The Calgary Real Estate Board has released the December statistics package so I thought this would give me a good opportunity to review the year in real estate with you.
Sales of detached homes in 2018 were the lowest they have been in over a decade with 9,945 homes changing ownership - the only year we were under the 10,000 sales ceiling. On the bright side, we are hoovering just below the average for new listings. Although we have been on a steady incline for the past three years, as we can see in the second graph below, we are somewhat below levels in 2008, 2011 and 2012, three of the toughest years we have seen in the past decade:
Looking at the inventory (in blue below) and sales (in green) we can see the ratio between the two is quite high. As that differential expands, typically pricing (in red) drops off considerably. We can also see in the second graph that supply is trending upward and is at a critical level, the highest it has been in five years.
All three price indicators - Benchmark, Median and Average prices – are the lowest they have been in the past four years. This is the highest inventory level we have brought into a new year in the past four, in combination with the lowest sales figures in that same period of time:
Here is a look at the detached market since 2005. As inventory levels rise, typically prices trend downward. We can also see that inventory levels usually increase from the beginning of the year to mid-year with a few exceptions. The inventory level is certainly trending upward, we may very well see a further glut in inventory this year as we move towards spring and early summer:
The numbers are certainly not looking very good heading into 2019, I do hope we are getting close to the bottom and we can see some gains shortly. I suspect we will see subtle (and maybe some not-so-subtle) changes in a variety of extraneous circumstances to the market such as slight changes to mortgage qualification, this is an interesting article in the Globe and Mail from last week. We have seen six mortgage rate increases in the past couple of years as well as qualification changes in October 2016 for insured mortgages, then again last January where all qualification rules were amalgamated regardless of the mortgage portion of a sale. It is tougher to get into the market as a first time home buyer, and that is certainly adding to the sluggish sales numbers. Perhaps some of these anticipating tweaks will set us on a more balanced course.
With all Calgary sales categories down over 20% this past year, I would imagine mortgage brokers - as well as any other real estate professionals - have seen a big financial hit in the past five years, and especially this past year. Although new home builds are not necessarily included in our MLS statistics, we will find that Builders are also seeing a similar decline in sales. I suspect we may see some builders, Real Estate Brokerages and mortgagors take a serious look at their future viability as they feel the financial pinch. It was the end of 2016 that we saw Reid Built go belly up and what a fiasco that still is! I suspect there are many companies, builders and support services that may be dealing with insolvency if we don’t see improvement in the industry early in the year.
There were some exceptional sales this year, 49 detached homes sold over a million dollars in metro Calgary. Here is a look at a few of those:
- 4328 Britannia Drive was originally listed for $5.95 million in 2013 and was on and off the market for 1,112 days, selling for $3,599,000 in early November;
- 3411 Ninth Street SW in Elbow Park sold at the end of November for $3,488,000. The seller purchased this in December 2011 for $5.05 million;
- 234 Discovery Ridge Terrace was purchased for $2.05 million in 2008 and sold in mid-November for $1,898,000;
- 126 37th Street NW was originally listed for $1.85 million in March and sold after 232 days on the market for $1,550,000.
Not all of the upper echelon saw such dramatic drops in price or value. I would say, though, that many affluent buyers in this price category are taking advantage of the lacklustre market and securing some beautiful properties in anticipation of values eventually returning to values of the past. Maybe they know something we don’t know!
Regardless of the slow market, there still are buyers that are looking for a new home. Some folks are upsizing as new members are added to their families, some are looking to purchase after renting for a period of time, there are new folks coming to Calgary all the time and there are some folks looking to down size or “right size”. What IS important in such a volatile market is to have the facts so that one can make well-informed, well-researched decisions whether they are considering buying or selling.
If you are considering buying, selling or investing in real estate, let me put my experience and expertise to work for you.
