March 1-14, 2015 Calgary Real Estate Market Update

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.

Calgary new listings March 14 2015

Calgary new listings, March 1-14, Y/Y comparison

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)

Sales-to-new-listings ratio - March 14 2015

Sales-to-new-listings ratio, March 1-14 2015

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.

Calgary home sales March 14 2015

Calgary home sales, March 1-14, Y/Y comparison

Calgary luxury March 14 2015

Calgary luxury home sales, March 1-14 & month-end, Y/Y comparison

Calgary Real Estate Stats Summary (click to enlarge)

Calgary Real Estate Stats Summary (click to enlarge)

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

  1. Also why it’s a little premature is oil just made another cycle low as I type this (ie oil has lower still to go).

  2. There is no way we have bottom yet. Alberta’s oil patch workers are consultants by 60%-70% (same as me). We usually get paid in 30-45 days after the well/shift. March 15-th is the unofficial start of the “spring break” time, the time when a massive amount of workers go home and wait for 2-3 months for a job (in a normal year). So the last cheque we can see would be around last week of April. So, from May 1 we will live on savings/survival job etc… Now we have situation while a summer drilling is under big question mark. So, in 3-4 months some guys will run out of money and ability to pay a mortgage. To the mid of July they will start to sell to avoid a bankruptcy and to the mid of the August we will see a first bankruptcy wave (imagine how it will affect the market as banks are always try to sell ASAP). IMHO it would be the bottom, IF we will see some improvements in the drilling plans for the fall. But if oil companies would decide to wait……we will continue to fall.

  3. I didn’t read anywhere in the report how the US is reaching operational capacity for oil storage, and when that actually happens, how they’re going to have to change their domestic policy to allow exports – or stop buying altogether. Or how the effect of that might slash oil prices another 50%, and the effect $25 oil might have on Alberta. Shouldn’t that be considered before declaring a bottom?

    http://www.foxbusiness.com/markets/2015/03/15/oklahoma-oil-storage-complex-at-cushing-nears-operational-capacity-has-515/

    Heh, the housing industry is hilarious. All it’s missing are pom poms.

  4. Good Comments Leo and Kuato.

    Leo: I have heard the same with some of the End-users we do business with and personal in the field. the layoffs have NOT fully been realized yet, and more will come July/Aug if the price hasn’t recovered. Also, a few of the majors, have not modified their budgets from the projected $65-70/barrel forecasts….their Board of Directors will eventually make them.

    Kuato: One more scary part of the point you raised. What IF Cushing, gets bottle-necked with Crude, price drops for sure, yes. But then we have Obama whom has been known to be Anti-Tar Sand cheerleader.
    I really hope There is firm legislation that states the US can not put preference on US oil to be refined ahead of Foreign oil. That could be a double hit for Canada
    MId-April is still forecasted Bottle Neck for storage, correct?

  5. Tri-Can, Talisman and Nexen just laid off another round of workers today. Only seen Nexen made the news.
    The hurt is clearly not over yet.

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