June spells a gradual recovery

Stable prices in detached sector signal balanced conditions despite increased inventory

Calgary’s housing market in June saw a modest improvement in sales along with an increase in new listings.

However, demand gains have not kept pace with the amount of new listings coming onto the market. This caused inventory levels to increase to 6,659 units, which is 11 per cent higher than last year’s levels.

Despite the recent shift in inventory this month, second quarter activity continues to demonstrate improved supply-demand balance and price stability. City wide benchmark prices totaled $441,500 in June. This is a 0.5 per cent gain over last month and nearly one per cent higher than last year.

“The supply gain this month will be monitored. However, on a quarterly basis, inventory levels remain comparable to last year, sales have improved and there have been modest price gains. All of this remains consistent with expectations of a gradual recovery,” said CREB® chief economist Ann-Marie Lurie.

Year-to-date residential sales in Calgary totaled 10,322 units, which is 12 per cent above last year’s levels. New listings increased by three per cent over the same time period.

Overall, both the sales-to-new listings ratio and months of supply have trended down this year. This signals more stable pricing in the housing market this year.

“While there were many buyers waiting for lower prices to step into the housing market, there were also many sellers waiting until prices stabilized before listing their home,” said CREB® president David P. Brown.

“Some of this recent growth in listings will help provide more choice, particularly in the detached market where market conditions had significantly tightened over the past few months.”

Detached inventories and sales totaled 3,224 and 1,385 units, for a month of supply of 2.3 in June. Despite the recent rise in supply, over the first half of this year inventories have averaged 16 per cent below last year’s levels while sales are 13 per cent higher, keeping this segment in more balanced conditions.

While activity is also improving in the attached segment of the market, resale activity in the ownership of apartment-style product continues to face challenges with weak sales relative to listings and rising months of supply.

As of June, the unadjusted benchmark price for an apartment style product totaled $265,800. This is nearly four per cent below last year’s levels and 11 per cent below recent highs.

Housing market set for favourable lead into spring

Detached prices stabilize as city-wide inventory trends down

After a long period of disconnect between supply and demand, Calgary’s detached housing sector is firmly in balanced territory. Sales were still 10 per cent below long-term trends in March, but above levels seen in recent years, while average inventory declined compared to last year, supporting price stability in the detached market.

“It’s not so much that demand went through the roof in March, but that we had less supply come onto the market, which is really helping to balance things out,” said CREB® president David P. Brown. “These changes are lifting the cloud of uncertainty for housing consumers and nicely positioning our market as we move into the more active spring season.”

Unadjusted detached benchmark prices totaled $503,900 in March, 0.4 per cent above last month and similar to levels recorded last year. Meanwhile, Apartment and attached prices continue to remain well below levels recorded last year.

“Market conditions are quite different in the apartment sector,” said CREB® chief economist Ann-Marie Lurie. “The additional supply coming from the new home sector is not easily reversed and the added competition is continuing to weigh on prices in the higher density sectors of the market.”

City-wide inventory levels totaled 5,114 in March, 16 per cent below last year’s levels. This is primarily driven by the 25 and 17 per cent contraction in the detached and attached markets. Inventory levels in the ownership apartment sector remain three per cent higher then levels recorded last year.

“The housing market transition in the first quarter appears to be consistent with trends in the labour market,” said Lurie. “However, the way the rest of the year unfolds will be largely determined by what happens in the next two quarters, as nearly 60 per cent of all housing sales typically occur in that time frame.”

January market improves over last year!

For the fourth consecutive month, housing inventory levels have recorded year-over-year declines. At 4,112 total units, January’s inventory was 18 per cent below last year’s levels.

“While housing conditions continue to favour buyers, a slow transition toward more balanced conditions is helping to ease downward pressure on home prices,” said CREB® chief economist Ann-Marie Lurie. “Conditions have improved over last year, but people need to remember that last year’s market was one of the weakest on record. Despite the appearance of a major shift in activity, the transition in the housing market is going to be a slow process.”

January sales totaled 947 units, 24 per cent above last year, but 21 per cent below 10-year averages for the month. Sales activity improved across all product types, but only when compared to the near record lows that occurred in January 2016.

The detached segment of the market is demonstrating the most improvement. Sales activity totalled 584 units in January, a considerable improvement over the 466 sales recorded last year. Inventories have also declined pushing the months of supply to 3.2 months well below the 5.4 months recorded in January 2016.

“This past month showed how the market never stands still,” said CREB® president David P. Brown. “The market isn’t expected to be as unpredictable in 2017, but it’s early in the year and there are still lots of unknowns that will shape decision-making for consumers.”

