The last time Calgary’s February real estate market was slower than now, we were watching the first season of Friends and singing along to On Bended Knee by Boyz II Men. Yes, month-to-date sales are at the lowest February level since 1995.
A total of 502 homes have sold through two weeks, -12% fewer than last year during the same time, -30% below the 5 year average and -38% below the 10 year average.
The newest mortgage rules are now in effect with nary a last-minute bump in the affected $500,000-$999,999 price bracket as sales there were down -21% y/y.
Overall average prices are showing a 2.77% y/y increase thanks to a sales uptick in the luxury segment. Twenty homes have sold for $1M+ this month, of which 4 of them were over $2 million. Between February 1-14 last year, there were 14 luxury sales with only 1 over the $2m mark.
Ignore the average price. It simply is not an accurate indicator, especially in a low sales volume environment with high-end transactions.
New listings continue to trend between the 5 and 10 year average and inventory sits at 5585, up 3.46% y/y.
Foreclosures/judicial listings are being easily absorbed so far with 8 sales in the past week, bringing down the total number of active listings to 82 from the 85 recorded on February 8th.
TD’s latest Regional Housing Report released on Friday says that Calgary housing prices are expected to fall by roughly 10% by the end of the year. Below is the excerpt or you can download the full report here.
Calgary existing home sales have already fallen 36% from their peak reached in July 2014, while Edmonton sales are down 15% from their October 2014 peak and are expected to reach their 2008/2009 lows by the end of this year.
The market remained well balanced by CREA’s definition in 2015, keeping home prices remarkably stable. A balanced market is typically defined as one where the sales-to-listings ratio is within the 40 to 60 range. The 6-month moving average in the was 56 in Calgary and 47 in Edmonton in December.
Listings are, however, rising sharply and both markets are tipping closer to one in which buyers will increasingly hold the bargaining power.
Rental vacancy rates, which are a leading indicator of slack, have more than doubled in all both markets during 2015 (Chart 16, Page 6). As such, home prices are expected to fall by roughly 8% to 10% in Edmonton and Calgary, respectively, by the end of the year. Home prices will likely stabilize thereafter along with oil prices.
New home construction will pull back considerably in the near- to medium-term, and take a few years to recover.
On the topic of the sales-to-new-listings ratio, all of Calgary is in buyer’s market territory so far this month (below 40%) with the apartment segment the deepest at 22%.