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COVID-19 Weighing on Housing Market

After a strong start to 2020, economic conditions have dramatically changed, as COVID-19 is impacting all aspects of society. 

The economic impact is starting to be felt across many industries. This includes the housing market.

March sales activity started the month strong, but quickly changed, as concerns regarding the spread of COVID-19 brought about social distancing measures. This had a heavy impact on businesses and employment. 

“This is an unprecedented time with a significant amount of uncertainty coming from both the wide impact of the pandemic and dramatic shift in the energy sector. It is not a surprise to see these concerns also weigh on the housing market,” said CREB® chief economist Ann-Marie Lurie.

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Home sales see a bump

City of Calgary, March 2, 2020 –

This month saw a double-digit gain in sales, but last February was one of the slowest levels of activity since the late ’90s.

With the extra day this February, monthly sales totaled 1,197 units.  A combination of these two factors resulted in a 23 per cent improvement over last year, but sales remain well below longer-term trends and consistent with the lower levels reported over the past five years.

“However, this should not diminish the fact that conditions are still improving,” said CREB® chief economist Ann-Marie Lurie.

“Calgary is continuing to see slow reductions in the amount of oversupply in the market, from modest changes in demand and reductions in supply. This needs to occur before we can see more stability in prices.”

The overall unadjusted benchmark price was $416,900 in February. This is similar to last month, but nearly one per cent below last year’s levels. Overall, prices remain nearly 11 per cent below the monthly high recorded in 2014.

HOUSING MARKET FACTS

Detached

  • After the first two months of the year, detached sales improved by nearly 12 per cent. Improvement did not occur across all districts, as sales continued to ease in the City Centre, North East and North West districts.
  • Driven by pullbacks mostly in the south and west districts, new listings declined by one per cent in the city so far this year.
  • Improving sales and easing new listings helped reduce inventory levels and reduced months of supply to just below four months in February. This is a significant improvement over the more than five months recorded last February.
  • The benchmark price continued to trend down this month for detached homes, but the pace of decline is easing. Citywide detached prices remain less than one per cent lower than last year’s levels, but price movements vary significantly by district, ranging from a three per cent decline in the City Centre to a two per cent increase in the South district.

Apartment

  • For the second month in a row, improving sales were met with gains in new listings. This is causing inventory gains.
  • Sales levels were high enough to cause the months of supply to ease, but the persistent oversupply in the market continues to weigh on prices.
  • February benchmark prices eased compared to the previous month and is over two per cent lower than last year’s levels. The overall benchmark apartment price of $244,700 in February is nearly 19 per cent lower than 2014 monthly highs.

Attached

  • After the first two months of the year, rising attached sales and easing new listings caused inventories to decline.
  • February months of supply is now below five months, an improvement compared to the past two years.
  • Conditions continue to favour the buyer, but improvements have helped reduce the downward pressure on prices. However, divergent activity continues based on location, as prices declined across most districts, but improved in the West, South East and East districts of the city.

REGIONAL MARKET FACTS

Airdrie

  • After the first two months of the year rising sales were met with gains in new listings.  However, the improvements in sales outpaced the new listings gain resulting in further inventory declines.  Months of supply have still eased over last year’s levels, but not enough to cause a significant change in price movements.
  • After the first two months of the year, the benchmark price has remained relatively stable compared to last year.

Cochrane

  • Trends in the town remain generally consistent with regional trends. Improving sales were met with some reductions in listings, inventory and the amount of oversupply in the market.
  • The market is showing signs of improvement, but prices continue to remain over two per cent lower than last year.

Okotoks

  • Improving sales in the town were strong enough to offset recent gains in new listings, causing further reductions in inventories and the months of supply.
  • The elevated levels of supply compared to sales continue to cause prices to trend down. However, at a benchmark price of $409,150 so far this year, prices are just above levels recorded over the first two months of 2019. 

Click here to view the full City of Calgary monthly stats package.

Click here to view the full Calgary region monthly stats package.

2020 opens with a slight gain in sales

City of Calgary, February 3, 2020 – Housing market conditions continue to follow similar trends to last year, with gains in sales.

At the same time, there have been further reductions in new listings, inventory and more declines in prices.

January sales activity was 863 units, nearly eight per cent higher than last year’s levels. While sales remained well below January activity recorded before 2014, they remain consistent with activity recorded over the past five years.

“A persistent slowdown in the energy sector has resulted in a reset in many aspects of our economy. This includes the housing market,” said CREB® chief economist Ann-Marie Lurie. 

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Calgary Real Estate Board

Calgary’s real estate market in December caps off 2019 with more signs of stability

December sales improved to levels more consistent with activity recorded over the past five years. This follows weak sales activity last year.

A stronger second half in 2019 was enough to push annual sales up by one per cent.

