Home prices dropping while inventories on rise
September sales fell 13 per cent from last year’s, according to report from Calgary Real Estate Board
Calgary and surrounding region experienced another pullback in sales and a resulting drop in the benchmark price of a home last month, making the market increasingly favourable for buyers.
Sales for September dropped 13 per cent year over year, the latest data for the Calgary Real Estate Board (CREB) show, released Monday.
While sales for the same period in the previous two years showed some stabilization, growing inventories this year have outpaced demand.
All told this reflects lagging employment growth, says CREB’s chief economist Ann-Marie Lurie.
“Even though oil prices are higher, we’re still sitting at eight per cent employment,” she says, adding this is a key driver of the real estate market.
Other headwinds, she notes, have been higher lending rates and stricter rules for borrowers.
While demand remains an issue in the region’s housing market, so too is over-supply.
Inventories were 7,941 units in the city for the month. That’s pushed up the supply of available homes in the market to 6.25 months of demand — the highest since the start of 2016. Rising supply and lacklustre demand are translating into lower prices overall. CREB data show the unadjusted citywide benchmark price was $428,700 in September, a drop of almost one per cent from August and three per cent below the same period in 2017.
For detached homes, 7,945 units were sold in Calgary year to date, 20 per cent below the 10-year average. The benchmark price was $493,100, which was 0.8 per cent less than the previous month and three per cent below September last year. The one bright spot was homes under $300,000, which showed modest growth.
The apartment sector experienced the slowest sales decline at six per cent this year so far. But like the detached market, sales are more than 20 per cent below to the long-term average. Overall, 2,103 units sold year to date, ending in September. Prices fell by 0.4 per cent last month from August, and 2.7 per cent year over year. The benchmark price fell more than two per cent to $257,200 from the previous year.
The attached market sales were 2,814 year to date, 15 per cent below last year for the same period, and 14 per cent below the longterm average. Again, recent oversupply is a headwind with prices falling more than three per cent to $324,700 year over year, the report states.
Outside the city, the market also favours buyers, with Airdrie seeing the detached benchmark prices at $371,244, a 1.7 per cent drop compared with same period in 2017.
The market is Cochrane is also soft with sales at 477 year to date, 59 less than the same period last year. Sales in Okotoks are also falling due to rising new listings. Yet benchmark prices actually increased one per cent to $436,422 from the same period last year — though that figure is still three per cent below previous highs.
Lurie says these areas face an additional challenge, too, as new builders in outlying regions are offering increasingly competitively priced product.
Despite rising inventories and sagging demand, the market is showing some signs the recovery may gain more traction.
“We had positive net migration to the city last year,” which should translate into growing demand for homes, she says.
Another indicator is falling vacancy rates. “That could be a sign that oversupply in that sector of the market is easing, and that eventually should translate into ownership over time,” Lurie says.
“But overall it’s a really slow recovery for us.”