Calgary Real Estate Market: September 2018
Quick Guide to The Calgary Real Estate Market
By REALTORS® at Renzo Real Estate
We know that one of these months moving forward will be a positive story about the direction of the Calgary real estate market; however, we are not quite there yet. As Calgary REALTORS®, at our real estate brokerage, we are continually examining the market and looking for month-over-month and year-over-year changes. This data can be extremely valuable when you are considering buying or selling. This month, we will take a closer look at these trends and what this means to both sellers and buyers as we move into the winter months.
At the end of September, Calgary home sales posted a 13% decline over the previous year.
When meeting with sellers, our real estate team will usually show the seller a graph depicting their odds of selling.
These graphs are very telling for Calgary sellers, as it clearly shows that listing your home doesn't guarantee a sale. In fact, if you are looking at percentages of homes sold, you could have less than a 30% chance of selling. Declining sales mainly influence this. Of course, this could be due to rising inventory levels and/or declining sales, but in most Calgary communities it is a combination of both.
Here are a couple of examples highlighting your odds of selling:
Green Line: Sold Properties
Grey Line: Active Properties
Blue Line: Expired/Terminated Properties
All over the course of 2018 (Data provided by RealOffice360 in conjunction with the Calgary Real Estate Board)
Lower Mount Royal Apartment Condos
Auburn Bay Detached
Long story short -- inventory is continuing to rise while sales are decreasing. This trend continues to add downward pressure on Calgary home prices. Although each community is unique, as is each product type, in total the inventory levels continue to rise.
From a real estate perspective and when we analyze sales trends over time, we are moving into historically the slowest period of sales in Calgary (winter) with rising inventory and decreasing sales. This trend is hugely concerning for prices as we move into 2019.
What is causing this continued decrease in the number of sales? The Calgary Real Estate Board noted that factors causing this include rising unemployment (which increased again last month), higher lending rates, and consumer confidence. We can see how more unemployment and high rates may cause a decrease in sales, but why does consumer confidence remain low? Shouldn't buyers be dancing in the streets with the deals to be had out there - thereby, presumably, increasing buyer/consumer confidence? Well - yes and no...
In comparison to long-term averages there are lower prices, but if you are trying to sell in order to buy the next place, you might be in a bind with your current home. Since we don't have people flocking to Calgary, and many of the newcomers don't see a need to buy right off the bat with low rental rates, we run into the domino effect problem. Couple that with those currently in the rental market not seeing a need to enter the real estate market, and you have a lot of market stagnation.
This challenge is sparking somewhat of a compound effect, where sales are already slow and those that would be purchasing in the market can't sell their current homes.
Let's highlight a few of the trends between different product types:
Total sales this year, year-to-date (YTD), are down almost 16% and we are down nearly 14% when compared to this time last year (Y/Y).
Our inventory has risen by 36% YTD and 24% Y/Y.
The average days on the market has risen by 25% YTD and 39% Y/Y
This trend is quite concerning as the detached market has always been there holding on as other product types fall. This trend shows us that the detached market has considerable downward pressure throughout Calgary.
The apartment market has taken such a beating over the past few years that we are starting to see "some" easing in this category. We say "some" because the numbers are still sliding but not at the speed that the detached market seems to be slipping. This can be due to the large hit this market has already taken.
Sales are down 6% YTD but up almost 1% Y/Y. A positive number is nice, but this is almost negligible. The months of supply has still risen YTD by 8.45% to 7.2 months; however, the Y/Y months of supply decreased by 9.5%. This is a welcomed trend in our depressed condominium market.
One more interesting note is sellers are taking less on a percentage of list price ratio in apartment condos (~96%) vs other product types (~97%). This shows more motivation in this market which could be a reason for the slight decrease in months of inventory lately.
The attached market is split into semi-detached and row style properties. There has been a considerable decrease in sales in the attached market: 15% decrease YTD and 19% decrease Y/Y.
Already slow row properties have seen a startling decrease in sales by 16% YTD and 22% Y/Y. This shows a softening in this product type.
The semi-detached product is a very interesting market and not one to be ignored. The YTD and Y/Y sales are similar to the detached product, however, the inventory levels have risen by 50% YTD and 42% Y/Y! This is an incredibly concerning rise in inventory. So, although the slow sales mimic that of other product types, the inventory is on a sharp upward curve. Without a doubt, this is influenced predominantly by Calgary's City Centre areas (approximately McKnight to Glenmore and Deerfoot to Sarcee). In this zone, months of inventory rose again to 14.22 months. If you were to take this area out, the semi-detached market would look like other product types. The main concern here is infill sales and inventory in the inner-city communities. With this level of inventory, prices will almost surely fall at quite a fast pace.
If you need to sell in the next 12 months or so, I would consider talking to your REALTOR® soon. They will be able to assist you in understanding your specific market conditions for your product type. If you are selling a detached home, be prepared to be more competitive than you may have previously thought. If you are selling an apartment, conditions are still slow, however, there were some small signs of improvement. If you are selling an infill property in Calgary's City Centre, you will need to be very aggressive with your price, with over 14 months of inventory, if you overprice (or even price on the high side of market value), you may not even receive a showing let alone a sale. Furthermore, based on the months of supply, the chances of a quick turnaround in the infill market are very slim and we should see persistent downward pressure; therefore, if you need to sell in the next 12 months, we would recommend being quite aggressive with your pricing and marketing.
With prices falling and inventory rising in the detached market, chances are prices will be lower come 2019. If you are looking for an apartment, purchasing now wouldn't be a bad idea, based on the market conditions. We are seeing apartment sellers take lower prices for their properties so there appears to be an increase in motivation. If you are looking for an infill property and can wait a few months, it may be wise to do so. If the months of inventory levels continue to rise (or stay where they are at), you are in an extreme buyers market. Since this is a new position for infill sellers, they may not be willing to accept this for a few months, so it may take time for this number to sink in before the market feels it.
Please reach out to us if you would like like further information: