“Anticipate A Market Correction This Year”, Price Recovery By 2020

City of Calgary Corporate EconomicsCalgary & Region Economic Outlook has released the Calgary and Region Economic Outlook for 2015-2020.

Below are some excerpts from the report:

Population

The city’s population has grown steadily over time, even in situations where oil prices were declining. Over the period from 1971 to 2014, there were only two episodes of population decline: 1983 (-2,441 persons) and 1984 (-878 persons). The impact of the 2008/2009 world-wide recession was observed in the city’s population data in 2010, when the population increased by just 6,060 persons.

Despite the severity of the recession, population growth remained positive. Based on these observations, Calgary’s population is expected to grow over the 2015-2018 period

Residential Real Estate

The MLS sales-to-listing ratio is a leading indicator for resale house prices. The indicator is trending downwards, signalling that the average price for re-sale houses has reached a period peak and will decline moderately in coming periods. ƒ The sales-to-listing ratio is a reasonable proxy for the demand/supply balance in the re-sale market. A fall in the ratio indicates that listings (quantity supplied) are growing relative to sales (quantity demanded).

The sales-to-listing ratio bottomed out in 2009, while house prices bottomed out in 2010-2011. If this pattern holds, house prices should decline slightly in the coming periods. Some of the decline will come from fewer multi-million dollar sales and some from a general lowering of prices. We anticipate a market correction this year and for average prices to recover to around last year’s level by 2020.

New Home Construction

Housing starts will not tumble quite as much as they did in 2009. In the previous oil price collapse, Alberta’s rate of household formation had been exceeded by its rate of new home building for several years. Consequently, there was an issue of oversupply in Alberta’s housing market. This time around, Alberta does not have a glut of new homes. Housing starts have actually lagged the rate of household formation since the 2009 recession, leaving most markets in a comparatively favourable position.

Average home prices in Calgary are expected to fall -9.4% in 2015 and then gradually recovery in 2016-2020. (see chart below)

You can download the entire report here pdf

City of Calgary forecast

City of Calgary forecast

March 2015 Calgary Real Estate Market Report

Update:  The Calgary Real Estate Board has uploaded a corrected report for March.  Overall Calgary sales were higher than previously stated, the average price lower, median price was unchanged.

creb

Download CREB®’s March 2015 Report: click here pdf (corrected)

CREB® commentary:  Elevated inventory levels and low sales for three consecutive months caused unadjusted benchmark prices to ease by 0.44 per cent in March, relative to the previous month, for a total of $454,300. Based on first quarter statistics, conditions are consistent with buyers’ market conditions.

Typical home prices have declined by 0.59 per cent in the first quarter of 2015, compared to the fourth quarter of 2014. The sales to new listings ratio also dropped to 41 per cent and months of supply averaged 4.01 for the quarter. This is a significant change from one year ago when the market was facing inventory shortages and price gains.

“Based on current sales activity and rising supply levels, the change in pricing does not come as a surprise,” said CREB® chief economist Ann-Marie Lurie. “However, the recent price adjustments have not eroded all the higher than expected price gains recorded last year. While conditions have likely tempered growth in new listings, further near term price adjustments will be dependent on changes to inventory levels.” said Lurie.

Sales activity fell by nearly 30 per cent in March, compared to this time last year, and remains well below 10-year averages. City of Calgary sales totaled 3,878 units at the end of the first quarter.

“In this market, buyers and sellers should be thinking about their short term and long term objectives,” said CREB® president Corinne Lyall. “This is a challenging economic time and people need to know their long game, so they can make the right real estate choices for today and tomorrow.”

While Calgary’s housing market has demonstrated buyer market conditions for the first quarter, the recent pullback in new listings in March has helped ease the growth in inventory levels, resulting in better absorption rates.

The apartment sector has the highest months of inventory in Calgary. This has resulted in higher quarterly price declines in this sector, when compared to the detached and attached sectors. By the end of March, the apartment quarterly benchmark price declined by 1.46 per cent, against the previous quarter. This compares to the 0.4 per cent declines in the detached and attached sector over the same time frame.

