Spring has brought some fresh air to the home resale market in Calgary.
The inventory of active homes for sale in Calgary in March was the lowest level for the month in more than five years. Homes are selling quickly, but the decline in new listings also hampered resale sales growth.
There were five per cent fewer new listings in March compared to the same month in 2012; inventory is also five per cent lower after the first quarter. As a result, volume also dropped by more than two per cent last month compared to March 2012. Overall active listings stand at just 4,006 units, up from February’s levels but well below the number available one year ago.
“Less resale product available to consumers is ultimately limiting sales growth,” said CREB® President Becky Walters. “In addition, resale homes are selling in less time and with continued upward pressure on prices.”
Walters said buyers have grown accustomed to a market where they have more time to make decisions because of ample supply. But, as market conditions have tightened, if they are serious about purchasing a resale home, buyers can no longer significantly delay that decision.
“While market conditions are a far cry from activity witnessed throughout the frenzy in 2006 and 2007, there has been a noticeable change over what become the norm over the past few years.” Walters said.
Single-family year-over-year sales growth declined by six per cent in March, a reflection of declining supply. Active inventory totaled 2,713 units, 22 per cent lower than levels recorded in 2012, and the lowest March inventory level recorded since 2007. The market balance continues to trend into seller’s territory in this segment, causing a year-over-year price increase of nearly nine per cent, for a total of $446,500 in March 2013.
“Tighter rental conditions and continued employment growth has supported housing demand growth,” said Ann-Marie Laurie, CREB®’s chief economist. “However, for those looking for more affordable single-family home products, their choices continue to narrow.”
The Canada Mortgage and Housing Corporation’s Rental Market Report, released in the fall, showed the apartment vacancy rate in the Calgary CMA declined to 1.3 in October 2012, down from 1.9 per cent in October 2011 and the third consecutive yearly decline.
Lurie said new single-family listings under $500,000 are declining at double-digit rates, driving consumers at that price point to either surrounding towns, condominiums or the new home market.
Calgary’s condominium townhouse market was the only category to record a year-over-year rise in sales activity for the month. This is in part because the level of new listings improved in March 2013 relative to March 2012. Condominium yearover- year apartment sales declined by nearly three per cent in March.
However, after the first quarter, sales activity totaled 830 units, a six per cent increase over the previous year. Condominium townhouse sales totaled 652 units at the end of the first quarter, a 15 per cent increase over the previous year.
“The condominium apartment market remains in balance,” said Lurie. “While it has moved to the lower end of the spectrum, it remains better supplied than the single-family market and the majority of product available is in an affordable price range.”
The benchmark apartment price totaled $257,700 in March, a six per cent increase over the previous year. Meanwhile, the condominium townhouse benchmark price experienced a year-over-year increase of four per cent, to $286,800.
“Despite tighter market conditions, it is unlikely that we will have another significant run-up in prices,” said Lurie. “Outside of easing economic factors expected this year, consumers have options in the total housing market.”
Gregory Klump, the Canadian Real Estate Association’s chief economist, said it’s too early in the year to draw sweeping conclusions.
“Until we get well into the summer months, year-over-year comparisons to months in the first half of 2012 are predictably going to be down significantly but not necessarily be indicative of further deterioration,” he said. “Rather, year-over-year comparisons will continue to reflect the long shadow cast by higher sales prior to last summer’s policy tightening. Looking at the monthly trend since then shows that we’ve been seeing reasonably stable trends for demand and prices.”