Calgary home prices plunge in October

The value of Calgary home sales is down $ 3 billion following a dismal October that saw the biggest yearoveryear price drop of 2015.

Calgary Real Estate Board data Monday showed the average October sale price fell 6.1 per cent to $ 457,513 — the lowest monthly figure since December 2013. The dollar value of all MLS transactions this year is $ 7.9 billion compared to $ 10.9 billion a year ago.

Sales also slid last month, falling 33 per cent to 1,421 transactions, the lowest level for October since 2011.

“The plummeting house prices are indeed a reaction to the declining provincial economy. Real estate fundamentals show the relationship between the GDP, jobs, and people,” said Melanie Reuter, director of research with the Real Estate Investment Network. “As the economy improves, jobs are created and people move to the area, putting upward pressures on vacancy, rents, and values. The opposite is also true.”

“With a declining economy, jobs dry up, people move away to find work elsewhere, vacancies increase, and housing values go down because of more supply and less demand. It becomes a buyer’s market with much more room to negotiate price.”

The median price in Calgary last month was down 2.6 per cent to $ 419,000 — tied with April for the lowest month this year. New listings declined 7.9 per cent to 2,680 while active listings at the end of the month of 5,578 were up 20 per cent from a year ago.

According to CREB, the benchmark price — which it says reflects typical properties sold in the market — was down 1.2 per cent to $ 453,100.

“Persistent weakness in the overall economy continued to impact housing demand in Calgary as October sales were nearly 16 per cent below long- term averages,” said Ann- Marie Lurie, CREB’s chief economist. “In addition, new listings did not decline enough to prevent inventory gains and, ultimately, price contractions.”

CREB said the months of inventory supply in the market has climb from 2.18 last year to 3.93 in October. That reflects the number of months it would take to sell all the inventory at current demand levels.

“Typically what we start to see at this time of year those numbers of inventory product available starts to slow as we hit the winter months,” said Lurie. “But it’s kind of remaining elevated. Demand is so weak. What it’s doing is just pushing up that month of supply figure.”

She said in June the months of supply figure was 2.36. Moving into a higher level is putting a downward pressure on pricing, she added.

The apartment sector in particular is seeing that months of supply number growing to 5.7 in October. It has been gradually increasing since June when was about three months of supply.

Lurie said the rise in the apartment sector is not surprising considering the amount of new product that has come onto the market recently as well as the growing rental vacancy rate in the city.

“If you look in the past, when we start hitting above that four ( months of supply) number and stay there for several months ... that’s when it really starts to put that downward pressure on pricing,” said Lurie.

Year- over- year, MLS sales fell by 32.4 per cent in the detached city market, by 30.9 per cent in the attached market and by 38.9 per cent in apartments.

Average sale prices also declined in all three categories — 7.3 per cent for detached; 6.9 per cent for attached; and 1.5 per cent for apartments.