Housing stats indicate some buyers still sitting on the sidelines
Calgary’s resale residential housing market picked up where it left off in 2015, with buyers’ conditions prevailing through every major category last month, according to CREB®.
Yet with many homebuyers still sitting on the fence, local housing officials caution that historically it’s been difficult to find a utopian moment to enter the market.
“Buyers, especially first-time buyers and investors, will do their best to time the bottom, but I think that will be really difficult,” said CREB® president Cliff Stevenson, noting that few were able to do so during the last recession in 2008/09 when the upturn happened quickly. “I think this year it will be a guessing game as to when will be the best time to get into the market.”
Sales in January declined year-over-year by 13 per cent to 763 units, and 43 per cent below the long-term average, according to CREB®’s monthly regional housing market summary.
While listings also declined – in this case to 2,741 units, a 16 per cent decrease compared to January 2015 – it was not enough to mitigate falling sales, leading to inventory gains and, ultimately price contractions.
The aggregate benchmark price of $447,300 in January was 1.21 per cent lower than the previous month and 3.27 per cent below the January 2015 price of $462,400.
“As expected, the imbalance between housing supply and demand is continuing to place downward pressure on prices,” said CREB® chief economist Ann-Marie Lurie, noting months of supply topped six in January.
“However, the recent price retraction has not erased all the gains recorded in recent years, as the benchmark price remains 4.41 per cent above the January 2014 price of $428,400.”
Lurie attributed Calgary’s soft housing market conditions to continued job uncertainty triggered by weak global oil prices.
“The recent slide in energy prices has raised concerns about near-term recovery prospects for the city,” she said. “Energy market uncertainty and a soft labour market are weighing on many aspects of our economy, including the housing sector.”
While all property types recorded price contractions, the largest decline was in the apartment sector.
The apartment benchmark price totaled $281,900 in January, a year-over-year decrease of 6.35 per cent and 2.12 per cent lower than the previous month’s price. Lurie noted apartment sector prices have once again fallen below the 2007 monthly high of $301,500.
Slightly less than 130 apartments sold in Calgary last month, a 16 per cent drop from 153 during the same time last year.
The detached segment of the market continued to show variations depending on price range, according to CREB®. The under-$500,000 segment, for example, remained relatively balanced with months of supply at three .
However, Lurie noted recent trends are now pointing to weaker ratios in lower price ranges, such as $500,000 to $600,000, as weak economic conditions are beginning to impact virtually all areas of Calgary’s resale housing market.
Overall, the benchmark price in the detached sector for January was $509,300, one per cent lower than last month and a 2.6 per cent decline from the same time last year.
In the attached sector, the benchmark price declined by 1.65 per cent from last month, and 0.78 per cent from last year, to $345,600. Sales declined year-over-year by just over 10 per cent to 170 units, while new listings dropped by slightly more than five per cent to 652.
While Calgary’s housing market is challenging some stakeholders, it is also offering up some clear opportunities for others, said Stevenson.
“You’ve got historically low interest rates and a great selection of product in the market, which hasn’t always been the case in the last couple years,” he said. “We’re also now seeing some substantial pricing adjustments in certain segments of the market and that’s giving buyers a real window of opportunity.”
Buyers in other major Canadian markets are facing a much different situation. Vancouver, for example, was just ranked by Demographia International in its latest housing affordability survey as the third least affordable place to live, beaten out only by Hong Kong and Sydney, Australia.
January resale housing statistics for Vancouver were not available as of press time. Yet in December, the benchmark price in the city jumped by 18.9 per cent compared to the same period in 2014 to $760,900, tops in the country, according to the Canadian Real Estate Association.
In Toronto, meanwhile, the benchmark price in December rose by 10 per cent from the year prior to $573,500.
In a report late last month, RBC declared Toronto and Vancouver as “unaffordable,” with the bank predicting further price growth in the coming year.
As for sellers, Stevenson believes Calgary homeowners will need to be more adaptable throughout the process to succeed in this market.
“The concept of sitting around and waiting for someone to show your home, to write you an offer, with large gaps in time, needs to be challenged,” he said.
“In this market, you really need to be nimble to compete with other comparable properties in your area – maybe more so now than any other year. It could be the difference between you selling and not selling.”