We are off to an interesting start for the first two months of 2018. With the third interest rate hike in six months in mid-January and the change in the qualification process of non-insured mortgages, it was to be expected that we would see a slow start to the year. Chillier weather along with lots of snow may have also impeded sales for the early part of the year.
Although sales of all residential properties in metro-Calgary was down 11% compared to last year for properties under a million dollars, we actually saw a significant increase in sales of homes over that million dollar threshold to the tune of 45%! Combining all property sales in all price categories, year over year we saw a 10% decrease in sales for the first two months of this year:
Lifestyles of the rich and famous?
Taking a closer look at the higher end homes may give us a better prospective of what is actually happening in that sector. The highest sale so far this year was a beautiful home in Britannia that sold for $3.18 million toward the end of February. This home was originally listed at the end of 2015 for $5,995,000 and was on the market for 788 days before they found a new owner. The sellers purchased this in 2012 for a whopping six million dollars. Wow, that is a heck of a loss!
The second highest sale was in Elbow Park. It was originally listed in September 2016 for $3.7 million, they were on the market a total of 388 days and sold for three million dollars. This home was purchased in September 2017 for $3,733,050!
The third highest sale was only on the market 18 days, a bit out of the norm for this price category, originally asking $3.15 million. They sold $257,500 (-8%) below list for $2,892,500.
And in the fifth spot is this bungalow in Briar Hill. It was on the market for 301 days, originally listing for $2.888 million and selling for $2.4 million. They also listed this home for 301 days in 2013/14 for $3.15 million.
So although on the outset it would seem that folks selling the elite homes in Calgary are seeing an increase in activity, perhaps what we are actually seeing are high-budget buyers taking advantage of a slower, receding market. Granted not all of the 77 sales of homes in this price category are seeing these crushing decreases in value, but it is interesting to see that those five homes sold considerably below their original expectations.
The rest of the detached market...
When we dip below this threshold and look at homes between $600k and that million dollar mark, we can see that sales for detached homes are down 23% from the pace we set last year. I think this is a significant price category that may very well affect other home sales in lower categories. We want to keep an eye on inventory levels in relation to sales. If we see a significant increase in listings, we risk a deterioration in pricing as sellers compete with one another for a potential buyer.
From February 1st to March 5th about 460 new (or re-listed) homes came onto the market in this price category, about 41% of the current inventory of 1,125 homes. In February there were 134 sales and January there were 105 sales, obviously new listings are far out-pacing sales. Perhaps this increase in the inventory are sellers that are trying to get a jump on the spring market. If new listings slow and the pool of buyers increases as we head toward better weather, perhaps everything will even itself out.
The bulk of our detached sales in metro Calgary are between $400k and $600k. So far this year they account for just over half of our sales. Year over year transactions are down 14%, from 739 last year to 638 this year. Almost half of the current 1,837 listings have been added since the beginning of February.
We are at an interesting crossroads here, hoping the buyer pool becomes more robust as we get closer to the spring market. As per usual our Alberta real estate market is full of intrigue and uncertainty.
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