January 1-21, 2015 Calgary Real Estate Market Update

bear  Sales have decelerated further from not only a year-over-year comparison, but in relation to 2010-2013 as well.  The 513 sales so far this month are on pace for the second lowest January level in over fifteen years.

bull Month-to-date sales are 32% higher than they were in 2009 during the same period.

bear  That’s not much of a bullish argument.

bull I don’t have much to work with here.

Calgary sales January 21 2015

Calgary home sales, January 1-21, Y/Y comparison

bear  Citing low oil prices, the Bank of Canada surprised the market by cutting the overnight rate by 0.25% yesterday and specifically mentioned Alberta’s housing market:   “The oil-price shock will also affect housing activity in energy-intensive regions. There has been a decrease in housing starts and a sharp drop in resales and sales-to-listings ratios in Alberta in December. Near-term housing activity elsewhere is expected to remain high, supported by very low mortgage rates, although the extent to which the downturn already evident in Alberta will spill over into other regions remains to be seen.” (Source)

Sales to new listings ratio - January 21 2015

bull The Bank of Canada’s move is good news for variable rate mortgage holders. Fixed rates may come down too, although as of this morning the banks haven’t trimmed their prime rate in response.

bear What good are low mortgage rates if people are losing their jobs?  Economists are predicting job losses, with companies like Shell & Suncor already shedding workers.

bull December’s labour report for Alberta was surprisingly upbeat with 5,700 jobs added (SA) last month and “even more curious about the job numbers is that jobs were stable in the oil and gas sector.” (Read report)   Admittedly, January’s report will likely be far different.

bear  An average of about 100 homes a day have been listed this month, the third highest level month-to-date for January over the past decade.

New Listings - Jan 21 2015

New Listings, Jan 1-21, Y/Y comparison

bear At this pace, month-end inventory will cross north of the 5,000 mark, making it the 3rd highest January level since 2006.    High inventory, low sales: too early to expect the benchmark price to be affected significantly this month but if this market imbalance persists, we’ll see price deflation.

Active Listings - Jan 21 2015

January Month-End Inventory Levels, Y/Y comparison

Calgary luxury sales January 21 2015

Calgary luxury sales, January, Y/Y comparison

Calgary real estate stats summary, Jan 1-21, Y/Y comparison

Calgary real estate stats summary, Jan 1-21, Y/Y comparison

10 responses to “January 1-21, 2015 Calgary Real Estate Market Update

  1. Nice impartial Blog posting again Mike.
    Good work.
    FYI: plugged into my housing cost spreadsheet.
    $1,000,000 mortgage. $6000 in annual prop taxes. $500/month utility.

    variable rate of 2.5% = $5486/month.
    variable rate of 2.25% = $5361/month.

    Thats only $125 per month savings… less then the average monthly TV bill for the average family.
    if you chop the the input costs by 50%, the saving are 50% obviously, so $60 bucks.
    if this rate drop affects anything in the housing market, it will be more due to peoples financial illiteracy, then due to any economic fundamentals.
    That being said, 5-10yr Cdn bonds have also increased in price in past 24 hrs, so maybe a drop in the 5-10yr mortgage rates soon, which would have a bigger impact on the housing market, than the variable one.
    I miss “Invisible hand economics”.

  2. Looking at condo/townhome inventories, is is safe to say that it’s the amateur investors unloading their rental homes before their HELOCs get called up by the banks?

  3. Thank you, I appreciate the balanced perspective.

  4. @YYC

    I’ve often wondered if banks would ever consider calling HELOCs at least partially if they got nervous. Has anyone (Mike included) ever heard of lenders doing this in a weak market? I can’t imagine this is happening in Calgary

  5. Skeptic, I imagine they would do it if the HELOC value exceeded the value of the condo. With previous 85% LTV the banks allowed it’s not far off to speculate that we reach that point.

  6. Calgary MLS listings soar while sales plunge
    Calgary Herald, Jan 23, 2015

    In Calgary, over the past decade, it’s December that’s the slowest month of the year – not January. It’s true, though, that January is not always a great proxy for the remainder of the year. For example, in January 2009, there were only 768 sales and the year-end total was 20,667. In 2010, there were 1,128 sales in January (+46.9% y/y) but the year ended with only 17,218 sales (-16.7% y/y)

  7. Interesting coverage and analysis as always Mike. Some of these stats are quite eye opening.

  8. Geoff McKenzie

    Enjoying your blog, Mike.

    Maybe you or one of your readers can clear something up for me. The focus on the media has (rightly) been on inventory, but whenever I see reporting on price it raises my eyebrows. The stories note that price is even, or up one percent or down one percent YTD depending on at what point in the month they checked the stats.

    Isn’t it misleading to base that percentage on the difference between last January and this January? I understand that we need to account for seasonal differences, but if I’m reading the data correctly, the price gains from 2014 have been completely wiped out. In other words, if you compare the January 2015 price index with the December 2014 index, prices have declined something like 8%! Is that not worthy of reporting? I would like to see a historical comparison of how much prices typically decline from December to January over a range of years.

  9. Hello Geoff, good question.

    City of Calgary median price is up slightly from $417,250 in December to $420,000 MTD (+0.7%). The average price is down from $475,193 in December to $459,703 MTD (-3.3%). A case for price growth or deflation could be made either way depending on which stat you use.

    However, you hit the nail on the head when you said you need to account for seasonality, and unless the prices are seasonally adjusted, the y/y comparison is a more “apples-to-apples” look at the market.

    The house price index (MLS HPI) for January won’t be released until the end of month, but it looks like the index for Calgary stalled at 215 last summer.

    Another good index to follow is Teranet’s which uses repeat-sale methodology. Using all the data available, and not focusing on just a single stat, will help provide a better picture of market direction.

    For historical prices, here’s the 10-year stats.

  10. Geoff McKenzie

    Thanks Mike, very helpful.

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