Luxury home sales rebound

Segment rallies as overall market continues to face challenges

Once considered out for the count, Calgary's luxury housing sector has seemingly rallied, posting a double-digit sales increase so far in 2016, according to new statistics.

Home sales in the city valued at more than $1 million totalled 118 over the first three months of the year – up more than 20 per cent from 98 during the same period last year. In March, $1-million-plus sales totalled 54, up from 49 in 2015.

This comes as CREB® released its most recent monthly housing summary, showing overall sales in the city this year have declined so far this year by nearly 10 per cent.

"While the $1-million-plus segment accounts for a small share of the activity, there has certainly been some improvement in sales over last year," said CREB® chief economist Ann-Marie Lurie. City Centre recorded 60 million-plus sales during the first quarter, a 13 per cent increase compared to 2015. The North West district also posted positive numbers, a 100 per cent increase to 10 sales, while the South East gained 11 sales, up 450 per cent from two during the same time the previous year.

CREB® president Cliff Stevenson theorizes the more robust activity was due to sellers in this sector readjusting pricing in response to market conditions.

"Price reductions in the $1-million plus segment of the market are often higher because the home is worth more money, so even a small percentage drop is going represent a larger sum compared to the mid-range of the market," he said. "These kinds of price declines can pique a buyer's interest when considering the idea of moving up into that next home and price point."

Calgary's luxury new home sector is also showing positive signs. Brookfield Residential senior vice-president of housing Allan Klassen said he's seen a noticeable bump in activity within the last month when compared to previous periods.

"It was certainly slow up until March for the previous four to five months ..., but it has really started to turn the corner over the last 30 days," said the industry veteran, who also oversees the luxury Albi Homes division, recently named a finalist in 11 categories of the Canadian Home Builders' Association's (CHBA) 2016 National Awards for Housing Excellence.

Klassen noted in the last 30 days, Albi has posted its best numbers in eight months, with six sales valued at more than $1 million in March alone, and four more in April.

"The foot traffic to our show homes has been down, but the quality of traffic has gone up significantly," he said. "I don't want to start holding a parade, but there certainly seems to be some activity out there."

As for the rest of the market, overall sales so far this year have fallen to 3,483 units, a nearly 10 per cent drop from 3,861 last year. In March sales dipped by 11 per cent to 1,588 units from 1,777 recorded during the same time last year.

"With no improvement in the labour market, it's no surprise that we continue to face downward pressure on housing sales activity and prices," said Lurie, noting provincial unemployment rates are at the highest level recorded since the early 1990s.

"While the $1-million-plus segment accounts for a small share of the activity, there has certainly been some improvement in sales over last year."

New listings, meanwhile increased over the same period by more than three per cent to 3,227 units. Weak absorption caused months of supply to increase by more than 19 per cent to 3.8 months, as the city's benchmark price decreased by 0.49 per cent from February and 3.51 per from levels recorded last year to $442,800.

Months of supply represents the amount of time it would take to sell current inventory. Since the start of the year, it has averaged around five months.

The attached sector saw the steepest decline in March, with sales falling by nearly 18 per cent to 326 units. This in contrast to a nearly seven per cent year-over-year increase reported in February.

New listings in the sector increased year-over-year by six per cent, causing inventory to edge up and months of supply to jump by more than 40 per cent to 4.5 months. As a result, the benchmark price fell by 3.3 per cent to $336,500.

Apartments also continued to struggle, with prices dropping by nearly five per cent from last month, and nearly one per cent from the same time last year, to $281,300.

The price decline was due to rising inventory in the sector, jumping by eight per cent to 1,534 units as sales fell by nearly 15 per cent last month to 257 units and listings gaining 1.5 per cent to 682 units.

Months of supply in the sector has now increased to nearly six months.

The detached sector, which represents more than half of all sales in the city, saw similar declines in March. The benchmark price fell by 0.4 per cent from February and 3.3 per cent from March 2015, as sales fell by nearly seven per cent to 1,005 units and listings increased by nearly three per cent to 1,821 units.

Inventory edged up slightly on a year-over-year basis to 1.7 per cent, while months of supply jumped more than nine per cent to just over three months.

"Homebuyers continue to wait and see if there are going to be further declines in home prices before making an offer," said Stevenson. "Timing the bottom of the market is proving to be quite a challenge in the housing market we are faced with now."