Calgary Real Estate Market: June 2019
CALGARY REAL ESTATE NEWS, TRENDS, AND PREDICTIONS BY REALTORS® AT RENZO REAL ESTATE
The Calgary REALTORS® at Renzo Real Estate are here to guide you through the Calgary real estate market, news, and trends. This month, the REALTORs® are looking at the real estate trends from May 2019, and it has been an exciting few months, to say the least. The spring real estate market is producing positive signs in Calgary and area, and there have been two months of relatively positive news. Last month sales increased and new listings decreased. This has lead to a 12% decrease in inventory compared to this time last year, but is this affecting real estate prices in Calgary?
As you can see from the green line, months of inventory is decreasing. Months of inventory is one of the strongest indicators of the market direction. It is calculated by looking at the number of sales in one month and the amount of active inventory. The calculation is made by determining how many months it would take to sell all the inventory given the sales that month. Here is more information on this statistic.
A decreasing trend in months of inventory tells us that either new listings are slowing, sales are increasing, or both. In this case, in Calgary and across all product types, months of inventory has decreased. In fact, the months of inventory is dipping below 4 months (3.89 months), which is a positive sign. If you only look at the months of inventory, you could say the May 2019 was a balanced market. Now, if you are selling in this market, it will not feel like this, but if months like May 2019 persist then we could see price growth.
From the blue line, you will notice that the average sale price in Calgary has not increased with our decrease in months of inventory. Why is that? Shouldn’t prices be going up if inventory is getting tighter? Yes, but it takes time. A few months of improved sales, is rarely enough to cause a swing in the market, but the momentum is positive!
That said, we cannot just look at one month. If we consider the year as a whole, the months of inventory is up 11.7% to 5.38 months, up from 4.81 months of inventory. Therefore, May was active, and our inventory has been trending down, but we still have a distance to go before the sentiments in the market will change.
Look at the downward trend that we experiencing as we are moved into spring 2019. You may be looking at this and saying, “Ok Calgary REALTORS®, that’s great but isn’t the spring market always like this?” Last year, if you are looking at months of inventory as the indicator, there was not near the improvement in the Calgary real estate market.
The spring real estate market in Calgary last year was relatively flat compared to this year. However, look at the spike we had toward the end of last year and the start of this year. It takes time and months of improvement before prices start to improve. Also, if we look at prices, we will see the average real estate sale price is still below this time last year.
Now, let’s take a deeper dive into different product types in Calgary.
Total Monthly Sales: 1,182 (Y/Y +11.61%)
Year to Date Sales: 4,002 (YTD -1.09%)
Months of Inventory: 3.32 (Y/Y -22%)
Months of Inventory Year to Date: 4.70 (YTD +19.66%)
Days on Market: 50 (Y/Y +24.35%)
Benchmark Price: $487,900 (Y/Y -3.92%) --- 7% below 2014 levels
The improvements in inventory levels in the detached Calgary real estate market is driven mostly by the sub $500,000 market. In fact, have a look at the difference in months of inventory when looking at detached homes in Calgary below $500,000 and above $500,000.
The months of inventory almost doubles when you make this distinction.
What does this mean for you?
If you are selling a detached home in Calgary, if you are in the sub $500,000 category, you should have less competition, however, you will still need to stay realistic with your pricing as prices have not improved.
If you are buying a property in this market, you will need to understand that this market is behaving differently than other markets, so expecting a deep discount off the list price is less likely.
Total Monthly Sales: 424 (Y/Y +10.42%)
Year to Date Sales: 1,537 (YTD +2.06%)
Months of Inventory: 4.46 (Y/Y -15.55%)
Months of Inventory Year to Date: 5.86 (YTD +11.12%)
Days on Market: 61 (Y/Y +20.95%)
Benchmark Price: $316,800 (Y/Y -5.12%) --- 10% below 2014 levels
The attached market is the one sector that has seen an improvement in year to date sales. This is great news for those in attached homes, however, a distinction needs to be made between semi-detached and row townhouses.
If you have a semi-detached home, your sales are up 6.98%, but if you have a row townhouse, your sales are down 1.77%.
Furthermore, not all areas are created equally. If you have a townhouse in the west, your inventory levels are still quite high. Also, if you have a semi-detached home in the city centre, your inventory levels are still high.
What does this mean to you?
There are improvements to the attached market but you need to stay mindful off the difference between semi-detached and townhouses. Also, make sure you look at the statistics for your Calgary community.
Total Monthly Sales: 315 (Y/Y +11.70%)
Year to Date Sales: 1,030 (YTD -6.70%)
Months of Inventory: 5.25 (Y/Y -23.09%)
Months of Inventory Year to Date: 7.28 (YTD +1.99%)
Days on Market: 70 (Y/Y +17.61%)
Benchmark Price: $248,200 (Y/Y -2.90%) --- 17% below 2014 levels
Apartment condos have taken a larger blow than other product types in the Calgary real estate market, but there have been some improvements. The drop in months of supply is a positive for the condo market, however, when looking at the condo market, the data we are working with does not include all of the new inventory/condo buildings that are being constructed. Development of downtown condos has slowed but there is still quite a bit of unsold inventory. Therefore, the apartment statistics are likely telling a more positive story than actually exists in the condo market.
What does this mean to you?
As a condo seller, you are still going to be in a competitive situation. The inventory levels are decreasing slightly which is a great sign but overpricing a downtown condo will not get you very far. Especially with the climb in average days on market and the price contraction.
The Calgary real estate market has had a few months of improvement. The increase in monthly sales and decrease in listings has lowered the high months of inventory that Calgary has been trying to deal with. These improvements are fantastic, but we can’t confuse slight improvements in inventory levels to steep increases in prices. In fact, prices are still contracting across most product types and communities. In order to see price growth, there will need to be continued months of tightening inventory.
Sources: Calgary Real Estate Board