January 1-7, 2016 Calgary Real Estate Market Update

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.

Calgary home sales, January 1-7, Y/Y comparison

Calgary home sales, January 1-7, Y/Y comparison

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.

Calgary new listings, January 1-7, Y/Y comparison

Calgary new listings, January 1-7, Y/Y comparison

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.

Alberta Net Migration Levels

Alberta Net Migration Levels

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:

City assessment vs. actual sold price

City assessment vs. actual sold price

Homeowners that disagree with the assessed value have until March 7 to file a complaint with the Assessment Review Board.

Calgary luxury home sales, January, Y/Y comparison

Calgary luxury home sales, January, Y/Y comparison

Calgary Stats Summary, January 1-7, Y/Y comparison

Calgary Stats Summary, January 1-7, Y/Y comparison

7 responses to “January 1-7, 2016 Calgary Real Estate Market Update

  1. Thanks for the update Mike! The # and % of unoccupied homes is a real eye opener. Do you have any kind of historic benchmark for these figures? i.e. what did the unoccupied look like a year ago? Or in the 2009-2010 slump? Or at the 2014 peak? I think this could add a bit of context. Thanks.

  2. Hi Bruce, in terms of percentage of listings and overall number of unoccupied listings, it’s high for January.

    I stopped keeping track of the daily/monthly unoccupied data when CREB started posting the daily stats on their site, so I don’t have anything after January 2012.

  3. So why aren’t house prices coming down more?
    What will it take to have a meaningful correction, $15 oil?

  4. Time, Liam, Time.

    The panic hasn’t set in yet (like in Fort Mac).
    the recent laid off, are still fairly optimistic to get reemployed before they have to dip into RRSP’s and long term savings.
    If the market does not correct back to the positive by that time, people will be forced to look for work in other provinces, or other industry’s in AB, which will either pay less, or be cause for a move. Thus that’s when a correction will formally take place.

    Calgarians are a fairly resilient lot, when it comes to home ownership.

    I am still surprised Fort Mac cratered that quickly.

    side note: Top dollar houses (over 1.5 million), will be much harder hit than sub 500k category, % wise.

  5. Mike. I’m still would be interested in knowing how much of a correction we have had so far? Any data on that? I’m guessing its in excess of 10% from the highs.

  6. CJ, using December 2015 stats for Calgary:

    Average Price: $462,657
    Peak: $491,609 (June 2014)

    Median Price: $407,750
    Peak: $435,000 (May 2015)

    Peak: $459,900 (November 2014)

    Teranet-National Bank House Price Index
    Peak, October 2014

    Comparing peak to December prices, declines have not exceeded 10% by any measure. Yet.

  7. thank you Mike

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