This one is coming out a little behind schedule! Now with May in the books and the spring market coming to a close, it’s not what most had expected. The tow line to start 2018 was that we may have seen the bottom of this last recession and that a long slow recovery was in order. Currently, there are over 9,000 listings on the market and sales are down to the tune of 21% through the first 5 months of 2018. Not quite what was expected at all!
So where do we go from here? Heading in to the summer market, there is plenty of selection for ‘off season’ buyers and probably more than one seller that needs to get their place sold. There might be a few deals to be had out there. With numbers like this, there is bound to be a correction to prices, however, I wouldn’t expect huge drops. To put things in perspective, detached homes have only dropped 5% over the last 3.5 years. On an average priced home, that is $25,000. Will prices drop? Probably. Will they drop more than 5% in the next few months. Probably not. Your best bet is to find a desperate seller and get an extra $5-$10K below market value (1-2%). Well, let’s get to it!
City of Calgary sales were down 19% in the month of May which leaves sales down 21% year to date. Looking back on the last few months, I would say that the new mortgage rules and increased interest rates had a part to play in it. I’ve noticed that there weren’t near as many move up buyers / sellers. And why would you? If you can only qualify for $550K instead of $700K and you are living in a $450K home, there isn’t much point in moving up. Might as well renovate and make do with your current home. Benchmark prices for the city are $436,900 which is down 0.6% year over year. With respect to the inventory levels, I believe that people have been hanging on for the last few years, hoping things would turn around. However, this is the end of the rope for some people and they now have to sell just to keep afloat.
The detached market is starting to show some cracks. Sales are down 23% in May compared to 2017 which leaves the segment down 21% year to date. Where are the buyers? There is still a lot of action for homes under $500K. I dealt with 2 multiple offers in May! Inventory levels are getting crazy though. Up 50% (4500 homes) since this time last year. The Northwest and East districts have really low supply (less than 4 months). The City Centre and West districts saw prices increase year over year while the Northeast saw prices decrease the most since May last year (down 3.4%). The well looks to have dried up in this segment. While there was substantial pent up demand over the last few years, the demand has sagged and now we are looking at high inventory levels leading in to the summer.
Although sales are down in with apartments, the segment has faired better than the rest. Sales are down 12% year over year and 11% year to date. Keep in mind that sales weren’t setting any records last year. With prices having adjusted nearly 15% since 2014, maybe prices are finally getting in line with buyer’s expectations. It certainly is making it more appealing as a way to get your foot in the market. You can buy a 1 bedroom condo for roughly $150,000. With condo fees and property taxes, you are close to $1,000 a month in payments. Not bad to own your own home, eh? There is definitely an increase in activity for units under $200K. The South and East districts have lower supply levels (under 5 months) while the Northeast and North have high supply with over 9. Benchmark prices sit at $256,200 which is 4% off last year. The Northwest has faired the best over the last year with prices only dropping 1% since last May.
Semi detached homes are following the same course as the detached segment. Inventory levels have sky-rocketed (up 66%) and sales have slowed down considerably (off by 17% year over year). The City Centre has seen the biggest jumps in inventory with over 8 months supply, while things are relatively tight in the South with under 3 months supply. Benchmark prices are starting to adjust with prices 2% lower than last May
The row housing sector is showing signs of life. Much like the apartment segment, prices have adjusted to create an affordable window for first time home buyers. Once again, sales for row homes priced under $200K have increased substantially compared to last year. Benchmark prices are $303,200 which is up 3.7% since last May. The Northeast has seen prices drop the most (down 6.7% year over year), while all other districts are flat year over year. The Northeast and City Centre are up over 7 months supply. There might be some good deals in those areas in the coming months.
Surrounding Towns
Airdrie –
- Sales year to date are down 12% to 503 homes
- Benchmark prices are down 1% year over year to $373,140
- Sitting at 4.3 months supply
Cochrane –
- Sales year to date are down 3% to 254 homes
- Benchmark prices are flat year over year at $422,520
- Sitting at 6 months supply
Okotoks –
- Sales year to date are down 16% to 204 homes
- Benchmark prices are flat year over year to $434,760
- Sitting at 6.5 months supply
Chestermere –
- Benchmark prices are at $492,200
- Sitting at 7.7 months supply
Strathmore –
- Benchmark prices are at $393,400
- Sitting at 7.3 months supply
For a more in depth look at the stats, here are the Calgary & Regional stats.
Here is the latest labour report for Calgary.
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