“Every transaction is a personal decision and anyone going through the process of buying and selling real estate will be trying to make the best decision for their family. They need to consider their long-term objectives and think about the price they are willing to accept or pay for a home.”

City-wide benchmark prices totaled $437,400, 0.16 per cent lower than last month and 2.82 per cent lower than last year’s levels. Since recent highs in 2014, residential prices have declined from a low of 4.9 per cent in the detached sector to highs of 11.5 per cent in the apartment condominium market.

Feel free to give me a call to get the full City of Calgary monthly stats package.

Home sales rebound in October

For the first time in two years, sales activity in October resembled normal levels. City-wide sales totaled 1,644 units, which is an increase of nearly 16 per cent over last year.

“The shift in sales activity this month is likely related to the new mortgage rule changes, inventory gains in the lower price ranges and further price adjustments,” said CREB® chief economist Ann-Marie Lurie. “The combination of all these factors may have encouraged some purchases to take advantage of the market conditions, particularly in the lower price ranges. However, with several factors at play, the monthly shift in demand may be temporary and will need to be monitored over the next several months.”

Sales activity rose across all product types in comparison to last year, but the largest gain in sales occurred in the detached sector at 18 per cent. There was a noticeable shift in sales activity by price range in October. In the detached market, homes priced between $300,000 and $400,000 saw the largest improvement in sales, while attached and apartment sales growth was mainly occurring in the lower price ranges.

“This year has been a challenge for many sellers,” said CREB® president Cliff Stevenson. “So when we have a rise in sales, it means more buyers got into the market and more sellers got out, which is a positive for consumers on both sides of the transaction.”

“Sales activity changed direction in October, but we need to see some consistency next month and the month after to call it a trend,” adds Stevenson. “For now it’s a nice building block.”

Despite the monthly rise, year-to-date sales activity in all sectors remained lower than last year’s levels and well below longer term trends. In fact, year-to-date sales activity has totaled 15,642 units, which is 6.3 per cent below last year’s levels.

While increased activity in the lower price ranges had a greater impact on the average and median price, benchmark prices once again edged down in October. The city-wide unadjusted benchmark price totaled $438,900, or 0.34 per cent below last month and four per cent below last year’s levels.

Since the start of the downturn, home prices have declined from a low of 3.8 per cent in the detached market to a high of 9.4 per cent in the apartment condominium sector. And, despite the rise in October sales, monthly prices continued to decline for most product types in the market.

Five Things About Population Impact On Housing

Weak net migration expected to impact Calgary’s housing market

Population growth in Calgary will moderate moving forward and contribute to a decline in housing demand, according to a market brief issued earlier this month by Canada Mortgage and Housing Corp. (CMHC).

In the release, the national housing agency noted net migration is expected to remain relatively weak over the next two years, which will have a trickle-down effect on the local real estate market.

CREB®Now breaks down five things you need to know about how population will impact housing demand in Calgary this year and next.

The History

Calgary’s population outpaced the national average for the 10 years preceding 2015. From 2006 to 2015, the city’s population increased an average of 2.81 per cent per year, compared with 1.12 nationally. CMHC credited the growth to favourable economic conditions, which attracted prospective workers to the region. This also boosted demand for housing, with total starts and MLS® sales both reaching record highs in 2014.

The More Recent

Calgary’s population growth started to level off in 2015, when the rate of newcomers to the city grew at 2.44 per cent, down from 3.55 a year earlier. CMHC attributed the moderation to weak oil prices that ultimately impacted investments in the energy industry – and, thus, employment prospects in the city.

The Employment Picture

While 2015 might have looked and felt like 2008, it will be considerably different moving forward. CMHC said economic recovery will be more gradual this time around, resulting in job losses – especially in full-time positions. In the first quarter of 2016, the city’s unemployment rate increased to 8.96 per cent compared to 5.67 in the same period in 2015.

The Outcome

With fewer employment opportunities in Calgary, along with stronger labour market conditions in other areas of the country, CMHC said net migration to the city will decline and remain relatively low. Net migration is projected to decline from 21,057 in 2015 to 14,000 in 2016, and then rebound slightly to 14,500 in 2017. This will limit Calgary’s population growth and temper housing demand.

The Outlook

Following several years of elevated growth, Calgary’s population will rise only 1.91 in 2016 and 1.81 per cent in 2017, said CMHC. This will bring the population in Calgary to 1,466,500 and 1,493,400 in 2016 and 2017, respectively.

