October 2018: Oversupplied market weighs on prices
Elevated inventory levels compared to sales are causing prices to ease further in Calgary’s housing market.
Citywide benchmark prices totaled $426,300 in October, trending down for the fifth consecutive month and resulting in a year-over-year decline of 2.9 per cent.
“Job growth in this city remains a concern, as unemployment levels remain well above levels expected for this year. Rising costs of ownership also continue to weigh on housing demand,” said CREB® chief economist Ann-Marie Lurie.
“At the same time, housing supply levels are not adjusting fast enough to current conditions, resulting in price adjustments.”
Inventories and sales totaled 7,345 and 1,322 in October. This has resulted in months of supply of 5.6, above levels typical for this month. While some easing in new listing growth will help prevent further inventory gains, inventory levels remain near record highs for the month of October.
“With these types of market conditions, many potential buyers should be able to find the home that they are looking for with well priced listings appearing in certain price ranges,” said CREB® president Tom Westcott. “Sellers need to manage expectations and have accurate data in order to be aware of what is selling in their community.”
For each of the property types, sales activity has improved in the lower price ranges, leaving most of those segments relatively balanced. However, the upper end of the ranges has seen significant gains in supply compared to demand, which is likely having more of an impact on prices in those ranges.
HOUSING MARKET FACTS
Detached sales in October totaled 829 units, for an 8.6-per-cent decline, resulting in a year-to-date decline of 15 per cent. This is the slowest level of detached sales since the late ’90s.
Year-to-date, the largest decline in sales occurred in the $600,000 – $999,999 price range, reflecting slow demand coming from move-up buyers.
For the second month in a row, new-listing growth eased, helping prevent further inventory gains. However, as this segment remains oversupplied, prices continue to trend down.
Detached benchmark prices totaled $490,200 in October. This is below last month and three per cent below last year. On a year-to-date basis, prices remain one per cent below last year’s levels.
As of October, year-over-year prices have eased across all districts, with the largest declines occurring in the North East, North West, South and South East districts. This is likely a result of added competition from the new-home sector.
Year-to-date apartment sales have totaled 2,316 units, nearly seven per cent below last year. New listings have also eased by six per cent, helping reduce the amount of inventory in the market.
Despite the easing inventories, the months of supply remains elevated at 7 months.
Year-to-date apartment condominium prices have eased by 2.8 per cent and remain 14 per cent below 2014 highs. Declines occurred across all districts, with the steepest declines occurring in the North East, East and South districts.
The attached sector has recorded year-to-date sales of 3,098. This is 15 per cent below last year and 14 per cent below long-term averages.
Meanwhile, despite recent easing in new listings, October inventories are the highest level on record.
The oversupply is affecting both the semi-detached and row sectors, which have seen prices trend down over the past 5 months.
Year-to-date, row benchmark prices have averaged $298,140 this year, nearly two per cent below last year and nine per cent below previous highs. However, prices have remained relatively flat in both the City Centre and North West districts.
As of October, semi-detached prices were $403,400, one per cent lower than last month and nearly three per cent lower than last year. Despite recent declines, year-to-date citywide prices remain relatively flat compared to last year. This was most due to gains in the City Centre, North East and East districts offsetting declines in the North West, South and South East.
REGIONAL MARKET FACTS
Airdrie’s housing market continues to experience declining sales and increasing inventory compared to last year. Elevated supply levels have led to downward pressures on the benchmark prices for detached homes.
Total year-to-date residential sales have reached 1,032 units, 11 percent below levels last year. Year-to-date, new listings have remained relatively stable, but remain well above long-term averages.
Year-to-date average inventory levels are 19 per cent higher than. As a result, months of supply have been elevated, and presently stand at six months. This has translated to sustained pressure on benchmark price, with the year-to-date value of detached homes now sitting at $370,880, which is a year-over-year decline of nearly two percent.
Year-to-date, residential sales have declined by 10 per cent, with 530 sales so far in 2018. These levels are comparable to similar periods in the past few years and higher than long-term averages.
At 1,164 units, new listings have reached a historical peak for this period and well above long-term averages. Inventory levels in Cochrane for 2018 have been persistently elevated and are almost 17 per cent higher than the same period last year.
This has started to place some downward pressure on prices. However, year-to-date detached benchmark prices have remained relatively stable compared to last year with a benchmark price of $424,900.
Year-to-date residential sales have declined to 428 units in 2018, comparable to levels from 2011 and well below long-term averages.
New listings are elevated at 936 units, which is eight per cent higher than last year’s levels and close to long-term averages. Inventory levels in October remain elevated with 232 units.
Despite gains in the amount of supply compared to sales, Okotoks detached prices have seen some modest gains. Year-to-date benchmark prices for detached properties totaled $436,660, 1.25 per cent higher than last year.