February 2015 Calgary Real Estate Market Report

creb

Download CREB®’s February 2015 Report: click here pdf

CREB® commentary:  Year-over-year new listings growth eased from 37 per cent last month to nine per cent in February. However, as sales activity remained below long term averages for the month, Calgary inventory levels rose to 5,474 units in February.

“While housing supply levels continue to be higher than we have seen in this market for some time, they remain below February 2008 record highs of nearly 7,000 units” said CREB® chief economist Ann-Marie Lurie. “If the pace of growth in new listings continues to ease, this could place some downward pressure on the supply growth in the resale market.”

After the first two months of the year, there have been 6,236 new listings come onto the Calgary market. However, the new listings gains have varied depending on price range and segment. Detached homes have continued to see a decline in new listings in the under $400,000 segment, while both the apartment and the attached product have recorded listing growth in the over $300,000 price range.

“It’s really important for consumers to consider what segment of the market they are buying or selling in when they make any real estate decisions,” said CREB® president Corinne Lyall. “The inventory, demand and price movement will vary based on the community, price range and product type.”

City of Calgary sales totaled 1,217 in February, a 34 per cent decline over the previous year’s activity. While sales fell across all product types, the rate of decline was higher in the apartment and attached sectors of the city.

“Everyone has different reasons for making a move and so it’s difficult to predict how buyers will react to this market,” said Lyall “Buyers who have been waiting for more inventory to come on the market may find what they are looking for today. If they are in a position to make a buying decision they certainly can take advantage of the lower interest rates.”

Months of inventory remain elevated at 4.5 months due to supply gains relative to slower sales in February. This placed downward pressure on pricing over the past month.

Unadjusted detached benchmark prices totaled 516,000 in February, a year-overyear increase of six per cent, but a 0.5 per cent fall over January figures. Meanwhile, attached and apartment benchmark prices totaled 354,600 and 296,000 respectively. Both represented a decline over previous month’s levels.

The variation in price is more extreme when considering the average price. In February the average price rose by 0.3 percent relative to January, but fell by 4.2 per cent compared to last year. This does not come as a surprise given how the composition of the sales influences the change. Benchmark prices provided changes over time on similar properties, providing a clearer indication of pricing trends.

“Expectations vary significantly when talking about the impact that lower oil prices will have on the housing market,” said Lurie. “This wide range in forecasts is often related to assumptions about how long the cycle will last and the resulting impact to employment and net migration.”

“These differences in expectations will likely persist until there is some firm data to support assumptions about Calgary’s employment levels,” said Lurie.

New Listings Level Off In February

The surge of new listings into the Calgary market has abated – at least for now.

A total of 2400 homes were listed between February 1-23, a -2% dip from 2453 new listings from the same span last month.  It’s noteworthy because in the past 5 years, new listings have risen an average of 28% between the same two periods (or 13% using month-end figures)

Whether this is a temporary lull in new listings due to pulled forward activity from anxious sellers in December & January will become more clear in the weeks to come.

New Listings Percent Change

New Listings Percent Change between Jan 1-23 and February 1-23

New Listings February 1-23

New Listings, February 1-23, Y/Y comparison

February 1-21, 2015 Calgary Real Estate Market Update

While the 5,504 homes for sale in Calgary are at the highest February level since 2009 and nearly double the amount from a year ago, an influx of sellers can’t be blamed for the ballooning inventory.

New listings this month are up only 10% year-over-year.  I say “only” because they were up over 40% three weeks into both December and January.   Also, new listings are above the 5-year average by just 3.7%.   Those are hardly market tipping figures.

New Listings

New Listings, February 1-21, Y/Y comparison (click to enlarge)

The main concern now is that buyers have gone awol.  Home sales month-to-date are down -35% from a year ago and 1/4 lower than the 5 year average.

This gives rise to the question:  are buyers simply being cautious and waiting on the sidelines or have they been directly affected by the economy and can’t buy?   If the answer is the former then there’s a chance the market can turn around later in the year, the latter means it’s going to get worse.

Whether too many sellers or too few buyers are the root cause for growing inventory, the net effect will be the same: a disproportionate amount of listings to sales which will drag prices down.

The median price for the City of Calgary is off -0.47% from the same period a year ago ($425,000 -> $423,000) and the average price is down -3.87% ($485,753 -> $466,946)

Calgary home sales

Calgary home sales, February 1-21, Y/Y comparison (click to enlarge)

Calgary luxury home sales - February 21 2015

Calgary luxury home sales, February, Y/Y comparison (click to enlarge)

 

February 1-14, 2015 Calgary Real Estate Market Update

Al Duerr was still the mayor of Calgary the last time sales at the halfway point of February were lower than they are now.

