A reminder for when you hear: “Inventory is dropping”

In the upcoming days and weeks you may hear some news about how Single Family Home & Condo inventory is dropping which is a sign we are heading into a more “balanced market.”

Just a reminder: Inventory drops in November/December due to Listing Expirations.   Sellers do not wish to be disturbed during the Holidays so they take their home off the market.

For example, 471 SFH and 247 condo listings had an expiry date for the last week of November (23rd -30th).   Even more will be taken off the market the deeper we get into December.  You can safely assume that they will be relisted later on, most after New Years – with some perhaps holding off until spring.

I’m concerned that the spring months won’t be the save-all that many sellers are expecting it to be if the same economic conditions persist.   Depending on how many sellers there are on the sidelines waiting to list, Calgary’s real estate market could become even more unbalanced if a flood of inventory hits in the early months of 2009.  

Metro-Calgary SFH sales didn’t even break the 700 mark in November – one of the lowest on record in recent years for even the seasonally slower months.  Since January 2004, October and November of this year have had the lowest SFH sales on record.  It’s also the first time (going back to Jan 2004) that condo sales haven’t broken the 300 mark. 

SFH Sales

  • Nov 2008:    670
  • Nov 2007:  1103
  • Nov 2006:  1397
  • Nov 2005:  1535
  • Nov 2004:  1190

Condo Sales

  • Nov 2008: 284
  • Nov 2007: 496
  • Nov 2006: 603
  • Nov 2005: 700
  • Nov 2004: 553

We are not close to a “balanced market.”   With a conservative month-end inventory of 5000 SFH’s and 2300 condos, we have over 7 and 8 months supply respectively. (CREB’s balanced market ratio is between 2-3.5 months supply)  Official CREB stats will be released in the next few days.

Source: Calgary Real Estate Board MLS Database, CREB Stat Packages

7 responses to “A reminder for when you hear: “Inventory is dropping”

  1. Unfortunately I don’t believe any of these sentiments will be mirrored in the MSM. Thanks for your postings Mike.

  2. Thanks for your comment, Cyrus. MSM won’t be able to rose-color the events in Calgary real estate for long. (Sales at record lows, condo median taking almost a $20k MoM hit, etc) It’s actually a disservice to consumers when some media presents the market with a biased slant. Sellers still expect 2007 prices which is too high for most buyers, so buyers will continue to wait.

  3. Today on the World Report, CBC Radio News, Greg Rasmussen noted that: “The low number of sales is creating a huge backlog of homes on the market, and that will mean more downward pressure on prices…In Calgary, median condo prices dropped at the rate of more than $500 every day in November.”

  4. This blog article was actually referenced in the Calgary Herald today:

    MLS sales fall below pre-boom levels

  5. Since there will be about 2300 condos month end. I have hear that about 8000-9000 condos will be available next year due to the completion of the condo projects. Is this true? If so.. this will cause the collapse of the house market.

  6. Hello Bic,

    At the end of September, there were 9,303 condo units under construction in the Calgary Census Metropolitan Area.

    In its Housing Now report, the CMHC said, in the month of September, “several condominium projects amounting to 749 units were halted and were removed from the units under construction count.”

    You also have to take into account how many of those units are pre-sold. And of those that were pre-sold, how many were purchased by speculators intending on resale. (Remember, these projects began months or years ago when market conditions were much different)

    Source 1

    Source 2

    Edit: “In the past, projects would go ahead with just half of the units pre-sold. That number now is closer to 75 per cent, meaning getting projects off the ground has become much more difficult.” Source

    Edit #2: November 2008 stats have it as 7411 apt + other units under construction

  7. Pingback: 2009: Spring Bounce or Spring Trounce? «

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