High supply in Calgary's condo market continues to push down prices

Calgary's condominium market continues to see the supply of available product overwhelm buyer demand, meaning owners looking to sell need to consider ways to set their unit apart from the crowd.

According to CREB®'s 2017 Economic Outlook & Regional Housing Market Mid-Year Update, the condo market has seen a slight rise in year-to-date sales over 2016, but not enough to keep pace with a rise in listings, up an average of nine per cent over last year.

That increased supply is putting downward pressure on prices, which are expected to continue to decrease during the rest of the year for an annual forecasted decline of three per cent.

How economic indicators actually drive the housing market

What do unemployment, migration and oil prices have in common? Apart from being touchy subjects at a party, they all influence the Calgary housing market to some extent. Understanding how and why that happens could provide an advantage when planning a home sale or purchase.

"In many cases the impact is indirect," said Ann-Marie Lurie, chief economist for CREB®.

One part of that impact relates to demand.

Market sees modest inventory gains, but overall prices inch up 

Sales exhibited stable growth through the first half of the year in the Calgary housing market, but the number of transactions slowed slightly in July compared to last year.

Citywide sales totaled 1,637 units, six per cent below July 2016 levels. Year-to-date sales activity totaled 11,957 units, nine per cent above last year.

"Sales growth exceeded expectations so far this year. Clients were re-entering the market after delaying decisions until there were some signs of economic improvement," said CREB® president David P. Brown.

Stable prices in detached sector signal balanced conditions despite increased inventory

The Calgary housing market saw a modest improvement in sales, along with an increase in new listings, in June.

However, demand gains have not kept pace with the amount of new listings coming onto the market. This caused inventory levels to increase to 6,659 units, which is 11 per cent higher than last year's levels.

Despite the shift in inventory this month, second-quarter activity continues to demonstrate improved supply-demand balance and price stability. City-wide benchmark prices totaled $441,500 in June. This is a 0.5-per-cent increase over last month and nearly one per cent higher than last year.

Demand for detached housing continues to rise

The detached housing market continues to lead the way in Calgary's slow but steady recovery from a two-year recession. It is the fourth consecutive month of price increases in this segment of the market.

For the first time since June 2015, prices for detached homes did not decline on a year-over-year basis. Unadjusted detached benchmark prices reached $509,000 in May – one per cent higher than last month and levels recorded last year.

Detached sales improved across all price ranges and represented 65 per cent of all Calgary sales in May, the highest level since 2012. The largest detached sales growth occurred in the $600,000 - $999,999 range.

Calgary's housing market showing signs of stability, but the road to a full recovery will take time.

If Calgary's housing market was a hospital patient, it would have been in intensive care for the last year. Today, though, the patient is showing signs of serious recovery.

First quarter data for 2017 from the CREB®, released earlier this month, reveals the market could be entering a period of stability in which supply and demand are essentially balancing out in the detached sector of the market.

"When we talk about recovery, we have to differentiate the marketplace conditions because there are two segments facing different prospects," said Ann-Marie Lurie, chief economist with CREB®.

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.

Warm weather brings indications of spring market to city

Following the second warmest February on record, the warm, sunny snow-free conditions emblematic of a spring housing market are already on display in our city. And while Calgary's housing market hasn't yet fully emerged from the doldrums, there are at least some signs of life.

With double-digit declines being the norm in 2015 for year-over-year sales, including several months of declines in excess of 25 per cent, the first two months of 2016 have seen the decline lessen.

Since October 2015, when year-over-year sales in the city fell by 33.2 per cent according to CREB®, Calgary's housing market has seen those declines lessen to 28.7 per cent in November, 18.1 per cent in December, 12.6 percent in January 2016 with February seeing the first single-digit decline in the city since December of 2014.

Housing stats indicate some buyers still sitting on the sidelines

Calgary's resale residential housing market picked up where it left off in 2015, with buyers' conditions prevailing through every major category last month, according to CREB®.

Yet with many homebuyers still sitting on the fence, local housing officials caution that historically it's been difficult to find a utopian moment to enter the market.

"Buyers, especially first-time buyers and investors, will do their best to time the bottom, but I think that will be really difficult," said CREB® president Cliff Stevenson, noting that few were able to do so during the last recession in 2008/09 when the upturn happened quickly. "I think this year it will be a guessing game as to when will be the best time to get into the market."

Local housing industry experts say a change that governs the amount buyers are required to put down when purchasing a home will significantly impact Calgary's already sluggish market.

Effective Feb. 15, 2016, the change announced by the federal government in early December will raise the minimum down payment for new insured mortgages from five to 10 per cent on the portion of the house price above $500,000.

"The intent of [the change] is to pull back demand, and they're slowing demand in a market where we're already seeing demand slow," said CREB® chief economist Ann-Marie Lurie, noting resale residential sales in Calgary have already dropped nearly 20 per cent from the 10-year average.