“Total population in Calgary is forecast to grow at its slowest rate since 2010, largely due to a decline in net migration, and contribute to weaker demand for housing,” said Richard Cho, senior market analyst in Calgary for CMHC’s Prairie region.

 

CREBNow By: Jamie Zachary

Sellers Continue to Adjust Pricing Expectations

Market imbalance in Calgary’s residential resale housing market continued to weigh on citywide prices in April.

Much like the previous month, year-over-year sales fell while new listings increased, resulting in inventory gains across all sectors of the market.

As a result, benchmark prices in the city declined by 0.4 per cent from last month, and 3.4 per cent from last year, to $441,000.

For sellers, the reality of seven consecutive months of price declines has started to sink in, said CREB® president Cliff Stevenson.

“From re-considering the listing of their home to lowering expectations on price, sellers are beginning to adjust to the current market reality,” he said. “However, some buyers in the market are still not willing to pull the trigger because they expect even bigger discounts. And so that gap between buyers’ and sellers’ expectations still persists across many product types and locations.”

Despite this, the detached sector fared better relative to the other sectors of the market. While detached sales activity has fallen by over four per cent so far in 2016 compared to last year, the sales to new listings ratio improved in April. This prevented sharper inventory gains and caused months of supply to move toward more balanced levels.

The same cannot be said of other market sectors. Year-to-date apartment and attached sales declined by a respective 19 and 13 per cent compared to last year. Slower sales, combined with rising inventories, ensured that market conditions continued to favour buyers in these segments.

“While the weak economic climate is influencing demand, the apartment and attached sectors are further impacted by increased supply in the competing new home sector and rental markets,” said CREB® chief economist Ann-Marie Lurie. “This is one of the contributing factors to the steeper price declines recorded in the apartment sector.”

Since the start of the price declines, monthly unadjusted benchmark apartment prices have declined by 7.6 per cent, while semi, row and detached have declined by a respective 5.9, 4.6 and 4.1 per cent.

What’s NEXT?

Soil contamination a major hurdle for any West Village development

The Calgary Flames’ season may be over, but that doesn’t mean hockey talk in the city has come to a close.

In addition to fans’ usual examination of how things could have gone differently, the question of where the team is going to play its home games in the not-too-distant future remains.

Part of that answer will come to light April 25 when Calgary Municipal Land Corp. (CMLC) reports findings to city council from its six-month environmental assessment of land in West Village where Calgary Sports and Entertainment Corp. (owner of the Flames, Calgary Stampeders and Calgary Roughnecks) is proposing to build the much-debated CalgaryNEXT project.

The report by CMLC – a wholly owned subsidiary of the City of Calgary that is currently behind the East Village revival and would oversee development of the West Village site – analyzed the scale of creosote contamination and options to remediate the land.

Noting a similar, albeit smaller-scale, clean-up having taken place in the East Village, CMLC senior vice-president of strategy and business development Susan Veres said the work needed to move the West Village forward will require a lot more work than many are expecting.

“Let’s not be naïve. The contamination issue in the West Village is far, far greater than East Village and would require a lot of support from a lot of groups,” she said in advance of the report’s release.

“Aside from market assessment and whether the market is there or not, I think you have to have a really long view for West Village because the work that would need to be done to get the land to a state where it could accommodate anything is an enormous undertaking.”

“LET’S NOT BE NAÏVE. THE CONTAMINATION ISSUE IN THE WEST VILLAGE IS FAR, FAR GREATER THAN EAST VILLAGE AND WOULD REQUIRE A LOT OF SUPPORT FROM A LOT OF GROUP.”

Last August, Calgary Sports and Entertainment unveiled its plans for CalgaryNEXT in West Village that would include the construction of a 19,000-seat “arena events centre” along with a 30,000-seat “Multisport Fieldhouse Stadium” with a covered roof and retractable seats to accommodate a 400-metre track.

The proposal also includes plans for residential housing in the form of condominiums, as well as hotels and commercial space – similar to the sort of development that has transformed the East Village from a blighted community to a master-planned neighbourhood.

Currently home to an assortment of car dealerships, the Greyhound bus station and a handful of empty lots, the 56-hectare West Village is bordered on the north by Bow Trail westbound and the Bow River, on the east by 11th Street S.W. and sits alongside the recently opened Sunalta LRT.