“Price declines, lower mortgage rates and some modest improvements in full-time employment helped support some demand growth in the city. Reductions in supply are also contributing to the slow adjustment to more stable conditions in the housing market,” said CREB® chief economist Ann-Marie Lurie.

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Calgary’s housing market expected to support more stable conditions in 2020

City of Calgary, Jan. 14, 2019 – Since the oil price crash, Calgary has faced job losses, wage reductions and tightening national housing policy. These factors have all contributed to the slower sales environment, excess supply and citywide price adjustments of more than 10 per cent.

However, as Calgary moves into the sixth year of this cycle, there are indications of adjustments to these conditions throughout the housing market.

“Job growth, combined with recent easing in mortgage rates and price declines, is starting to bring some purchasers back into the lower end of the market,” said Ann-Marie Lurie, CREB® chief economist.

“We are seeing more transactions in the $500,000-and-below price point for residential homes.”

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Calgary’s real estate market in December caps off 2019 with more signs of stability

City of Calgary, January 2, 2019 – December sales improved to levels more consistent with activity recorded over the past five years. This follows weak sales activity last year.

A stronger second half in 2019 was enough to push annual sales up by one per cent.

“Price declines, lower mortgage rates and some modest improvements in full-time employment helped support some demand growth in the city. Reductions in supply are also contributing to the slow adjustment to more stable conditions in the housing market,” said CREB® chief economist Ann-Marie Lurie.

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CALGARY REAL ESTATE BOARD

Homes under $500,000 moving to more balanced conditions

Sales activity in October improved by nearly 10 per cent compared to last year, driven mostly by improvements for apartment and attached product.

New listings also eased, which helped reduce inventory levels and the oversupply in the market. Despite the move to more balanced conditions, the market remains oversupplied and prices continue to remain below last year’s levels.

“Employment has shifted in the city, with job growth occurring in our non-traditional sectors and often at a different pay scale. This is consistent with the shift to more affordable housing product,” said CREB® chief economist Ann-Marie Lurie.

“However, at the higher end of the market the amount of oversupply is rising, as supply cannot shift enough to compensate for the reductions in demand. This is likely causing divergent trends in pricing and preventing prices from stabilizing across the city.”

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Homes under $500,000 moving to more balanced conditions

City of Calgary, November 1, 2019 – Sales activity in October improved by nearly 10 per cent compared to last year, driven mostly by improvements for apartment and attached product.

New listings also eased, which helped reduce inventory levels and the oversupply in the market. Despite the move to more balanced conditions, the market remains oversupplied and prices continue to remain below last year’s levels.

“Employment has shifted in the city, with job growth occurring in our non-traditional sectors and often at a different pay scale. This is consistent with the shift to more affordable housing product,” said CREB® chief economist Ann-Marie Lurie.

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Third quarter 2019 housing market update: Stronger sales driven by affordable product and supply reduction

Third-quarter activity continues to show signs of improvement. Similar to last quarter, much of the improvement in the market has been driven by supply adjustments.

However, the housing market has also benefited from stronger year-over-year gains in sales activity this quarter. Price declines have likely contributed to some of the demand growth. Also, sales growth has been driven by product priced under $500,000.

“This is a market with divergent trends. The lower end of the market is recording improving sales and easing supply. This is supporting more stability in prices. However, at the higher end of the market we continue to see slower sales and rising supply,” said CREB® chief economist Ann-Marie Lurie. 

“Persistent struggles in the overall economy have caused a shift in salary expectations, along with adjustments in housing demand. Improvements in the lower end of the market will eventually impact higher price ranges, but we are still in a buyers’ market. We are facing enough economic risk that it will prolong the time it takes to move the entire market to more stable conditions.” 

Supply continues to adjust in the resale market, mostly due to reductions in new listings. Easing starts and lower vacancy rates are also helping reduce overall supply levels. These supply adjustments will help support more stability in prices, but often move at a slower pace compared to supply reductions driven by demand growth. 

Nonetheless, the easing supply compared to sales is helping push the market toward more balanced conditions and reducing the level of price declines. Prices continue to remain nearly three per cent lower than last year’s levels, but the pace of decline is easing, and third-quarter prices remained relatively stable compared to second-quarter figures. While we are far from price recovery, pressure on prices should ease if these adjustments continue.

Three things to know about the 2019 third-quarter market update:

  • Sales activity improved by 6.75 per cent compared to last year, driven by gains in the under-$500,000 segment.
  • On average, inventories declined by nearly 14 per cent compared to last year. 
  • The third-quarter benchmark price was $425,533. This is a decline of 2.74 per cent year-over-year, but a 0.31 per cent increase quarter-over-quarter.

For more information, please refer to CREB®‘s Q3 2019 Calgary & Region Quarterly Update Report, available here.