Market remains balanced despite easing in absorption rates
Supply gain in apartment sector threatens to impact price
Declines in residential housing sales activity eased in July, creating, when combined with stable inventory levels, no change to the month-over-month price. Year-over-year sales fell by 14 per cent to 1,995 units in July, compared to a 17.8 per cent decrease the previous month. Despite the decline, sales activity during the month was consistent with the 10-year average.
While sales decline eased, so too did the decline in new listings, causing the unadjusted sales-to-new listings ratio to edge down to 67 per cent in July and months of supply to increase to 2.53 months.
“As weakness in the energy sector continues, this is trickling into several other aspects of our local economy, including our housing market,” said CREB® chief economist Ann-Marie Lurie.
Despite weaker absorption rates, market conditions remained relatively balanced and helped maintain month-over-month stability in benchmark prices, which remained unchanged from the previous month at $455,400. “Often, the focus is on home prices. In fact, Calgary has recorded significant gains in home prices over the past several years,” said Lurie. “And despite the recent retraction, we have not seen all those previous gains eroded.”
While benchmark prices exhibited some month-over-month resilience, they still declined by 0.15 per cent annually and one per cent lower than levels recorded in January. It represents the first time since 2011 that benchmark prices have posted a year-over-year decline.
Lurie attributes most of the year-over-year decline to the apartment sector, where prices fell by 1.61 per cent to $293,300 – nearly two per cent lower than the price at the beginning of the year – due to weak demand and growing supply.
Year-to-date new listings in the apartment sector declined by 4.6 per, while sales declined by 29 per cent over the same period, resulting in inventory gains. By July, the months of supply pushed up to 3.77 months compared to three months in June.
“The relatively weak demand for apartment product, combined with rising supply, continued to place downward pressure on prices for the second month in a row,” said Lurie.
CREB® president Corinne Lyall noted Calgary’s housing market is continuing to see some nuances in supply between the different segments of the market. “These differences are really important to understand as it relates to consumer expectations,” she said. “Some buyers expect they will get major price reductions in this market, but that’s not always the case. In some areas, supply levels are more balanced with demand and that creates price stability.”
Meanwhile, detached home prices remained steady month-over-month at $515,300. While absorption rates eased in the sector, conditions remained relatively balanced. “Many clients are optimistic about the long-term outlook and are less concerned about short-term fluctuations in the housing market,” said Lyall.
“They’re focused on taking the time they need to make the right choices for their lifestyle. Saying that, it’s important to stay current and become educated with the market dynamics in the communities where they may be making real estate decisions.”