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CREB® commentary: Prices ease as expected; Inventories rise as sales activity softens further.
Following four months of relative stability, unadjusted benchmark prices eased as expected in September to $456,100, a 0.26 per cent decline compared with last year.
Most of this aggregate moderation was due to price declines in the apartment sector brought on by higher-than-average inventory levels.
“Overall sales activity relative to new listings caused a softening in absorption rates, which resulted in inventory gains and ultimately placed moderate downward pressure on pricing,” said CREB® chief economist Ann-Marie Lurie.
Residential sales in the city totaled 1,448 units in September, well below typical activity levels for this time of year. Year-to-date Calgary sales remained below both the five- and 10-year year averages by a respective 10 and 26 per cent.
“Rising unemployment and persistent weakness in the local economy is impacting housing demand,” said Lurie. “However, unlike earlier this year when consumers were reacting to uncertainty, recent activity reflects current economic conditions.”
While all property types recorded a notable drop in the sales-to-newlistings ratio, both the apartment and attached segments saw the most significant declines. Ratios in both categories dropped to the 40 per cent range, while months of supply pushed up to 4.95 and 4.35, respectively.
In comparison, the detached category saw its ratio hover around 50 per cent in September and months of supply settle at 3.32.
Elevated inventory levels in the apartment segment, in particular, are the result of moderate listing declines relative to sales activity, noted Lurie. Year-to-date apartment sales have fell by 32 per cent, while listings have dropped by just seven per cent.
As a result, the apartment benchmark price totaled $290,600 in September, a 1.19 per cent decline over last month and 2.71 per cent below last year.
CREB® president Corinne Lyall said that while the apartment sector now favours buyers with added selection and attractive pricing, other factors will continue to play into purchase decisions.
“While the apartment sector offers more choice, not all units are created equal,” she said. “When considering apartment condominiums, it’s important to understand that the corporate and physical health of the building can also influence both buying and selling decisions in this type of market.”
Despite higher months of supply, typical home prices in both the detached and attached sectors remained relatively unchanged in September, totaling $517,200 and $357,000, respectively.
Although citywide inventory levels remained elevated compared to activity seen in the past three years, Lyall noted they still were well below highs recorded during the previous economic downturn in 2008/09.
“There is no question that we have seen a shift in our local housing market conditions, but it needs to be put in perspective,” she said.
Aggregate prices have eased by one per cent from the beginning of the year, a moderate correction when compared against the aggressive gains last year that averaged more than nine per cent, noted Lyall.