August 1-7, 2015 Calgary Real Estate Market Update

One of the downside risks mentioned in CREB®’s housing outlook released on July 29th was that low energy prices could have a deeper than expected impact on employment.  The very next day, Cenovus announced up to 400 more Calgary jobs were being axed in the second half of the year.  I’m expecting more jobs will be lost as oil prices remain low and companies are forced to cut costs.

Overall prices have held up remarkably well this year as the pullback in new listings after the initial surge that started the year has helped offset low sales. However, I see little in the way of factors providing upward price pressure.  Year-over-year price growth has been steadily shrinking and I expect prices will slowly grind below year ago levels in short order.

If layoffs continue & employment prospects dim, this will impact migration, consumer confidence & spending.  Inventory would climb as buyers are unwilling or unable to make large financial commitments and some owners might be forced to sell.  The end result, again, would be further downward pressure on prices.  The weak energy sector has impacted the real estate market more noticeably in the higher price points thus far, but if the downturn creeps into other sectors of Alberta’s economy, we’ll see a more widespread real estate decline.

It’s been an ordinary August so far with sales just below the 5 & 10 year average.  New listings have increased a touch, trending just above the 5 year average but nothing alarming at this point.

The weakest segment at the moment are Apartments.  At the end of last month, there were 3.77 months of supply indicating market conditions favored buyers.

Overall, the market appears balanced but will be facing headwinds throughout the second half of this year

Calgary home sales August 1-7 2015

Calgary home sales, August 1-7, Y/Y Comparison

Calgary New Listings August 1-7 2015

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

Calgary luxury home sales August 1-7 2015

Calgary luxury home sales, August, Y/Y comparison

Sales-to-new-listings-ratio August 7 2015

Sales-to-new-listings Ratio for August 1-7, 2015

Calgary Stats Summary August 1-7 2015

Calgary Stats Summary, August 1-7, Y/Y Comparison

2 responses to “August 1-7, 2015 Calgary Real Estate Market Update

  1. Joe Winnipeg

    Some more numbers:

    Current oil price (WTI): $43.87 (lost another 1.77% on Friday)
    Western Canadian Select (WCS) : $17 –> break even mark
    % of Canadian GPD derived from real estate (selling, renting, etc): 13%
    % of Canadian GPD derived from construction: 7%
    Cheapest 5 year variable mortgage: 1.85%
    Mortgage payment for $500,000 over 25 years @ 1.85%: $2082.95
    Mortgage payment for $500,000 over 25 years @ 8% (historical average): $3859.09 ha ha ha!
    Average House Price Vancouver: 1.4 Million
    Average House Price Toronto: 1 Million
    Number of Consecutive Quarters of Negative Economic Growth in Canada: 5
    Wage Growth (Canada) 0-3% depending on location
    Canadian Dollar: 76.15 cents/US
    Group layoffs Alberta 2015 to date: 11000 (This doesn’t include non-announced one-offs, contractors, etc). The actual number of people who’ve lost their jobs is probably closer to 20,000.
    Canadian Debt to Income ratio: 1.63 (yikes)
    Current Home to Income Price ratio: 5.38
    Historical Home to Income Price ratio: 3.5
    % Drop in House Prices (or salary increases ha!) Required to Bring Home Income Back to historical averages: 35%!
    % Drop in House Prices (or salary increases ha!) Required to Bring Home Income Back to historical averages in Toronto and Vancouver: 40%

    I think the numbers are fairly conclusive. It’s time to rush out and get a half million dollar mortgage and buy that house you’ve always wanted up in Rocky Ridge. How could things *possibly* go wrong? Like every real estate agent says, better buy a house now because prices are only headed TO INFINITY AND BEYOND!!! Wait a second. I’m not a complete idiot.

    Bubble much? I know they do at those bubble tea places.


    It’s apparent you didn’t even bother reading the article…Also, I’m curious why you switched your handle from ‘Kuato Lives’? Ashamed to be associated with your earlier predictions? 😛
    -Mike Fotiou

  2. Do you think your half dozen readers actually care?

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