Gen­er­ous sup­ply push­ing down re­sale home prices in city

Oc­to­ber marks the fifth con­sec­u­tive month of fall­ing bench­mark prices

Calgary Herald - - NEW HOMES - JOEL SCH­LESINGER

Prices con­tin­ued to fall last month for re­sale homes in the city as over­sup­ply still weighs on the real es­tate mar­ket.

“Over­sup­ply is re­ally across the board,” says chief econ­o­mist An­n­Marie Lurie with Cal­gary Real Es­tate Board.

De­tached, apart­ment and at­tached mar­ket seg­ments all suf­fered from too much sup­ply and not enough de­mand in Oc­to­ber.

The re­sult is the bench­mark re­sale price fell last month to $426,300 from $428,700 in Septem­ber. More­over, it was 2.9 per cent less than a year ear­lier when the bench­mark price was $439,200. Bench­mark prices are that of a typ­i­cal home based on a for­mula that uses var­i­ous fac­tors to en­sure ac­cu­rate com­par­isons.

“I wish I would have some­thing new to say, but it’s been the same trend we’ve seen in Cal­gary for some time,” Lurie says, adding Oc­to­ber marks the fifth con­sec­u­tive month of fall­ing bench­mark prices.

The trend may con­tinue if un­em­ploy­ment re­mains high in the city. At about eight per cent, Cal­gary still has the high­est un­em­ploy­ment rate in the prov­ince, she adds. Al­though the en­ergy sec­tor is ex­pe­ri­enc­ing an in­crease in ac­tiv­ity over the past year, “when we look at job growth, we haven’t seen it with those white col­lar jobs.”

Th­ese typ­i­cally high-pay­ing jobs are what drove the city ’s econ­omy in the past, but they have yet to re­turn to lev­els be­fore the down­turn in 2014. Lurie says this is not en­tirely un­sur­pris­ing for mar­ket ob­servers.

“We were al­ways ex­pected that this would be a chal­leng­ing re­cov­ery.”

But the slow re­turn to bet­ter con­di­tions has been dif­fi­cult for Cal­gar­i­ans ac­cus­tomed to the rapid re­cov­er­ies as­so­ci­ated with a boom and bust oil econ­omy.

While the econ­omy weighs heav­ily, some pos­i­tives can be found among the data, Lurie says.

“In­ven­tory may be el­e­vated, but at least I have seen some of those new list­ings com­ing onto the mar­ket come off.”

This is re­flected in the to­tal months of in­ven­tory de­clin­ing to un­der six months in Oc­to­ber com­pared with Septem­ber when it was higher than six months.

Ad­di­tion­ally the num­ber of units on the mar­ket fell from about 440,000 in Septem­ber to a lit­tle more than 435,000 last month.

While pos­i­tive, the num­bers are not game-chang­ers.

More­over, it’s un­clear how the lat­est rate hike by the Bank of Canada will im­pact the mar­ket.

The hike came closer to the end of the month so it didn’t have time to af­fect Oc­to­ber’s fig­ures in a sig­nif­i­cant way, Lurie adds.

Ad­di­tion­ally, con­di­tions are equally unin­spir­ing in out­ly­ing areas, which are also fac­ing over­sup­ply is­sues.

Still, the num­bers haven’t fallen off quite as much as Cal­gary. Air­drie, for ex­am­ple, saw the big­gest de­cline in its bench­mark price, drop­ping about two per cent year over year to $370,880. Mean­while Cochrane’s bench­mark held steady at $424,900, and Oko­toks’s bench­mark ac­tu­ally rose by 1.25 per cent to $436,660.

Al­though the num­bers paint a bleak pic­ture across the re­gion, and it’s un­clear when the mar­ket will turn pos­i­tive, she notes the cur­rent con­di­tions do trans­late into rel­a­tively good news for buy­ers.

“For some­one in the mar­ket right now, there is lots of se­lec­tion to choose from.”

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