by CREB on April 17, 2015
Slower economic activity influenced demand across the region in the first quarter of 2015. However, despite rising inventory levels, housing prices in Calgary’s surrounding areas remained relatively stable.
“A lack of recovery in oil has many concerned about their employment status and these concerns have been impacting consumer confidence in the first quarter,” said CREB® chief economist Ann-Marie Lurie. “However, on aggregate, surrounding area prices have posted some quarterly growth as some of these areas have not recorded the same level of pull-back in sales relative to inventory levels.”
Unadjusted benchmark prices for residential properties in the surrounding areas were nearly one per cent above average levels recorded in the previous quarter and 8.4 per cent above levels recorded in the first quarter of 2014. City of Calgary prices have started to retract, but it is important to note that total residential benchmark prices in Calgary recovered from 2007 highs in 2013. In surrounding areas, prices only surpassed previous highs last year.
Residential sales in surrounding areas totaled 911 units in the first quarter of 2015, a 22.7 percent decline compared to the same time last year. Meanwhile, new listings increased by 11.6 per cent and inventories averaged 1,715 for the quarter, pushing the quarterly average months of inventory to 5.65.
“With improved first quarter supply in both the city of Calgary and the surrounding areas, consumers will definitely have more housing options,” said CREB® president Corinne Lyall. “Each of the surrounding areas has their own unique dynamic, so it’s really important to consider the community and specific segment of the market that you are buying or selling in when making any real estate decisions.”
Sales in Airdrie totaled 302 units in the first quarter of 2015, a 10.1 per cent decline relative to the same time last year. Over the same period, benchmark prices in Airdrie continued to increase in the first quarter. In fact, quarterly detached prices averaged $397,867 in the first quarter, which amounts to a 0.24 per cent increase over the previous quarter and a year-over-year increase of 8.4 per cent.
Cochrane had a similar experience where quarterly detached prices averaged $445,033 in the first quarter, a 2.6 per cent increase over the previous quarter and a year-over-year increase of 12.5 per cent. Meanwhile, first quarter sales totaled 116 units at the end of March, a 35 per cent decline over the same time last year.
“Cochrane’s resale sector often has a different dynamic than some of the other surrounding areas as there is a larger share of new home sales representing total sales activity,” said Lurie. “After the first quarter, new home sales activity represented nearly 20 per cent of total sales in Cochrane, compared to 10 per cent in Airdrie and five per cent in Okotoks.”
In Okotoks, detached benchmark prices averaged $453,567 in the first quarter of this year, a 1.23 per cent increase relative to the fourth quarter of 2014 and 6.98 per cent higher than the first quarter of 2014. During this period, Okotoks sales activity totaled 117 units, a 21.5 per cent decline compared to last year. Relative to Airdrie and Cochrane, detached properties make up the largest share of sales in Okotoks.
10 Year Summary Statistics of Calgary by CREB®
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First quarter activity reflects economic uncertainty
by CREB® on April 1, 2015
Elevated inventory levels and low sales for three consecutive months caused unadjusted benchmark prices to ease by 0.44 per cent in March, relative to the previous month, for a total of $454,300. Based on first quarter statistics, conditions are consistent with buyers’ market conditions.
Typical home prices have declined by 0.59 per cent in the first quarter of 2015, compared to the fourth quarter of 2014. The sales to new listings ratio also dropped to 41 per cent and months of supply averaged 4.03 for the quarter. This is a significant change from one year ago when the market was facing inventory shortages and price gains.
“Based on current sales activity and rising supply levels, the change in pricing does not come as a surprise,” said CREB® chief economist Ann-Marie Lurie. “However, the recent price adjustments have not eroded all the higher than expected price gains recorded last year. While conditions have likely tempered growth in new listings, further near term price adjustments will be dependent on changes to inventory levels.” said Lurie.
Sales activity fell by nearly 30 per cent in March, compared to this time last year, and remains well below 10-year averages. City of Calgary sales totaled 3,843 units at the end of the first quarter.
“In this market, buyers and sellers should be thinking about their short term and long term objectives,” said CREB® president Corinne Lyall. “This is a challenging economic time and people need to know their long game, so they can make the right real estate choices for today and tomorrow.”
While Calgary’s housing market has demonstrated buyer market conditions for the first quarter, the recent pullback in new listings in March has helped ease the growth in inventory levels, resulting in better absorption rates.
The apartment sector has the highest months of inventory in Calgary. This has resulted in higher quarterly price declines in this sector, when compared to the detached and attached sectors. By the end of March, the apartment quarterly benchmark price declined by 1.46 per cent, against the previous quarter. This compares to the 0.4 per cent declines in the detached and attached sector over the same time frame.
“Market influence is always wide-ranging and everyone has different reasons for making a move,” said Lyall. “Consideration must be given to the amount of inventory that’s available for a similar property based on the specific features of that home. The amount of competition for a property is often what influences the price that buyers and sellers will agree on.”
When considering the inventory that is available in the City of Calgary, there are 878 units priced under $300,000, of which 99 per cent are either apartment or attached product. The majority of inventory falls in the range of $300,000 to $600,000, of which 56 per cent of the product is detached. Meanwhile, at the other end of the spectrum, there are 1,933 units in inventory at a price over $600,000, of which more than 72 per cent are detached homes.
“Concerns in the energy sector continue to persist, and employment figures are starting to support those concerns,” said Lurie. “In February, employment figures pointed towards job losses related to the energy sector. While monthly employment gains offset the losses, most of the gains were in the traditionally lower paying industries such as the personal services sector. If this trend continues, it may influence the composition of housing demand,” said Lurie.