“Market influence is always wide-ranging and everyone has different reasons for making a move,” said Lyall. “Consideration must be given to the amount of inventory that’s available for a similar property based on the specific features of that home. The amount of competition for a property is often what influences the price that buyers and sellers will agree on.”

When considering the inventory that is available in the City of Calgary, there are 878 units priced under $300,000, of which 99 per cent are either apartment or attached product. The majority of inventory falls in the range of $300,000 to $600,000, of which 56 per cent of the product is detached. Meanwhile, at the other end of the spectrum, there are 1,933 units in inventory at a price over $600,000, of which more than 72 per cent are detached homes.

“Concerns in the energy sector continue to persist, and employment figures are starting to support those concerns,” said Lurie. “In February, employment figures pointed towards job losses related to the energy sector. While monthly employment gains offset the losses, most of the gains were in the traditionally lower paying industries such as the personal services sector. If this trend continues, it may influence the composition of housing demand,” said Lurie.

March 1-21, 2015 Calgary Real Estate Market Update

It may be spring, but you wouldn’t be able to guess that looking at Calgary’s real estate figures.

March is historically one of the four busiest months of the year.  So far this month there have been a total of 1173 sales, down -29% year-over-year, and below the 5 and 10 year average by -17% and -21% respectively.

Calgary home sales March 21 2015

Calgary home sales, March 1-21, Y/Y comparison

The amount of new listings have scaled back by -6.83% from the same period last year, easing supply growth.  But the number of homes for sale is still rising.

Inventory, now at 5785, towers 78.6% above a year ago and 44.4% higher than two years ago.

Calgary new listings March 21 2015

Calgary new listings, March 1-21, Y/Y comparison

The high-end market is especially struggling with sales of million dollar plus homes off by -44% from last March.

With a large numbers of layoffs being reported in Calgary (Nexen, Talisman and ConocoPhillips each announced job cuts this past week) and provincial migration into Alberta slowing, the real estate market faces heavy headwinds going into the second quarter and the seasonally busiest time of the year.

Calgary luxury home sales March 21 2015

Calgary luxury home sales, March 1-21 and month-end, Y/Y comparison

Sales-to-new-listings ratio - March 21 2015

Sales-to-new-listings ratio – March 1-21, 2015

Calgary Real Estate Stats Summary - March 21 2015

Calgary Real Estate Stats Summary, March 1-21, Y/Y comparison

March 1-14, 2015 Calgary Real Estate Market Update

With the focus of attention largely on markets being hit by the plunge in oil prices, it is encouraging to see possible signs that the worse may soon be over in Calgary,” notes RBC in their February housing market update released on Friday.

The report continues: “In particular, we point to the drop in new listings…as a positive development that, if sustained, would suggest to us that panic is not setting in and that activity may be close to reaching a floor. Upcoming economic news will tell whether the degree of market reaction in December-January was appropriate.” (Source)

While it’s premature to be calling a bottom, new listings have pulled back sharply in March.   There have been 1427 new listings month-to-date, down -9% year-over-year and below the 5 and 10 year average.  In fact, new listings 2 weeks into March are at the lowest level since 2003.

Calgary new listings March 14 2015

Calgary new listings, March 1-14, Y/Y comparison

The deceleration of new listings has helped boost the sales-to-new-listings ratio for Calgary into balanced market territory.  According to the ratio, the Attached home segment is on the cusp of a seller’s market, Detached homes are in balanced conditions, but Apartments remain in a buyer’s market.

What the sales-to-new-listing ratio doesn’t take into account is the amount of inventory already on hand before the current month.   For that we’ll look at the absorption rate, or months of supply.

For Calgary overall, there’s currently 3.8 months of supply (buyer’s market), Attached: 3.4 months (balanced), Detached: 3.8 months (buyer’s market), Apartments: 5.7 months (buyer’s market)

Sales-to-new-listings ratio - March 14 2015

Sales-to-new-listings ratio, March 1-14 2015

No improvement in sales yet as they are down -31.2% y/y, -21.7% below the 10-year average and -17.5% under the 5-year average.  Attached homes are faring the best,  off by “only” -15% from last March but right in line with the 5-year average.

