Housing stats indicate some buyers still sitting on the sidelines

Calgary's resale residential housing market picked up where it left off in 2015, with buyers' conditions prevailing through every major category last month, according to CREB®.

Yet with many homebuyers still sitting on the fence, local housing officials caution that historically it's been difficult to find a utopian moment to enter the market.

"Buyers, especially first-time buyers and investors, will do their best to time the bottom, but I think that will be really difficult," said CREB® president Cliff Stevenson, noting that few were able to do so during the last recession in 2008/09 when the upturn happened quickly. "I think this year it will be a guessing game as to when will be the best time to get into the market."

Sales activity remains well below long-term averages  

Elevated inventory levels in October contributed to a second consecutive month of price declines in Calgary's resale residential housing market.

Benchmark prices declined 0.7 per cent from the previous month, and 1.2 per cent from the same time last year, to $453,100.

"Persistent weakness in the overall economy continued to impact housing demand in Calgary as October sales were nearly 16 per cent below long-term averages," said CREB® chief economist Ann-Marie Lurie. "In addition, new listings did not decline enough to prevent inventory gains and, ultimately, price contractions."

August sales activity falls below long-term averages

Calgary's residential resale housing market recorded further easing in absorption rates in August due to weaker sales activity.

Sales in the city declined by 27 per cent to 1,643 units last month relative to the same time last year and 12 per cent below 10-year averages.

"Persistent weakness in the energy sector weighed on sales activity this month, which once again retracted to levels well below the norm for the city," said CREB® chief economist Ann-Marie Lurie.

Supply gain in apartment sector threatens to impact price

Declines in residential housing sales activity eased in July, creating, when combined with stable inventory levels, no change to the month-over-month price.

Year-over-year sales fell by 14 per cent to 1,995 units in July, compared to a 17.8 per cent decrease the previous month. Despite the decline, sales activity during the month was consistent with the 10-year average.

While sales decline eased, so too did the decline in new listings, causing the unadjusted sales-to-new listings ratio to edge down to 67 per cent in July and months of supply to increase to 2.53 months.

Several reports have sounded the alarm our real estate market is grossly overvalued, but industry watchers contend Calgary isn't poised for the big crash some are forecasting

Reports suggesting Calgary's housing market is over-valued, supported by recent price corrections, are missing many of the obvious indicators saying otherwise, say experts.

The metrics used to measure affordability simply do not back up the argument that Calgary's real estate market is highly overvalued and ready for a precipitous drop in home values, said Robert Kavcic, a senior economist with Economic Research BMO Capital Markets in Toronto.

"One of the (metrics) we look at is the average mortgage payment as a share of income, and right now that's a little bit above the long-run norm of 27 per cent at about 29 per cent," he said.

Outside factors will impact housing market through 2016

With the sun in Calgary rising and falling relative to the price of a barrel, it should be no surprise that the city's real estate market will continue to be impacted by economic realities beyond its control, say housing analysts.

Following a first half that can best be described as turbulent, the remainder of 2015 looks to bring more of the same for the city's housing market, with CREB®'s mid-year forecast update suggesting decreases across the board, including moderate price contraction.

"Further job losses are expected in the second half of the year," said CREB® chief economist Ann-Marie Lurie.

"These employment changes, combined with overall weakness and slower-than-anticipated recovery of oil prices, are expected to keep housing demand relatively weak for the rest of 2015.

Roller-coaster ride to start 2015 ended with more balanced conditions

The arrival of 2015 was bound to signal a change of pace for Calgary's resale real estate industry, which had just wrapped a bow around a banner 2014.

In fact, with oil prices showing signs of deteriorating toward the end of 2014, December's four per cent sales decline – following 11 consecutive months of sales increases –was really a sign of things to come.

"Changes in the economic climate are expected to cool housing market conditions in 2015, and December activity may be the first indication of this shift," said CREB® chief economist Ann-Marie Lurie at the time.

That change came early and it came swift, with sales falling by more than 30 per cent in January to five-year lows even though new listings maintained their upward momentum by increasing by 37 per cent compared to the same period last year.

Improved sales to new listings ratio reduces inventory gains

After the fifth consecutive monthly benchmark price decline in Calgary, the number of new home listings eased to 3,064 units in April, an 18 per cent decrease over the previous year.

"With fewer buyers making purchase decisions and improved selection for resale, new home and rental property, sellers have been either adjusting their expectations on price or delaying their plans about when to list their home," said CREB® president Corinne Lyall.

First quarter activity reflects economic uncertainty

Elevated inventory levels and low sales for three consecutive months caused unadjusted benchmark prices to ease by 0.44 per cent in March, relative to the previous month, for a total of $454,300. Based on first quarter statistics, conditions are consistent with buyers' market conditions.

Typical home prices have declined by 0.59 per cent in the first quarter of 2015, compared to the fourth quarter of 2014. The sales to new listings ratio also dropped to 41 per cent and months of supply averaged 4.03 for the quarter. This is a significant change from one year ago when the market was facing inventory shortages and price gains.

Energy prices influencing choices in Calgary housing market

Jordan Meloches and his fiancée Ashley Hopkins didn't hesitate when they recently purchased a condominium in the northeast community of SkyView Ranch.

In fact, while many Calgarians were dissuaded from entering the resale housing market in January by lingering low oil prices, the couple said the current economic climate was the farthest thing from their minds.

"The market to us now really wasn't a concern. We bought in SkyView, which is still developing, so I think our value will only increase as the land out there develops," said Meloches, who cited the condo's proximity to their work and future potential as a rental property as factors when settling on a decision.