A Transition in the Making

Detached sales activity boosts February housing market

After the first two months of the year, Calgary's detached sector continues to drive a slow transition in the housing market.

February sales totaled 1,342 units, which is still 19 per cent below long-term averages, but an improvement over the past two years.

As sales kept trending upward, detached inventory levels continued to ease in February. These conditions caused months of supply to fall to 2.4 months, putting less downward pressure on pricing.

Unadjusted detached benchmark prices totaled $501,900 in February, which is one per cent lower than prices recorded last year, but slightly higher than January figures.

"There seems to be a new sense of optimism these days," said CREB® president David P. Brown. "Some sellers are feeling upbeat about the changing landscape and the improved chances of selling their home. Other people are looking at the spring market with caution and wondering if we're going to see a higher than expected surge of listings."

It's hard to know for sure how consumers will react to the spring market, but Brown says no matter what happens, sellers will still need to be realistic with their pricing.

Some sellers are feeling upbeat about the changing landscape and the improved chances of selling their home. Other people are looking at the spring market with caution and wondering if we're going to see a higher than expected surge of listings.

"There is less supply in the market and that's a good thing for sellers, but that doesn't mean it's realistic to expect the list price of a couple years ago. Sellers need to look closely at similar properties on the market right now and really consider what kind of asking price will make them competitive."

The amount of excess inventory eased in the overall market in February, setting the stage for a transition to a more stable market this year.

Months of supply totaled 3.4, down from five months last February. At the same time, the sales-to-new-listings ratio trended from a near record February low of 39 per cent last year to 55 per cent this February.

With sales improving and new listings and inventories contracting – two key measures of market balance, there's good evidence to show that the housing market has started a trend toward more balanced conditions.

"The transition in the housing market appears to be underway," said CREB® chief economist Ann-Marie Lurie. "However, it is important to note that this change is primarily being driven by improvements in the detached market and stability in the labour market."

"It will take some time for these conditions to translate into all housing segments and achieve price recovery," said Lurie. "But all indicators continue to point toward a slow transition from a contracting market toward one that is stabilizing at lower levels."

Tagged: Apartment Sector | Detached Sector | Economy | Housing Market | YYCRE