“With the focus of attention largely on markets being hit by the plunge in oil prices, it is encouraging to see possible signs that the worse may soon be over in Calgary,” notes RBC in their February housing market update released on Friday.
The report continues: “In particular, we point to the drop in new listings…as a positive development that, if sustained, would suggest to us that panic is not setting in and that activity may be close to reaching a floor. Upcoming economic news will tell whether the degree of market reaction in December-January was appropriate.” (Source)
While it’s premature to be calling a bottom, new listings have pulled back sharply in March. There have been 1427 new listings month-to-date, down -9% year-over-year and below the 5 and 10 year average. In fact, new listings 2 weeks into March are at the lowest level since 2003.
The deceleration of new listings has helped boost the sales-to-new-listings ratio for Calgary into balanced market territory. According to the ratio, the Attached home segment is on the cusp of a seller’s market, Detached homes are in balanced conditions, but Apartments remain in a buyer’s market.
What the sales-to-new-listing ratio doesn’t take into account is the amount of inventory already on hand before the current month. For that we’ll look at the absorption rate, or months of supply.
For Calgary overall, there’s currently 3.8 months of supply (buyer’s market), Attached: 3.4 months (balanced), Detached: 3.8 months (buyer’s market), Apartments: 5.7 months (buyer’s market)
No improvement in sales yet as they are down -31.2% y/y, -21.7% below the 10-year average and -17.5% under the 5-year average. Attached homes are faring the best, off by “only” -15% from last March but right in line with the 5-year average.
Average and median prices month-to-date are higher than a year ago for 2 out of the 3 housing segments: Attached and Apartments. Prices have dipped for Detached homes and because that category makes up the bulk of sales, it ultimately means prices have fallen for Calgary overall as well. (See last chart for prices)
Back to the outset of this post: why is it too early to be calling a bottom in Calgary’s market? Because Alberta’s economy hasn’t found a bottom. Last month, employment fell by 14,000 giving back the 13,700 jobs gained in January and then some. Since there haven’t been any developments to suggest there aren’t more job losses on the way, we can expect a slow market for the short-term at the very least.