A total of 580 homes have sold midway through the month, a -35.8% drop year-over-year.   Sales are also off -35% from the 10-year average and -25.7% below the 5-year average.    It’s the lowest February level month-to-date going back to 1996.

Calgary home sale, February 1-14, 2015, Y/Y comparison

Calgary home sale, February 1-14, 2015, Y/Y comparison

Calgary’s luxury market has slowed significantly too with only 15 homes selling for $1M+ compared to 36 during the same period a year ago.

That’s had a large impact on the average price which currently sits -5.19% lower than last February and the median which is up 1% y/y.

Without the 36 luxury sales, the average price for February 1-14, 2014 would drop from $493,860 to $449,904.  The median price would fall from $426,250 to $417,500.

Likewise, removing the 15 high-end sales this month would cause the average price to decrease from $468,245 to $446,288.  The median would dip from $430,500 to $426,000.

Calgary luxury home sales, February, Y/Y comparison

Calgary luxury home sales, February, Y/Y comparison

While new listings are up 16% y/y, they’re only about 6% higher than the 5-year average.   On their own, the amount of homes being listed isn’t alarming or out of the norm.   Had sales been on par with the 5-year average, the sales-to-new-listings ratio would be at ~50%, a balanced market.

Economist Will Dunning estimated that “prices will rise at about the same rate as overall inflation when the sales-to-new-listings ratio is about 51%.” (Source)

As it stand now, the ratio is below 40% signifying market conditions favor buyers.

 

Sales to new listings ratio - Feb 14 2015

New Listings, February 1-14, Y/Y comparison

New Listings, February 1-14, Y/Y comparison

TD: Calgary & Edmonton Housing Markets Likely To Correct

Oil driven housing markets like Calgary & Edmonton are likely to correct over the next two years according to TD’s latest regional housing outlook.

“A significant softening in job markets will set the stage for a second major housing correction in Calgary and Edmonton since 2008,” states the report.

“While results in the upcoming spring market will be helpful in estimating the magnitude of the likely correction in these two markets, our early reading points to a decline in average prices of roughly 10% over the next 4-6 quarters from their peak levels late last year, with stability returning to the market by mid-2016.”

TD Housing Forecast

TD Housing Forecast

TD predicts the average price of a Calgary home will fall from $459,500 to $439,500 in 2015 (-4.4%) and then to $424,500 in 2016 (-3.4%).    Sales are expected to plummet by -47% this year and -1.9% next year.

The report goes on to say: “Calgary and Edmonton have already experienced a sudden and abrupt turn, and by January, existing home sales had already slumped by 45% and 30% from peak levels reached last year, respectively. Meanwhile, annual average existing home price growth slid into negative territory.”

It’s too bad TD is focusing entirely on the average price which is a volatile and misleading measure in the context of the following facts:

  • Median price was up 1.08% y/y in January
  • Benchmark price was up 7.69% y/y in January
  • Teranet HPI which tracks repeat home sales was up 7.1% y/y in January
  • Luxury sales ($1M+) in January were down -42% y/y

If the Calgary real estate market continues on this path, price declines are obviously expected.  However, I think TD is jumping the gun by stating that prices have already slid into negative annual growth by referencing only the average price.

To download and read the entire report: click here pdf

 

Calgary Repeat Home Sale Prices Slide In January

Calgary home prices declined for a third consecutive month in January according to the Teranet–National Bank House Price Index™ which tracks repeat sales.

Prices were down -0.7% month-over-month in January, adding to a -1.1% drop in December and a -0.2% dip in November.   That brings Calgary’s index back to July/August 2014 levels.  The last 3-month slide was between December 2012 to February 2013.

Even with the recent cumulative decline of -1.9%, Calgary repeat home sale prices were up a strong 7.1% year-over-year.

Month-over-month percent changes

Month-over-month percent changes

Calgary House Price Index, historical

Calgary House Price Index, historical

Source: housepriceindex.ca

 

Calgary New Home Prices Rise In December

Calgary new home prices were still on the rise in December,  edging up 0.1% from the previous month according to the New Housing Price Index released by Statistics Canada today.  However, that was the smallest monthly gain since December 2013.

Year-over-year, prices were up a nation leading 6.5%.  Builders reported higher material and labour costs as the main reasons for the increase.

Statistics Canada reports: “Compared with the same month in 2013, the Prairie region (+3.0%), Ontario (+2.0%) and the Atlantic region (+0.1%) posted annual price gains in December, while Quebec (-0.1%) and British Columbia (-0.6%) recorded annual decreases.

Calgary New Housing Price Index

Calgary New Housing Price Index

New Housing Price Index, December 2014 (click to enlarge)

New Housing Price Index, December 2014 (click to enlarge)