Hous­ing mar­ket plagued with ex­cess in­ven­tory

Calgary Sun - Homes - - Homes - Myke Thomas CALGARYSUN

The City of Calgary’s hous­ing mar­ket — new builds and re­sale — fin­ished 2018 with an abun­dance of i nven­tory, ac­cord­ing to re­ports from Canada Mort­gage and Hous­ing Corp. (CMHC) and the Calgary Real Es­tate Board (CREB).

On the new build side, CMHC says the in­ven­tory of com­pleted, non-sold homes in the Calgary cen­sus met­ro­pol­i­tan area stood at 2,105 homes at the end of the year. In­cluded in the to­tal are 542 sin­gle-fam­ily homes, 360 semi-de­tached, 288 town­homes and 915 apart­ments.

In De­cem­ber, builders started 530 new homes, in­clud­ing 223 sin­gle-fam­ily, 70 semi-de­tached, 124 town­homes and 113 apart­ments. The to­tal num­ber of new starts in 2018 was 10,971, com­pared to 11,534 in 2017, made up by (2017 fig­ures in brack­ets) 3,791 sin­gle-fam­ily (4,423), 1,216 semi-de­tached (1,318), 1,561 town­homes (1,567) and 4,403 apart­ments (4,226).

There are a lot of homes un­der con­struc­tion — a to­tal of 11,452 — more than 60 per­cent of which are apart­ments (7,155), plus sin­gle-fam­ily (2,135), town­homes (1,370) and semi-de­tached (792).

In the re­sale mar­ket, higher in­ven­tory, de­clin­ing sales year over year and a slight drop in prices from Novem­ber to De­cem­ber, were a di­rect re­sult of the lack of any sign of eco­nomic re­cov­ery, says the year-end re­port from CREB.

“Per­sis­tent weak­ness in the job mar­ket and changes in the lend­ing mar­ket im­pacted sales ac­tiv­ity in the re­sale mar­ket this year,” said CREB chief econ­o­mist Ann-Marie Lurie. “This con­trib­uted to el­e­vated sup­ply in the re­sale mar­ket, re­sult­ing in price de­clines.”

Prices in De­cem­ber were down one per­cent f rom Novem­ber and slightly more than three per­cent year over year. Sales i n De­cem­ber reached 794 homes, a full 21 per­cent de­cline from De­cem­ber 2017 and bring­ing to­tal sales in 2018 to 16,144 homes, a 14 per­cent drop from 2017 and close to a 20 per­cent drop be­low long-term av­er­ages.

At the end of last year, 4,904 homes were listed for sale, com­pared to 4,322 in De­cem­ber 2017, tak­ing the months of sup­ply to 6.18, well into a buy­ers’ mar­ket. The bulk of the gain in in­ven­tory was in the sin­gle-fam­ily and at­tached home seg­ments.

“Through­out 2018, t he months of sup­ply re­mained el­e­vated and av­er­aged 5.2 months,” said Lurie. “This con­trib­uted to the an­nual av­er­age bench­mark price de­cline of 1.5 per­cent. Price de­clines oc­curred across all prod­uct types and have caused city­wide fig­ures to re­main over nine per­cent be­low the monthly highs recorded in 2014.”

It was a year of care­fully read­ing the mar­ket be­fore de­cid­ing to sell or buy, said Tom West­cott, CREB pres­i­dent.

“Both buy­ers and sell­ers faced ad­just­ments in ex­pec­ta­tions this year. Sell­ers had to com­pete with more choice in the re­sale mar­ket, but also the new home mar­ket,” said West­cott. “With less peo­ple look­ing for a home, it be­came a choice be­tween de­lay­ing when to sell or ad­just­ing the sale price.

“How­ever, buy­ers look­ing for more af­ford­able prod­uct did not find the same price ad­just­ments that ex­isted in some of the higher price ranges.”

CREB will of­fer more in­sights into the 2018 mar­ket and a look at this year at its 2019 Fore­cast Con­fer­ence and Trade show on Jan. 20.

For more in­for­ma­tion, go to creb­fore­cast.com

POSTMEDIAFILEPHOTO

For new builds, the in­ven­tory of com­pleted, non-sold homes in Calgary stood at 2,105 at the end of the year, while 4,904 homes were listed for sale in the re­sale mar­ket.

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