Depending on whether you’re comparing February to the previous month or to last February, you’ll have a different perspective of how the market performed.
Metro-Calgary Single Family Homes
SFH sales increased to 825, an increase of 50% over January’s sales. This was down 34% from last February when 1252 properties changed hands. Prices remained steady month-to-month, inching upwards slightly to an average of $415,568 (up 0.6%) with a median of $375,000 (up 0.1%) Year-over-year, both the average and median have dropped 12%. (From $471,696 and $428,000 respectively)
Metro-Calgary Condos
343 condo sales were recorded, a 52% rise over January’s sales. Again, this was down 39% from last February. Month-over-month, the average price dropped 0.7% to $268,971 while the median ended up 3% to $249,900. Compared to February 2008, the average price has dropped13% ($311,812) with the median down 15% ($295,000)
Inventory Absorption Rate
The Inventory Absorption Rate continued to improve month-over-month for both Single Family Homes (5.3 months) and Condos (6.0 months) A notable difference from last year is the month-end inventory - there’s 633 SFH and 236 fewer condos listed this time around. Even though inventory is lower, with fewer sales than last year, the absorption rate remains elevated over last February and continues to sit in a Buyer’s market. We’ll have a better idea of where the absorption rate is headed when we’re deeper into the spring months when historically the highest sales volumes and inventory levels converge.
You might wonder looking at the SFH Price Chart above and the Absorption Rate Chart below how the market peaked when it was supposedly in a “Balanced Market?” This was because preceding that, there was an extended period of limited inventory and high demand and momentum carried over into the few months the market was technically “balanced.”
Looking back at Total MLS Sales VS Total MLS Inventory for Calgary & Area, between April 2005 and December 2005, there was under 2 months supply. Between January 2006 and June 2006, there was under 1 months supply on the market. The Absorption Rate never surpassed 3 1/2 months between those periods, and up to summer 2007.
We know speculation was high these past few years in Calgary - so the question is, what are those investors doing with the properties they snatched up in 2007/2008? Speaking with a Property Manager this past week, many have turned to renting out their properties at a loss, covering the difference of the mortgage payments/condo fees out of their own pockets. Although the prospect of holding onto a property with negative cash flow isn’t appealing, some are waiting for the market to rebound before listing. Bear in mind, this is just anecdotal from one Property Manager. But looking at the sales prices of the past 2 years and what rents are currently, I would assume many find themselves in that same situation today.
For a further explanation as to how this stat is calculated, please click here
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Comparing the House Price Index to Calgary’s MLS® Statistics
There’s no doubt that Teranet’s House Price Index is excellent for tracking house prices since it uses ‘sales pairs’ to determine price increases/decreases.
December’s House Price Index showed a 7.62% decline year-over-year. December’s MLS® statistics showed the following year-over-year declines for Calgary:
SFH Average: -6.15%
SFH Median: -6.59%
Condo Average: -9.78%
Condo Median: -11.19%
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Last week on BNN was special as they had episodes dealing with the “New Real Estate Reality.” There was 21 segments in all- a lot of information: click here to view
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Calgary Land Transfer Tax Defeated
The City of Calgary has dropped its plan to introduce a land transfer tax originally proposed as an initiative to cover the costs of affordable housing.
On Monday February 23, 2009 the council narrowly squashed the consideration of a 1 per cent home buyers’ tax in a vote 8-7.
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UPDATE: March 5th
click to enlarge
If you have any questions or are interested in buying or selling real estate, feel free to contact me.
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Mike Fotiou, First Place Realty, is a licensed Realtor, Certified Condominium Specialist, Accredited Buyer’s Representative and Commissioner for Oaths in the Province of Alberta.
A great post as always Mike!
It should be interesting to see what happens now, as February was Calgary’s “strongest” month of 2008.
What I mean by that is, it was the strongest month relative to the month before it.
Feb 2008 Median: It increased 4% from January 2008.
Feb 2008 Average: It increased 3.2% from January 2008.
Feb 2008 Avg/Sq Ft: It increased 2.4% from January 2008.
From that point on, all through 2008 and until now, all 3 of those indicators have been negative, except for average in Mar-May (+1.5%) and Sep-Oct (+1.7%) and the avg/sq ft in March (+1.2%).
This year the Median stayed nearly exactly the same from Jan-Feb (+0.02%) and the average increased by 0.51% and the average per sq ft increased by 0.91%.
If February is once again our “strongest” month to month performance, 2009 could be a very bad year for sellers.
Well, from the chart: http://findcalgary.files.wordpress.com/2009/03/sfhaveragemedian.gif it looks like we are in a moderate grind down that is going to last a couple of years before we hit “normal” 2005ish prices.
It’s unfortunate that the disbelief in falling values (home marketed prices) is keeping us from achieving a bottom quicker.
I am looking forward to buying RE and can do so without a mortgage, but not this year or when the downward slide is on like this. Even a savings account will pay more ROI% than owning RE right now.
IMO, even after the stock market corrects it will take another year before RE bottoms out due to lost jobs, bankrupt companies and fear of the new RE market.
Mike
I have been telling people for years that in the last boom here in Calgary it took upto 21 years for peek buyers to recover their “investment” back to 0. It’s interesting a blogger in Edmonton has come up with the same conclusion:
As you can see from that graph, when adjusting for inflation, those that bought at the peak of the prior bubble, didn’t recover their initial investment for 25-30 years… coincidentally just after the current boom really kicked in.
http://dynamic-evolution.com/ehb/090304-2.jpg
I found this blog post to be really interesting. http://edmontonhousingbust.blogspot.com/
Hope readers enjoy and learn from it.
Mike
Jay – thanks for your post. I didn’t realize that February of last year was the strongest month-over-month. We’ll have to wait and see how this year plays out…
Mike, thanks as always for your thoughts. I had started putting together a similar chart, and was trying to figure out how to get the years 2007 and 2008 using the Old CREB Criteria.
Thankfully, Bob Truman still keeps the Old Criteria stat posted, so we can still keep comparing ‘apples to apples’.
I’ve posted the Calgary Inflation Adjusted Average Price chart. I used the Bank of Canada’s Inflation Calculator (using Jan 2009 CPI) along with Bob Truman’s Old Criteria stats. To calculate the Average Price for 2007 this was what I did:
-Added up total number of sales for the year
-Multiply each months sales by each months average price and then divide by total number of sales
-Add up the result for each month, and then should get you the correct average for the year
I got:
2007: $415,435
2008: $407,220
And then adjusted for inflation. Can anyone out there confirm I did this correctly?
It’s still early in the morning, so if you see any errors in my calculations, please let me know.
I was going to add trendlines, but depending on what year I started from, I could make the trend seem like the current market was either underpriced, or overpriced – so I’m leaving that up to you to decide…
Also interesting is the new stat Bob started keeping track of – Absorption Rate by Price Range. The market is flirting with being balanced for homes priced under $400k, while homes priced between $700k-$800k have the worst absorption rate at 16.1 months.
Long time lurker, first time poster. Mike F, thanks very much for your informative posts and stats.
Let’s just say that as a current potential buyer that my wife and I have encountered a few sellers that refuse to believe that it’s no longer 2007.
For the last house that we put serious offers on, the sellers refused to go below 98% of list price. No wonder it’s sat on the market off and on for over a year!
I agree with John, I have been watching certain areas of the city and noticed houses that have been off and on the market for 6months-1year with no change in pricing. I think, much like the recession, that people are refusing to believe that the markets have changed substantially.