Sta­bil­ity set­tling in to Cal­gary’s res­i­den­tial real es­tate mar­ket

Fall­ing prices spur sales ac­tiv­ity in lower-end of­fer­ings, economist says

Calgary Herald - Calgary Herald New Condos - - Front Page - JOEL SCHLESINGE­R

Cal­gary’s real es­tate mar­ket is sta­bi­liz­ing as the lat­est num­bers show a con­tin­u­a­tion of ris­ing sales and fall­ing in­ven­to­ries.

But by no means is the mar­ket any­where near the pic­ture of health it was a half decade ago, says Ann-Marie Lurie, chief economist for the Cal­gary Real Es­tate Board.

“We’re see­ing sales im­prove, but you have to keep in mind they’re still very low rel­a­tive to his­tor­i­cal norms,” she says. “It’s re­ally that the mar­ket isn’t get­ting any worse at this stage.”

Septem­ber marked the third month in a row of ris­ing, year-overyear sales along with eas­ing lev­els of new list­ings and in­ven­tory.

All three met­rics point to im­prove­ment in the mar­ket, but they are also in­dica­tive of a mar­ket that has long been slump­ing, she says.

Driv­ing all three fig­ures is a con­tin­u­a­tion of fall­ing home prices. The bench­mark price for a re­sale home fell about two per cent in Septem­ber com­pared with the same month last year. Year to date, end­ing Sept. 30, prices were down al­most four per cent com­pared with the same span in 2018.

Fall­ing prices tend to spur more sales ac­tiv­ity, par­tic­u­larly in the lower end of the mar­ket, Lurie says.

“As prices come down enough that sup­ports de­mand growth.”

All told, sales rose by more than eight per cent in Septem­ber, year over year.

At the same time, fall­ing prices re­duce new list­ings as would-be sell­ers hold off putting their homes on the mar­ket, Lurie adds. Con­se­quently, new list­ings fell 12 per cent in Septem­ber from the same pe­riod the year be­fore, while sup­ply fell 20 per cent.

Apart­ment sales led the way with a 16 per cent surge month over month, although apart­ment sales are up only slightly year to date.

“Some of that (sales growth) is due to the re­ally af­ford­able prod­uct on the mar­ket,” Lurie says.

While the bulk of sales re­mains in the $200,000 to $299,000 range, year to date sales end­ing in Septem­ber for apart­ments un­der $200,000 grew for the fourth year in a row — mak­ing it unique among all style and price seg­ments.

“It re­ally is a con­sis­tent story that most of the push is from the most af­ford­able prod­uct.”

What’s more, Lurie adds sales in the un­der $200,000 price range were vir­tu­ally un­heard of at the peak of the mar­ket in 2014. This more re­cent de­vel­op­ment is largely driven by a price de­cline in the apart­ment seg­ment of 17 per cent from the peak five years ago.

Still, the mar­ket is mov­ing to­ward bal­ance even though Cal­gary real es­tate still favours buy­ers.

Lurie says economics must im­prove be­fore the mar­ket gets sig­nif­i­cantly bet­ter for sell­ers. While em­ploy­ment has im­proved, much of the job cre­ation has not been in high-pay­ing en­ergy and re­lated in­dus­tries, she says. Still, un­em­ploy­ment was down in Au­gust at 7.3 per cent from eight per cent in Au­gust 2018. As well, mi­gra­tion was up year over year end­ing in July, with more than 5,500 peo­ple com­ing to the province. But that’s a far cry from the high point in 2014 when the city had net pop­u­la­tion gain of al­most 12,500 peo­ple.

“Over­all, the trend is to­ward more bal­anced con­di­tions,” Lurie says. “But we’re still not there yet.”

CREB chief economist Ann-Marie Lurie says economics must im­prove be­fore the hous­ing mar­ket gets bet­ter for sell­ers. GAVIN YOUNG/FILES

Re­gatta, by Brook­field Res­i­den­tial, is the fi­nal phase of de­vel­op­ment for Brook­field’s Auburn Bay com­mu­nity. BROOK­FIELD RES­I­DEN­TIAL

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