February 1-14, 2015 Calgary Real Estate Market Update

Al Duerr was still the mayor of Calgary the last time sales at the halfway point of February were lower than they are now.

A total of 580 homes have sold midway through the month, a -35.8% drop year-over-year.   Sales are also off -35% from the 10-year average and -25.7% below the 5-year average.    It’s the lowest February level month-to-date going back to 1996.

Calgary home sale, February 1-14, 2015, Y/Y comparison

Calgary home sale, February 1-14, 2015, Y/Y comparison

Calgary’s luxury market has slowed significantly too with only 15 homes selling for $1M+ compared to 36 during the same period a year ago.

That’s had a large impact on the average price which currently sits -5.19% lower than last February and the median which is up 1% y/y.

Without the 36 luxury sales, the average price for February 1-14, 2014 would drop from $493,860 to $449,904.  The median price would fall from $426,250 to $417,500.

Likewise, removing the 15 high-end sales this month would cause the average price to decrease from $468,245 to $446,288.  The median would dip from $430,500 to $426,000.

Calgary luxury home sales, February, Y/Y comparison

Calgary luxury home sales, February, Y/Y comparison

While new listings are up 16% y/y, they’re only about 6% higher than the 5-year average.   On their own, the amount of homes being listed isn’t alarming or out of the norm.   Had sales been on par with the 5-year average, the sales-to-new-listings ratio would be at ~50%, a balanced market.

Economist Will Dunning estimated that “prices will rise at about the same rate as overall inflation when the sales-to-new-listings ratio is about 51%.” (Source)

As it stand now, the ratio is below 40% signifying market conditions favor buyers.

 

Sales to new listings ratio - Feb 14 2015

New Listings, February 1-14, Y/Y comparison

New Listings, February 1-14, Y/Y comparison

5 responses to “February 1-14, 2015 Calgary Real Estate Market Update

  1. Geoff McKenzie

    Mike, where are you finding the luxury home stats that are allowing you to factor them out of the averages? Are further breakdowns available? (E.g. Attached from $700–900?)


    Hi Geoff, agents can view sales by price range, type and other criteria on the MLS® system.
    -Mike Fotiou

  2. Hi Mike,

    Love your website. Thanks for all the info! It is nice to have the facts.

    Question though, shouldn’t one also look at the sales to active listings ratio as a barometer for buyers/sellers market (as opposed to just new listings)? As an example we have double the active listings than the same time last year, even though new listings are slightly up.

    Personally, I think we are in the beginnings of a serious buyers market, only to recover when the price of oil does. I don’t think the repercussions of the drastic slide in oil price have been fully felt yet… Nobody knows for sure if or when oil will go back up, or how high it will get back to. I work in oil and gas, and this is as scary as I have seen it!


    Hi Yeebs, definitely you should also look at sales to active listings. CREB®’s month-end reports have the inventory absorption rate graphed for each housing category. February’s incline will be even steeper than last month’s.
    -Mike Fotiou

  3. Hi Yeebs, do you think now is more dire than 2008-2009? Low oil price is a hugh boost to world economy. Since 1980, there are five times when oil price dropped by more than 50%. There are 1987, 1991, 1999, 2002 and 2008. What happened then warranty our serious research. I would also question why the divergence happened last couple of months between oil price and oil company shares and our financial sector. What could the divergence indicator? Don’t just listen to those so called “experts ” on oil price, like recent GS call on oil at $20. In fact nobody knows. At height of financial crisis, “experts” called Dow going to 3000, as I remember. Be positive, most importantly, be resilient.

  4. In 2008-2009, the local economy was much more dependent on the price of natural gas (remember the days of $12/GJ and the corresponding Ralph Bucks). Technology and in particular advances in shale gas technology created a scenario where we transitioned from a serious supply shortage to a very significant over supply position and gas prices dropped to $3/GJ . The one thing that made the 2008-2009 recession relatively painless was the quick bounce back of oil prices (about 6 months). Fast forward to today and advances in shale oil technology have created a glut in supply and a 50% cut in oil prices. 6 years later and gas prices still haven’t recovered currently trading around $2.70/GJ. If shale oil follows the trend of shale gas, this might be a more brutal recession and the market might look more like 1986 when housing prices dropped 50%. Remember if you bought at the peak in 1981, it took someone 25 years (2004) to break even (inflation adjusted).

  5. 2008-2009 was a global recession initiated by reckless mortgage practise in US, credit bubble/derivative blowup and LEH went under Oct/2008. Oil went from 145 in spring/08 to 30’s in fall/08. It was scarier then than now(at least for now). Nobody experienced it previously, including central banks around the world. Forecasts were everywhere. How oil price affected Calgary house market historically, the article
    by Mike on July 29, 2010 would be an excellent reference, https://calgaryrealestatereview.com/2010/07/29/calgary-historical-average-house-prices-sales-timeline/

    There are several major differences between now and 1981 when Calgary house price plunged, not in 1986. For example: mortgage rate (now low single digit, then close to 20%), Calgary unemployment rate (now around 4.8%, then low double digit), world economy (now Asian developing countries thirsty for energy, then ? China alone imported 257 million barrels of oil in the month of Dec/2014, comparing to 214 million in the month of July/2014, 20% increase).

    I don’t recall gas price at $12/GJ in 2008/2009. It was around 2005/2006 along with Ralph bucks. Gas price fluctuated between $3-5 in 2009 and $6-9 in 2008.

    A recent article in Global and Mail on Calgary housing market would be an interesting read. http://www.theglobeandmail.com/life/home-and-garden/real-estate/with-deep-ties-bc-alberta-adjust-to-a-new-real-estate-reality/article23

    I think one of alternative approaches to strength one’s balance sheet is to increase foreign holdings, return also boosted by weakening Cdn $.

Please feel free to post your comment or question

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s