Calgary home sales have found some traction with a total of 1,032 homes selling through two weeks. While that’s still -18% off last June’s near-record pace, it’s not far behind the 5 & 10 year average for the month (1,080/1,082).
Attached home sales (213) are even slightly above the historical averages month-to-date.
The 1,552 new listings are the fewest to come online for the month since 2005. Despite the current sales-to-new-listings ratio being at healthy 66% overall, until we see a significant reduction in the inventory that had accumulated earlier this year, we’ll continue to see negative price pressure. Recall that the City of Calgary benchmark price in May was up an anemic 0.95% year-over-year.
Luxury home sales are having a dramatic effect on the Apartment segment’s average price, and no, condos are not in a “full-blown meltdown” as one anonymous poster wrote.
Just like the Apartment average price was boosted ~$20,000 last month by several large sales, the reverse is happening now.
Only one unit has sold for $1M+ MTD compared to five last June, a couple of which were for over $3 million. Without those five sales, the average price would drop to $312,802 from $352,018. Removing the one luxury sale from this June would mean an average price of $292,933 instead of $297,745.
Examining the 175 apartment sales will show that 46 of them (26.3%) previously sold on MLS® since 2010. Only four of them sold for less than they were previously purchased, but others had sparse appreciation that would’ve been wiped out after fees. Still, many saw significant growth.
The point being is that when you read reports about a record monthly drop in Calgary prices – that’s the overall market painted with the same brush. Different property types, price points and communities can and do trend much differently.
Not to be ignored is how new construction influences the resale market. Take for example new condo sales. In Q1, sales were 53% lower than the average of the past five years, creating “substantial” downward price pressure. (Read Altus Group Q1 Update)
In a slow market, developers prefer to offer incentives rather than reduce prices. But at least one condo developer has opted to go the price-cutting route:
With vacancy rates on the rise and many more units under construction, it will be interesting to read the Altus Q2 report and assess the subsequent impact on the resale market.