Took a hiatus in August and feeling refreshed and ready for the fall! Here is the monthly stat pack for August. The last couple months in Calgary have been characterized by more sellers on the market. Sales are up 2% city wide compared to last year and up 8% year to date, however, here we sit with over 6,600 active listings. The number of listings peaked late August at just under 7,000! Keep in mind, we have been running 5,000-6,000 listings since the low oil prices (late 2014). While sellers previously may have been hesitant to throw their place on the market (keeping the number of listings down), now there are more deciding to sell. Couple that with less buyers and we are seeing inventory levels rise. The increase in interest rates has definitely had an effect, but the pent up demand from market uncertainty has withered away as well. I’m just not sure consumers are seeing the light at the end of the tunnel yet. There was some optimism to start 2017 with expectations for recovery towards the end of this year or next and now it seems more likely that might be a few years out.
The condo market (apartment & row) now makes up nearly half of the listings on the market. Apartment benchmark prices sit at $263,300 (-3% year over year). Sales are down 7% and inventory is up 12% (1,768 units). Interestingly enough, year to date sales are up 5%. Now last year was near record lows so not much to write home about, however, it does show that buyers do like the new price of condos. The West and Southeast districts show year over year price increases of approximately 1% while in the East you will find plenty of selection and good deals. Investors are starting to take notice and low condo fees mean that a person can get positive cashflow on their investment.
Row housing is showing positive signs with benchmark prices up 0.4% since August last year. Sales are up 3.3%, however, inventory levels are also up 14%. Buyers are still feeling that owning a townhome is a safer bet than apartments (if they can afford it). The duplex segment has seen decent activity with year to date sales up over 10% while inventory is up 16%. This part of the market has been keeping better pace with the inventory levels and it shows in the benchmark prices – up 3.4% to $419,600. There is tighter supply in the North and Southeast districts (good news for sellers) while the City Centre, Northwest & West districts have all seen prices increase approximately 5% since this time last year. Both parts of this segment are enticing to buyers right now. The infills downtown show an increase in activity as move up buyers see this as a good opportunity to upgrade. As well, in suburban areas, buyers looking for an affordable home without condo fees see it as their last chance to buy a home before rising interest rates put home ownership out of reach.
A note on that. The Government has increased the lending rate by 0.5% in the last few months. This has affected purchasing power and there is concern in the market. How far will the rates increase? I still don’t believe that the banks want to own a bunch of homes and Canadians are notoriously over leveraged. With that being said, there is still room for rate increases. On an average priced detached home ($442,300) an increase of 0.5% in the interest rate equates to approximately $100 more a month. It doesn’t seem like much, but if interest rates were to go up 2%, it would be a substantial increase. From talking to other people in the industry, there is an expectation that rates will go up before they go down.
The detached segment keeps clipping along. Sales are flat from last year, but up 8% year to date. Benchmark prices have increased 1.5% year over year. The move up market has been motivated this year as year to date sales in all categories $450,000-$1M have seen an increase from last year. The Northwest district is seeing an increase in sales activity compared to new listings (73%) which could mean lower supply in the area. Currently there is under 3 months supply for the Southeast, West & Northwest districts.
Outside of Calgary, benchmark prices have been relatively flat. Cochrane & Okotoks are down 0.4% and 0.5% respectively. Cochrane’s sales year to date are up 14% and Chestermere’s sales are above the 10 year average. Airdrie’s benchmark prices are up 0.8% year over year to $379,800. It does seem that people are taking advantage of lower prices outside the city. Makes sense. If your buying power has been cut down, go where your dollar goes further.
There are silver linings – employment growth is happening outside of the energy sector. I have heard from a few people recently that Calgary is attracting head offices from other industries. Nice to hear that we are making an effort to diversify! As long as there are more people moving in to Calgary than leaving, it should make a case for higher demand.
If you are on the fence about buying a home, conditions are good right now. There is a lot of selection and with interest rates going up, you may want to make a move before the reality becomes a dream. Get your rate lock today! If you haven’t talked to a mortgage broker yet, get a rate lock for 120 days. Doesn’t cost you a cent. Let me know if you need a recommendation.
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