were only significantly higher than long-term averages in the North district, which is likely a reflection of the growth coming from new communities.
  • Price changes in the detached market have varied in each district. Year-to-date, the districts seeing price declines have been limited to the North, North East and East districts. Prices remain over three per cent higher than last year in the City Centre and West districts. Citywide detached prices have averaged $502,625 so far this year, 0.49 per cent higher than last year.
  • Year-to-date apartment condominium sales totaled 823 units. This is 15 per cent below last year and 27 per cent below long-term averages. New listings have eased slightly over last year, but inventory levels remain elevated, keeping months of supply well above seven months.
  • Elevated supply based on sales continues to weigh on apartment condominium prices. In April, the benchmark price totaled $256,700. This is nearly three per cent below last year and 14 per cent below monthly highs recorded in 2014.
  • Year-to-date semi-detached prices remained relatively unchanged over benchmark prices from last year, as gains in the City Centre, North East, West, South and East districts were offset by declines in the North, North West and South East areas.
  • After the first four months of the year, row prices remain nearly one per cent above levels recorded last year. Like many other property types, price trends vary depending on the district. Year-over-year price adjustments range from a 1.86 per cent increase in the City Centre district to a 6.14 per cent decline in the South district.

REGIONAL MARKET FACTS

Airdrie

  • April sales totalled 94 units in Airdrie, which brings total residential sales to 358 since January. These levels are lower than the long-term trends and considerably lower than the same period in 2017.
  • Year-to-date levels for new listings were recorded at 880 units and continue to exhibit a rising trend compared to previous years. These levels are well above long-term averages, which is keeping inventories at higher levels. Average inventory levels from January to April of 2018 were 23 per cent higher than the first four months of 2017.
  • Excess supply in the market has weighed on home prices. The year-to-date unadjusted benchmark price for detached homes is $373,125. This is nearly one per cent below the same period in 2017.

Okotoks

  • Year-to-date sales activity in Okotoks of 155 units was considerably lower than last year, while new listings have increased by nearly five per cent over the same period. This contributed to an increase in inventory averages for this four-month period to 209, which is 20 per cent higher than last year’s levels.
  • Increases in inventory levels compared to sales have placed some downward pressure on monthly prices. However, year-to-date detached prices remain nearly one per cent above the same time last year.

Cochrane

  • Sales activity in Cochrane for the first four months of 2018 totalled 189 units, comparable to last year. However, new listings continue to rise, contributing to a level of inventory that is approximately 13 per cent higher than the same period in 2017.
  • Elevated months of supply have hindered price recovery in this market. The year-to-date benchmark price for detached properties was recorded at $421,125, which is similar to the same period in 2017.