Oversupply persists despite improved sales activity for affordable product

City of Calgary, April 1, 2019 –

March saw a modest decline in city wide sales activity compared to last year. However, sales have been rising for more affordable product in the detached and attached sectors.

Shifts in the lower end of the market have not outweighed easing across the higher priced product. First-quarter sales dropped to 3,108 units. This is nine per cent below last year and 28 per cent below typical levels of activity.

Price declines and relatively slow sales activity are impacting the number of new listings. For the second consecutive month, new listings eased compared to last year’s levels and long-term trends, but it was not enough to prevent inventory growth.

“If new listings continue to slow compared to sales, it could start to help with the persistent oversupply scenario weighing on our housing market,” said CREB® chief economist Ann-Marie Lurie.

“However, inventory is still high. It will still take time for our market to transition towards more balanced conditions and stable pricing.”

With 6,595 units in inventory in March, the months of supply eased to five months. This is an improvement over the past several months, but still considered oversupplied when compared to levels traditionally recorded in March.

The oversupply in the Calgary market has caused further price declines this month. As of March, benchmark prices eased to $413,900, five per cent below last year’s levels and just below levels recorded last month.

 

First-quarter sales declined by nearly nine per cent compared to last year and 30 per cent below typical levels of activity.

Detached sales have varied depending on location and price range, with gains occurring mostly in the most affordable price ranges of each district. 

In March, citywide detached sales improved for all homes priced under $500,000.

Despite easing in new listings, inventories increased over last year’s levels, pushing months of supply to the highest level ever recorded for the month of March. When considering activity by districts, the North East and East districts have seen the level of oversupply ease compared to last year.

Oversupply in the detached sector continues to weigh on prices across all districts in the city. Citywide detached benchmark prices eased 5.4 per cent compared to last year for a total price of $475,800.

 

Resale condominium sales fell by 14 per cent in March, causing first-quarter sales to total 464 units, 17 per cent below last year. The decline did not occur in all districts, as sales activity improved in both the North and West districts of the city. Despite some signs of improvements in those districts, activity remains well below long-term trends.

Supply in this sector is showing signs of adjusting to the lower levels of demand. New listings eased again this month compared to last year’s levels. Unlike other property types, this adjustment is impacting inventories. Inventory in March was 1,488 units, 12 per cent below last year’s levels.

The months of supply has edged down from levels recorded earlier in the year, but due to weak sales, it is elevated compared to last year’s levels.

Citywide, apartment condominium prices fell by 0.7 per cent from last month and 2.6 per cent over last year. However, in both the North East and South East districts, prices posted a modest gain over last year. 

 

There was a slight uptick in attached sales in March due to improvements in both the semi-detached and row sectors. Despite the gains in March, year-to-date sales remain four per cent below last year’s levels and 16 per cent below long-term averages.

Year-to-date sales have eased, but there have been improvements in the South and South East districts.

Despite some improvements in sales, citywide months of supply remain elevated.

Prices continued to trend down for semi-detached product. March’s benchmark price was $391,000, nearly six per cent below last year’s levels and 0.4 per cent below last month’s price. However, the North district saw different results, as tightening months of supply supported a modest gain in prices compared to both last month and last year.

Row prices in March remained relatively flat compared to February levels, but remain more than four per cent below last year’s levels and over 13 per cent lower than previous highs.

 

First quarter sales were seven units less than last years levels, but the number of new listings also declined by 47 units over the same period. This prevented any significant change in inventory levels in the market. However, the months of supply remained elevated averaging five months after the first quarter.

The persistent oversupply in the market has weighed on prices. City-wide benchmark first quarter prices eased by 1.7 per cent compared to the previous quarter and remain 4.6 per cent below levels recorded in the first quarter of last year. While prices eased across all property types, the largest declines occurred in the apartment sector.

 

Cochrane’s first quarter sales and new listings were 114 units and 330 units, respectively, both declining over last years levels. However, the relatively steeper pull-back in sales caused inventories to rise and months of supply to average eight months in the first quarter.

Persistent oversupply in the market has weighed on prices. After the first quarter benchmark prices eased by 1.6 per cent compared to last year and 1.5 per cent compared to the previous quarter. However, year-over-year declines were higher in the attached sector at 2.7 per cent compared to the detached sector which was 1.5 per cent.

 

In the first quarter both sales and new listings slowed compared to last year. However, the pull-back in new listings was not enough to reduce inventory levels in the market and months of supply remained elevated averaging 7.7 months in the first quarter.

The persistent oversupply has impacted prices. The detached benchmark price averaged $413,733 in the first quarter a 4.8 per cent decline compared to last year and 3.8 per cent below the fourth quarter of 2018. Price declines were slightly higher in the attached sector with the benchmark price totaling $376,433 for the first quarter a five per cent decline over the previous year.