Job market weakness and lending restrictions a common thread in 2018’s housing market
January 02, 2019
City of Calgary, January 2, 2019 –
As oversupply continues in Calgary’s housing market, December prices eased by one per cent compared to last month and are over three per cent below last December.
“Persistent weakness in the job market and changes in the lending market impacted sales activity in the resale market this year,” said CREB® chief economist Ann-Marie Lurie.
“This contributed to elevated supply in the resale market, resulting in price declines.”
December sales totalled 794 units, a 21 per cent decline over the previous year. Overall year-to-date sales in the city totalled 16,144 units. This is a 14 per cent decline over 2017 and nearly 20 per cent below long-term averages.
Inventory levels in December sat at 4,904 units. This is well above levels recorded last year and 30 per cent above typical levels for the month. Elevated resale inventories in 2018 were caused by gains in the detached and attached sectors.
Throughout 2018, the months of supply remained elevated and averaged 5.2 months. This contributed to the annual average benchmark price decline of 1.5 per cent. Price declines occurred across all product types and have caused citywide figures to remain over nine per cent below the monthly highs recorded in 2014.
“Both buyers and sellers faced adjustments in expectations this year. Sellers had to compete with more choice in the resale market, but also the new-home market,” said CREB® president Tom Westcott.
“With less people looking for a home, it became a choice between delaying when to sell or adjusting the sale price. However, buyers looking for more affordable product did not find the same price adjustments that existed in some of the higher price ranges.”
More information on the 2018 housing market will be released at CREB®’s 2019 Forecast Conference & Tradeshow (www.crebforecast.com) on Jan. 30, 2019.
HOUSING MARKET FACTS
Detached sales declined across all districts in 2018. With citywide sales of 9,945 units, activity remains 21 per cent below typical levels for the year.
Detached inventories were higher than last year’s levels for each month of the year, including December. Slow sales caused the market to be oversupplied through most of 2018.
Detached benchmark prices totalled $481,400 in December, a one per cent decline over last month and a three per cent decline over last year. Overall, 2018 prices declined by 1.5 per cent compared to last year.
Prices have eased across most districts in 2018. The largest declines this year have occurred in the North East, North West and North districts.
Apartment sales totalled 2,663 units in 2018. While the decline is less than other product types, levels are 22 per cent below long-term averages.
The apartment condominium sector has struggled with oversupply for almost three years and 2018 was no exception.
However, supply has been easing, as inventories this year averaged 1,584 units, one per cent below last year’s levels.
Despite slowing supply growth, the market remained oversupplied, causing further price declines. In December, benchmark prices were $251,500, over two per cent below last year. Annually, prices have declined by nearly three per cent for a total decline of 14 per cent since 2014.
Price declines this year have ranged from a high of nearly six per cent in the East district to a low of two per cent in both the City Centre and North West districts.
Declines for both row and semi-detached product resulted in 2018 attached sales of 3,536 units, a 15 per cent decline over the previous year and 14 per cent below long-term averages.
Slower sales activity prompted some pull-back in new listings, but this was limited to the row sector. Row new listings declined by four per cent and semi-detached new listings rose by nearly 15 per cent in 2018.
Despite some adjustments to new listings, inventory levels remained elevated, keeping the market in buyers’ market territory and putting downward pressure on prices.
In December, the semi-detached benchmark price totalled $397,500. This is a monthly and year-over-year decline of 0.8 and 3.8 per cent, respectively. Recent price declines have caused this sector to erase any of the gains that occurred last year, as 2018 prices remain just below 2017 levels. Overall, annual prices remain 1.4 per cent below 2014 peak levels.
Row prices have also been edging down. As of December, row prices were $288,400, a 1.5 per cent decline from last month and nearly four per cent below last year’s levels. Overall, 2018 prices remain two per cent below last year’s levels and nearly 10 per cent below previous highs.
REGIONAL MARKET FACTS
In 2018, the Airdrie housing market was distinctly marked by oversupply and signs of buyers’ market conditions. Compared to last year, inventory levels and months of supply have been significantly higher, combined with lower levels of sales. This has led to downward pressures on the benchmark price for detached homes.
Annual residential sales exhibited a year-over-year decline of 14 per cent and were almost 19 per cent lower than activity over the past 5 years. This consistent decline was observed across all product types.
Supply in 2018 was at record-high levels, with new listings achieving a new year-to-date peak for most of the year. Inventories have also been continuously increasing throughout this year and are 12 per cent higher than in 2017. Months of supply have increased steadily and averaged 5.6 months in 2018.
Persistent oversupply has resulted in a decline in Airdrie prices. In 2018 detached benchmark prices averaged $369,042, over two percent below last year
Declining by 64 units, 2018 sales in Cochrane were lower than the previous year. However, an annual count of 599 sales remains comparable to activity over the past three years.
In 2018 there were 1,288 new listings, the highest on record. Elevated new listings and easing sales resulted in rising inventories and months of supply that averaged nearly 7 months.
Elevated supply has caused detached prices to trend down over the second half of the year, however, it was not enough to offset earlier gains. In 2018, detached benchmark prices have remained comparable to last year.
2018 residential sales in Okotoks were 463 units, a decline over last year and comparable to 2010 activity.
Gains in new listings combined with slower sales resulted in rising inventory and excess supply in this market.
Despite increased supply and weak sales, detached home prices in Okotoks showed modest increases in 2018. The average detached benchmark price totalled $434,875, which is one per cent higher than last year.
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