February 1-7, 2015 Calgary Real Estate Market Update

bullSome surprising but welcome news came from Statistics Canada earlier this week on the labour front.

Alberta employment grew by 13,700 in January and the unemployment rate dipped to 4.5%, tying Saskatchewan for the lowest rate in the country.  Alberta alone added 174% more jobs than what the consensus was for all of Canada.

Annually, employment in the province rose by 66,900 accounting for over half of the job gains in Canada.  Employment growth was 3.0%, the highest rate of the provinces (See chart below).   So is Calgary’s real estate slowdown due more to a lack of consumer confidence?

Alberta Job Growth (Chart source)

bear  At this point, the slowdown is a mix of both lost jobs and a less than positive outlook. Statistics Canada’s LFS estimates were for the week of January 11 to 17 and many layoffs have been announced since then.

An Alberta Treasury Board & Finance research note warns:

“Despite the strong reading in January, the labour market is still expected to cool this year as a result of lower oil prices. Job losses have, in the past, lagged sharp corrections in oil prices,” (Source)

Statistics Canada reports:

[Alberta] Employment in natural resources was little changed on a year-over-year basis, but it was down 13,000 (-7.2%) from the most recent peak in September 2014. (Source)

ATB economist Todd Hirsch writes:

“A deeper dive into the data reveals that the energy market is, indeed, seeing a slowdown. Between December and January, there were 1,000 fewer jobs in oil and gas, and 3,700 fewer jobs in a category labelled “professional, scientific and technical” jobs. These would be occupations such as geologists, engineers and other technical services which are frequently contracted by petroleum producers.” (Source)

bear A total of 274* homes sold during the first week of February: that’s down -34% y/y, off -35.6% from the 10-year average & -26.3% from the 5-yr average.  Detached sales, which make up the overall bulk, were even below 2009’s level. (*CREB®’s homepage stats shows 275 sales MTD, but one of them was incorrectly marked as being located in Calgary when it’s actually in Nanton)

Calgary home sales, February 1-7, Y/Y comparison

Calgary home sales, February 1-7, Y/Y comparison

bear New listings are elevated both on a year-over-year basis and compared to the 10-year average, however they remain well below 2008 levels when Calgary inventory surged to the highest level on record.  A key difference this time around, however, was that sales that year weren’t as muted as they are now.  Active listings are now at 5100 and growing.

Calgary sales to new listings - Feb 7 2015

Calgary New Listings, February 1-7, Y/Y Comparison

Calgary New Listings, February 1-7, Y/Y Comparison

bear Luxury home sales continue to lag with 6 properties selling for a $1M or more compared to 23 during the same period last year.

bullA bright spot was an Aspen Woods home that sold for $2,350,000 this week which was the highest sale price so far this year.

Just for curiosity’s sake, I calculated what the average price would be without any $1M+ sales.

The average price month-to-date would be $454,783  instead of $474,984. For February 1-7, 2014 the average would only be $441,321 rather than its current $500,062.

From a 2013 blogpost: “Last October marked the beginning of a string of monthly records for luxury sales.  Going forward, the y/y comparison for high-end transactions should be close and will help with the average price skewing that we have been seeing of late.”   Now we’re in the exact opposite situation with fewer high-end sales than the year before amplifying the decline in the average price.

The median price month-to-date is up 4.72% year-over-year, from $424,950 to $445,000.  But again, it’s early in the month and the average & median price fluctuate daily because of how few sales there are.

Calgary Luxury Home Sales, February Y/Y Comparison

Calgary Luxury Home Sales, February Y/Y Comparison

 

5 responses to “February 1-7, 2015 Calgary Real Estate Market Update

  1. Hi Mike, I assume the “average price” for CREB statistics includes all homes sold in calgary regardless of price (ie. luxury homes or not). Based on how averages work (and proven in your point above) they can skew the numbers quite a bit. Just wondering, is there anywhere we can find average price excluding luxury homes over $1mm? If not I think it would be great if you continued reporting that statistic.
    This whole “luxury” classification seems like another category entirely and I wonder why they don’t split that out separately from the overall average. Most people are buying homes under $1mm, so if it’s classified as luxury it’s really just skewing the average upwards and not helping the “average” person. Especially if it can sway it $20k as you’ve identified.
    I just think it’s important in the current market because last year saw lots of large luxury sales, pulling the average up, whereas when oil drops typically the first homes to stop selling are the large luxury homes as they include the biggest risk. So we are comparing averages with multiple luxury sales in 2014 to averages with few luxury sales in 2015…. Just seems like a much better idea to exclude them in BOTH statistics for a true comparison. Thoughts?


    That’s why it’s important not to ignore other price measures such as the median, benchmark and indices.
    -Mike Fotiou

  2. I completely agree, that’s why I don’t put much reliance on the average. I was just curious if CREB reported on an average that excluded those high priced listings (as you have done above), since I see this as a much more meaningful “average” than the current one but haven’t come across anything.
    Thanks!


    Unfortunately CREB doesn’t report that particular type of statistic.
    -Mike Fotiou

  3. Geoff McKenzie

    But CREB does publish some useful stats in their monthly reports. Here’s January: http://www.creb.com/~/media/Public/Statistics%20Package/2015/January%202015.pdf

    Notice on page 7: Year over year, sales of homes under $400,000 declined; sales of homes $400,000 – 699,999 increased and sales from $700,000 – $999,999 declined. Median prices were pretty flat from mid-2014 through January 2015, so it makes you wonder what’s going on at the $400,000 threshold and what’s going on at the $700,000 threshold. In the latter case checking pages 10 and 12, we find that all the decline came at the expense of attached homes (detached sales are pretty flat) – but it’s a trend that’s been happening over the past three or four years, rather than something explained just by the oil shock. My guess is, that category is losing volume at both ends: lots of product formally priced at the top end is now being priced over a million, and lots of product at the bottom end is now slipping under $700,000. Median and average prices (but not benchmark) for attached homes dropped from December to January, so the “bottom-end slump” theory is particularly attractive. Also, I’m shopping for a home in that range, so consider my analysis both amateur and biased;)

  4. Thanks again for the responses Mike. Your website and commentary is a fantastic resource. One last question – with the change over in creb statistics I’m just wondering how reliable are the current stats on the website for current month and YTD? I’m noticing a bunch of the stats say “N/A”, for example new listings and active listings. Is that because they can’t retroactively group the data from prior years or is it a glitch to be fixed?
    Ryan

  5. Hi Ryan,

    For active listings, CREB can only accurately see what is currently active in the database – not what was active this day, last year. For the previous version of the stats, they had recorded the number of actives each day, and then referenced what was recorded the year before. They’ve done the same for this version, but it will take a year for it to build up that history.

    New listings are showing up correctly with the Y/Y comparisons.

    Benchmark prices are only available for month-end.

    Back to the active listings stat, I’ve asked if they could at least display the figures for the City of Calgary overall since there shouldn’t have been any changes to that…We’ll see.

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