August marked the first month since July 2009 where single family home prices were lower than the previous year.
The month-end average price for SFH was $445,617. This was down 4.1% from July and down 1.9% from August 2009. The median was $395,000 which was down 1.25% from both last month and the previous August when it was $400,000.
There were a total of 867 transactions which was lower than the 915 recorded last month and down 32% from the 1277 in August 2009.
Inventory continued to decline as over 300 listings expired at the end of the month. This left the inventory absorption rate at 5.8 months, down slightly from 6.0 in July.
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Metro-Calgary Condo
The average price of a condo in August was $286,384 which was down 1.6% from July, but up 1.1% from August 2009. The median price also dropped month-over-month to $260,000 which was down $8k or 3%. Last August, the median was also $260,000.
Sales were down 42% year-over-year, with 364 units changing hands. This was also less than the 396 sales recorded last month.
Similar to the SFH market segment, inventory continues to decline as listings expire. With approx 2255 condos on the market, this represents an inventory absorption rate of 6.2 months, unchanged from last month.
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The market experienced an increase in activity during the last week as evidenced by pending sales, though this was limited to just SFHs:
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Canadian Housing Forecasts
Yesterday several reports were released. Here they are again if you missed them:
CHMC Housing Market Outlook The average MLS® price is expected to edge lower in the third quarter of 2010 with modest growth resuming thereafter as balanced market conditions curtail the upward pressure on house prices. For 2010, the average MLS® price will be $338,900 while 2011 will see a slight increase to $342,200. (read full report)
Canadian Centre for Policy Alternatives Home sales may be slowing, but prices in six of Canada’s largest housing markets are in bubble territory for the first time in 30 years — and a U.S.-style correction is still not out of the question. Read “Canada’s Housing Bubble: An Accident Waiting To Happen”
C.D. Howe Institute The report on the risk of a Canadian housing bust, by Jim MacGee, an associate professor of economics at the University of Western Ontario, acknowledges that recent swings in Canadian house prices have raised concerns that a U.S.-style housing bust is looming. But upon comparing policies and housing market conditions in Canada with those in the U.S., the report concludes that there is little likelihood of a U.S.-style surge in foreclosures or a collapse of house prices in Canada. (read full report)
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I sense things are changing , there is no longer the hype about real estate anymore at work . We have had layoffs and people have just settled down. I have no heard of anyone in trouble , but no one seems to be talking about trips or holidays much anymore. So I am guessing most are no longer spending and I get the feeling people are concerned about their jobs a bit. So after reading the Outlooks I would say there cold be some reality in those reports how ever time will tell. Gas prices continue to head downwards so this is Alberta ‘s main problem I think.
Good info as always , bye the way Mike is your industry thinning out in the number of realtors ?
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Mike Fotiou says: Not in Calgary…at least not yet. CREB membership is still over 5,500 which is the highest it has ever been.
Not very surprising monthly averages.
The million dollar question is what’s going to happen next month? Are there really tons of sellers out there who will just pull their house because they don’t have to sell, or will inventory stay high, and will prices come down more strongly. Would be interested in hearing your thoughts, Mike!
Will, sorry I’m a little late in replying so I’ll just let you read Bob’s reply to your question on his blog.
You might find this article from today’s Financial Post interesting. I’ve posted some of the highlights below, but you can read the entire article here.
I’m sick and tired of hearing “It’s a great time to buy a home.” I’m gonna vomit the next time I hear it.
The economy is going through a crisis, people are in so much debt, the home prices are falling, unemployment rate went up last month, and someone is telling people this is the best time to buy?
In my opinion, it’s just gonna make things worse after all is said and done. But hey, people are free to do their own research and if they don’t, then that’s their fault.
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Mike Fotiou says: It’s a tad disingenuous when those in banking/real estate use that clichéd phrase. Everyone is in a distinctly unique situation and financial position in life, and perpetually using self-serving blanket statements like that only undermines credibility.
No worries Mike – thanks! I figured I’d ask both you guys since you may have different opinions / interpretations of what’s going on.
Hello Mike,
I am trying to find a chart you produced that detailed the role loosening lending standards played in reversing the downward trends RE was experiencing in 2008. Can you provide a link to that chart? Thanks
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Mike Fotiou says: Was it this chart?
Mike – What’s your take on the pending sale numbers? I can see how the average can be pulled up by a few high end sales, but the median is currently at $419K. Are you seeing a slight improvement in the market or is it just a matter of better properties being sold? Thanks!
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Mike Fotiou says: Sales have picked up again in the past week – the highest level since the last week in July. I’ll post an updated Sales by Week chart first thing tomorrow. With regards the pending median figures, there are currently only 5 properties between having a median of $399,900 and $419k. Factor in a 96% SP/LP ratio, and there isn’t any improvement in prices at this time.
Yes, that was the chart. Thank you Mike
Here’s the updated Weekly Sales chart: click to view
It’ll be interesting to see whether the increased SFH activity at the end of August will continue or if it’ll be short-lived like July’s month-end. The increase could also just be partially due to the week prior being weaker.
Condo sales have been gradually increasing throughout August.
Thanks Mike. I see the pending median is back down to $400K. The next few months should be interesting, will we see a bit of a rebound or just a lot of stagnation…
I missed this Scotia report released on September 1st:
Read the entire report here
From the same report referenced above, some more insight into Teranet’s House Price Index:
It’s still very early in the month with low sales volume, so you’ll see large swings in the average & median prices when looking at the MTD numbers. For example, here’s a snapshot of the sold prices around the current median of $408k:
…
$390,000
$392,000
$392,400
$395,000
$395,000
$400,000
-$408,000-
$410,000
$410,000
$410,000
$414,000
$417,000
…
Mike – Now that, interest rate is not going up as fast as anticipated earlier in the year, do you think more people taking this opportunity to buy houses? As I understand, when interest rates go up, house prices go down. If that is true then, when interest rates don’t change, house prices should not change. Do you agree?
Amar, not only are interest rates not going up as fast as some anticipated, but buyers are getting better fixed rates now than the rate hold they got months ago. Yet sales are still down precipitously from previous years.
Prices have weakened over the past several months even as fixed rates have been decreasing. Interest rates are playing a minor role in the ‘correction‘ currently under way.
For those thinking the average prices and median prices indicate rising prices should take a look at Mike F’s daily solds data. You’ll notice prices of the top homes are indeed down as much as $400k from original list price.
Also each month anyone cruising the MLS can see you can now buy more house this month than you could have last month and it will be the same next month.
IMO there should be absolutely no rush to buy when homes keep getting cheaper and/or you get more home for your dollar each passing month that goes by.
“Deals” today will look like rip offs in a years time.
For whatever reason, the sale of the $5.9M Bel Aire property didn’t materialize and this is reflected in the pending average updated today.
Mike…..
The pending average fell $50K overnight…..did the $5.9MM sale of the lot in Brittania fall apart ?
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Mike Fotiou says: Yes, see my comment above.
I’m glad to see that the $5.9m Bel Aire sale fell through, I can almost guarantee the buyers will get a better deal for it in just a few months. Might as well save a few hundred thousand right? I can’t see why not as it is happening to Mount Royal properties in the high price range.
Mortgage Rates – I think we are starting to see a move beyond the rates as the primary factor in the falling prices, it’s a mental thing now, people can see the prices falling and poor economy and won’t buy like in the USA. This of course will turn around in the future several years from now.
Dooouuhhhh……….heh…………