We begin the year with the highest inventory level since 2008 and the lowest sales volume since 2009. Welcome to 2016!
As CREB® noted in their December report, “monthly inventory levels declined, as expected, to 4,336 units. Yet they were still 28 per cent higher than the same time last year, and at the highest December level recorded since 2008.”
What’s eye-opening is the occupancy status of the homes now listed. There are 4510 active listings and a full 45% are unoccupied.
Here’s the breakdown of Calgary homes on MLS® that are vacant or new construction that have never been occupied:
Detached: 803/2234 (35.9% unoccupied)
Attached: 637/1133 (56.2% unoccupied)
Apartment: 592/1143 (51.8% unoccupied)
That’s a lot of empty homes.
Supply is only one side of the equation, but the demand to start the year isn’t any more reassuring.
A total of 100 homes have sold in the first week of 2016, a -21% drop from a year ago and the weakest start to a year since 2009.
New listings are up 19.9% from last year too, but still below the panic levels seen in 2008 when speculators began dumping investment properties.
Frankly, there’s still a ways to go before we begin to see any light at the end of the tunnel. Layoffs in Calgary have been relentless; another 6900 were laid off last month. Meanwhile, net migration to Alberta in Q3 2015 plummeted by 34% y/y.
If I were in the market to buy, I would wait a little while to see how this all shakes out. It’s impossible to time the exact bottom of the market, but not difficult to follow the trend – and prices have been trending lower, albeit slowly.
The City of Calgary sent out the 2016 property tax assessment notices earlier this week, and I want to reiterate the ‘market value’ the city comes up with should not be used to determine the sale price of a property.
When asked how the city determines property values, the city assessor responded, “We’re really no different than anybody else in terms of how we figure out what the property would sell for. What we do, as realtors do, as assessors do, we simply look at sales data that happened in the marketplace.” (Source)
How many city assessors have you had physically come inside your home before assessing its value? None. The city market value estimates are done sight unseen which is why they are only a ballpark estimate at best. I’ve written about this at length before: Why You Shouldn’t Rely On City Property Assessments For Buying or Selling Real Estate.
The 2016 property assessment notice states that it “reflects the estimated market value of your property based on the valuation date of July 1, 2015.” But does it really? Below is the list of Calgary homes that sold on exactly July 1, 2015 with the actual sale price compared to what the city says it was worth on that date:
Homeowners that disagree with the assessed value have until March 7 to file a complaint with the Assessment Review Board.