December 1-14, 2015 Calgary Real Estate Market Update

Aside from the global financial crisis of 2008, December month-to-date sales in Calgary are at the lowest level since 1995.

A total of 493 homes sold in the first two weeks of the month, a -22.7% year-over-year drop and below the 5 & 10 year average by -15.6% & -17.1%.

The average and median price are off by -1.9% and -1.8% respectively.

Calgary December 1-14 sales, Y/Y comparison

Calgary December 1-14 sales, Y/Y comparison

It was exactly a year ago that new listings spiked as the economic fallout of plunging oil prices rippled through Calgary’s real estate market.

Even so, new listings are up further this month by 5.25%.  Inventory now sits at a bloated 5,189 – a 33.2% annual increase or 1,294 more active listings than last year.

How much of an impact the new downpayment rules being introduced in February 2016 will have on the beleaguered $500k-$1M Calgary market is debatable, but it certainly won’t help.  It’s like covering someone’s mouth that’s already in a choke hold.

A sure sign of a difficult market is when incentives and bonuses start popping up. Builders loathe to cut asking prices because it would set a precedent for future sales.  Instead you’ll see them give design credits for upgrades.

Some sellers attempt to steer more traffic to their home by offering a significant buyer agent bonus of $1000, $5000, $10000, or even $25000. A quick count shows over 200 listings with bonuses now.

Other sellers appeal directly to the buyer. A few years ago, a couple of Calgary sellers promoted $1000 worth of beer as an incentive to buyers.

While a grand of brewskies is sweet, today you can get a new $100,000 Tesla S with the purchase of this home.   You can read about other incentives in the Calgary market here.

We’re likely to see many more creative sellers in the months to come – but there is a downside to consider.  This Wall Street Journal article from 2007 sheds more light on how hidden incentives can distort sale prices.

As a buyer, do incentives have appeal or would you rather wait for a literal price reduction?

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

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

Calgary luxury home sales, December 1-14, Y/Y comparison

Calgary luxury home sales, December 1-14, Y/Y comparison

Calgary Stats Summary Dec 1-14 2015

Calgary Stats Summary, Dec 1-14, Y/Y comparison

2 responses to “December 1-14, 2015 Calgary Real Estate Market Update

  1. Literal price reduction has much more incentive for me as financially, the bottom line is more important than having extra beer in my fridge or granite countertops.

  2. Good article Mike.
    the wall street journal article was an interesting read.
    personally, I think that Individual to individual home sales (97% of most resale transactions?) can have a gimmicky promotion. As once the seller sells his home, there is no reason to inflate the resale market. His only motivation is to sell that one house.

    for New-build homes, that practice should be banned. as the Bulider is artificially inflating the market, for their specific benefit to distort the market.
    “Look at last weeks comparable sale for 1 million! its the same house as you are looking at!”
    if the comparable included a $100k car, the house in reality is only worth 900K. the new buyer should be given privy to that information to base their decision of “market” value.

    for the remaining 3% (?) of the resale market, these might be speculator buying 3-4 property’s single family homes, or buying an entire floor of a condo tower (I known people who have done this), there is a huge personal incentive for the market to not “pop” so them offering gimmicky incentives makes sense. it would be difficult to regulate/control this practice bythe none commercial/business seller..

    Long story: keep your Tesla, I want the price reduction.

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