Calgary’s housing market is running hot and cold

Calgary ’s housing market is a glass half-full/ half-empty scenario, according to recently released data from the city.

“The overall findings, if I were to summarize them, are mixed,” said Oyin Shyllon, an economist and the regulatory lead for the City of Calgary finance business unit, which compiles housing data on a quarterly basis throughout the year.

“There are positive and neutral elements and some things we’re not very happy with.”

Among the positives for the third quarter, running from July 1 to Sept. 30, were housing starts, at their highest levels since 2014.

“That tells us people who build homes see a lot of positives ahead.”

Starts were already surging in the second quarter with 3,919 units for that period. In 2014, by comparison, starts were about 4,500 for the second quarter, which was around the same time oil prices were more than US$90 for West Texas Intermediate.

This year, the third-quarter numbers were down from the second quarter — which is a typical drop in activity seen in previous years for the same span. Building starts for Q3 were 2,940 for the entire metropolitan area (including Airdrie). In contrast, the starts in 2017 for the second quarter were 3,446 and 2,869 in the third quarter.

Overall, the “first nine months of this year was very close to 9,000 starts,” Shyllon said. “For the first nine months of last year, it was about 8,400.”

What’s more is builders are adjusting to changing conditions with fewer single-family home builds. In Q3, only 677 single-family homes were underway, down from 771 in Q2 and 920 in the third quarter of 2017.

The reduced focus on singlefamily homes partly reflects a trend toward less costly townhomes and apartments, spurred by rising mortgage costs.

Increased borrowing costs aside, wage growth was very strong in the third quarter at 2.3 per cent — the highest level “in a long time,” Shyllon said.

Higher wages were likely to be a contributing factor that kept housing affordability flat for the quarter, in line with the first half of the year. The lone neutral metric for Q3, affordability, was also likely kept in check by a bevy of negative data points, including falling sales — a drag on pricing.

Shyllon said 5,553 units sold in the third quarter — down 918 from the second quarter and 500 units less than Q3 in 2017.

There are positive and neutral elements, and some things we’re not very happy with.

“The extension of that is if you look at listings for homes, we’ve seen a substantial decline from the second quarter to the third quarter.”

He added it’s likely many homeowners who had been considering selling may be looking at lacklustre conditions and deciding not to list.

Moreover, employment has stumbled again.

“Employment had been improving, but it got worse in the third quarter,” said Shyllon, adding this figure is perhaps the biggest driver of the market. What’s more is this number, along with the other datapoints, were compiled before oil prices fell dramatically in October and November. As a result the market picture is even less certain for the end of 2018, he added. “That’s why we are eagerly anticipating the fourth quarter data to get a good sense of what is going on now.”