Average and median prices month-to-date are higher than a year ago for 2 out of the 3 housing segments:  Attached and Apartments.  Prices have dipped for Detached homes and because that category makes up the bulk of sales, it ultimately means prices have fallen for Calgary overall as well. (See last chart for prices)

Back to the outset of this post: why is it too early to be calling a bottom in Calgary’s market?  Because Alberta’s economy hasn’t found a bottom.   Last month, employment fell by 14,000 giving back the 13,700 jobs gained in January and then some.    Since there haven’t been any developments to suggest there aren’t more job losses on the way, we can expect a slow market for the short-term at the very least.

Calgary home sales March 14 2015

Calgary home sales, March 1-14, Y/Y comparison

Calgary luxury March 14 2015

Calgary luxury home sales, March 1-14 & month-end, Y/Y comparison

Calgary Real Estate Stats Summary (click to enlarge)

Calgary Real Estate Stats Summary (click to enlarge)

Calgary New Housing Price Growth Slowing

Following 25 months of increases, new housing prices in Calgary were flat month-over-month in January according to the New Housing Price Index released by Statistics Canada today.

At 5.1% annual growth, however, Calgary new home price gains continued to lead Canada albeit at a slower pace than previously.

Statistics Canada reports that nationally the NHPI fell 0.1% in January, largely as a result of lower negotiated selling prices. This was the first decrease at the national level since July 2010.

Calgary annual new housing price growth leads Canada

Calgary annual new housing price growth leads Canada

Calgary new housing price growth slowing

Calgary new housing price growth slowing

NHPI January 2015 (click to enlarge)

NHPI January 2015 (click to enlarge)

Calgary Repeat Home Sale Prices Up 5.6% In February

Calgary home prices were 5.6% higher in February than the year before according to the Teranet – National Bank House Price Index™ released today.  Annual price growth decelerated from the 7.1% gain recorded in January.

Prices were down -0.3% on a monthly basis in February, extending the downturn to four consecutive months for a cumulative decline of 2.3% (Nov: -0.2%, Dec: -1.1%, Jan: -0.7%) The last time Calgary had a four month slide was in August-November 2010.

Month-over-month percent changes

Month-over-month percent changes

Calgary Index

Calgary Index

The Teranet–National Bank House Price Index™ is estimated by tracking ob­served or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method.

DIY: Check Land Title To View Sale Price (Free Method)

Did you know that you can check the sale price of a home by just previewing the land title in Alberta – for free?

The only caveat is that the property must have already transferred ownership, so it won’t show the selling price for any recent sales. In those instances, feel free to post a comment here and I’ll get back to you.

STEP ONE

To preview the title, you need to know one of four descriptors of the home:

  • Legal description (Plan, Block, and Lot Number)
  • Land Identification Number Code (LINC number)
  • Title number
  • Street Address

For the purpose of this tutorial, I’m going to assume all you have is the street address to go by.

STEP TWO

Go to the Alberta Land Titles Spatial Information System (SPIN2 for short) and click on “Guest Login” and agree to the terms.

Click on "Guest Login"

Click on “Guest Login”

STEP THREE

Click on the “Search”

Click on Search

Click on “Search”

STEP FOUR

Select “Search By Street Address”

Select: "Search By Address"

Select: “Search By Street Address”

STEP FIVE

After entering the address and clicking “FIND”, the map will zoom to the general vicinity.  From here, hover your cursor over the correct parcel of land and a small white box with numbers will pop up.

Enter the address, click find, and then find the correct parcel

Enter the address, click find, and then find the correct parcel

The white box that appears displays the LINC Number and the Legal Description (Plan/Block or Unit/Lot)

Write down the LINC number

LINC Number and Legal Description for future reference

STEP SIX

While still in map view, there’s a navigation bar at the bottom of the page.  Click the first icon located under “tools”( the information circle and arrow).  Then select the parcel for the home you’re interested in.

Click on the tool icon

Click on the tool icon

STEP SEVEN

When this screen pops up, click on the preview icon (the paper and binoculars).

Click on the icon with the binoculars

Click on the icon with the binoculars

This will bring up a preview of the Title with the value of the property.

value

 

I hope you found this tutorial easy to follow and helpful!