‘Downward pressure’ bringing added choice, affordability to Calgary market
Amid ongoing uncertainty in the province’s energy sector, sales in Calgary’s resale residential housing market declined by 27 per cent in August over the previous year to 1,643 units, according to CREB®’s monthly housing summary.
While the decline in sales was evident across all price ranges, homes $600,000 and up saw the most significant decline in absorption rates (sales versus new listings) compared to last year. Year-to-date new listings in this range were similar to levels recorded last year, yet sales activity represented only 18 per cent of all the sales last month, down from nearly 20 per cent last year.
During the first eight months of the year, sales in Calgary’s $1-million-and-up category have declined by 35.64 per cent compared to last year, while sales of $3 million and up have dropped by 57.89 per cent.
A separate report from RE/MAX noted the current market is encouraging many would-be buyers to take their time in making decisions, particularly in the luxury market. The average number of days on market in the $1-million-plus range stands at 59, with 2.3 to 2.5 months’ supply.
“What we’re seeing in Calgary is that luxury buyers are not witnessing a notable decrease in prices, but there is less pressure and stress for buyers during the negotiation process,” said Elton Ash, regional executive vice-president of Western Canada for RE/MAX.
“We’re seeing that normal conditions like home inspection and financing, which were rarer when buyers were frequently in competing offer situations, have become part of the normal negotiation process again. Buyers don’t have to make up their minds on the spot.”
CREB® largely echoed the RE/MAX report, with president Corinne Lyall adding the combination of price declines and higher inventory levels in some segments of the market are influencing buying patterns in the city.
“Improved selection in these segments is giving buyers the opportunity to be discerning about their purchase decisions,” she said. “They may be weighing their options between resale and new product, along with what community fits their lifestyle.
“Although market conditions affect consumers’ real estate decisions, so do their lifestyles. People move for a number of reasons, including proximity to work and schools, along with changes in family dynamics”
As outlined in RBC’s latest Housing Trends and Affordability report, the cost of servicing a mortgage on a two-storey home in Calgary fell by 0.8 per cent during the second quarter of 2015, while costs for a bungalow fell by 0.4 per cent.
RBC measures the cost of mortgage payments (principal and interest), property taxes, and utilities, based on a 25 per cent down payment.
According to RBC, owning the average bungalow would require 32.4 per cent of household income, with the cost of owning the average two-storey taking up 31.9 per cent of household income.
The cost of owning a condo in the city remained relatively unchanged over the last quarter, with costs increasing by just 0.1 per cent to 19.5 per cent.
Pending further changes to the province’s energy sector, the increases in housing affordability have resulted in a buyer-friendly market, said RBC economist Robert Hogue.
“Owning a home in Calgary at market price remains more affordable than it has been on average since the middle of the 1980s; however, movements in oil prices are likely to exert a stronger influence on the market direction in the short term,” he said.
According to CREB®, Calgary’s benchmark price remained essentially unchanged in August at $456,300 compared to $455,400 in July and $456,700 the same time