It was once home to Canada Creosote (later known as Domtar), which ceased operation in 1962. Creosote is a compound of about 200 organic chemicals that was used to preserve wood products such as railway ties and power poles. Made up of a variety of chemical compounds that mostly do not dissolve in water, a small portion of the compounds is lighter than water and sits on top of the water table. A larger portion of the compounds is denser than water and settles and moves along the bedrock by gravity.

Health risks range from respiratory irritation from breathing in the vapour, skin damage from long-term skin or air contact and long-term exposure resulting in some cancers. In the early 1990s, environmental monitoring determined that contaminants from the site had migrated under the Bow River and into the community of West Hillhurst.

Starting last November, Worley Parsons initiated a site/assessment and field program of West Village around the site. This program will form part of the CMLC’s report being produced City Hall.

With more information on the clean-up likely to be revealed in CMLC’s report, early estimates have pegged costs between $50 and $300 million – numbers Veres said could be equally accurate depending on development intentions for the land.

“It depends to what extent you’re mitigating and for what purpose are you mitigating? Are you mitigating the land so that it can house people or so it can house a park? Living on it and visiting it are two different things, so I can see why there is a broad spectrum in the number,” she said.

The clean-up process is also a bit more complicated than simply trucking out the old contaminated soil, noted Jan Quinlan, soil and contaminated sites specialist for Alberta Environment and Parks.

“Cleaning up a creosote contaminated site is a major undertaking and is very complex because of mixture of contaminants that make up creosote,” said Quinlan.

“It isn’t as simple as just digging everything up, as the contamination can travel into areas where it is hard to access. Usually a multi-faceted approach is required to address soil, water/groundwater and potentially bedrock.”

Since such a clean-up will likely be required long before any infrastructure improvements, Veres said those looking for any major development take place in West Village could have long wait in front of them.

“It took years of pre-planning to get East Village to a position where it could be marketed; where the infrastructure could be delivered; where the financing mechanisms were in place – it took years before we started,” she said. “So I would suggest a similar scenario would have to unfold in West Village. If it is going to be a redevelopment site, there’s a lot of work ahead.”

For now, Veres sees CMLC’s involvement, at least at this point, as a natural fit given the corporation’s similar experience developing East Village.

“If the future of West Village is for a mixed-use community, sort of a brownfield redevelopment, then yes, that would be our specialty and we demonstrated that skill set in East Village,” she said.

“But I think it’s not yet espoused the complete and holistic vision for West Village, and I think that’s why we were asked to do some work and that’s why the City is doing some work.”

Apr 15, 2016  by: Cody Stuart CREBNow

Changes at Royal Lepage Foothills

As some of you are already aware, the real estate brokerage that I work for – Royal LePage Foothills – will be closing their doors. This will not affect any of my clients – I have taken the steps necessary to look after all my m2realty peeps – you are in good hands! I am working on finding a new place to call home and will keep you posted.
If you have any questions I can be reached on my cell at 403-370-2620 or via email at m2realtycanada@gmail.com

December Market Update

Housing market conditions favour buyers

Weak sales activity relative to inventory places downward pressure on prices
Calgary, Dec. 1, 2015 – Persistently high inventory levels within Calgary’s residential resale housing market, combined with weak sales activity, contributed to buyers’ conditions in November.
Monthly sales totaled 1,263 units, a 28 per cent decline from last year and nearly 20 per cent below the 10-year average. Meanwhile, the amount of new listings in the market increased by five per cent over last November, and moved five per cent above 10-year average.
The combination of both soft sales and elevated listings caused months of supply to rise above four months. It represents the third consecutive month that housing supply in the city has remained near four months, which is an indicator that supports buyers’ conditions.
“The housing market is reflecting the realities of the economic conditions,” said CREB® chief economist Ann-Marie Lurie. “Calgary has continued to post job losses in the energy sector, unemployment levels are high, wages are down and recovery expectations have changed. All of these factors have contributed to the weak demand we have seen throughout the year.”

CREB® president Corinne Lyall pointed out that inventory levels still remained 27 per cent below the November highs recorded in 2008. “Furthermore, price declines have not been as steep as those recorded during the last downturn,” she said. The unadjusted benchmark price in November declined to $450,700, a 0.5 per cent drop compared to last month and two per cent from last year.

Calgary’s detached housing sector faired the best in November as months of supply increased to only 3.4. Nonetheless, the unadjusted benchmark price declined by 0.6 per cent compared to October, and 1.52 per cent from November 2014, to $510,700.

In the attached category, buyers’ conditions emerged as months of supply increased to 4.8. As a result, the unadjusted benchmark price declined to $352,400, a 0.5 per cent drop from last month and 1.5 per cent from last year.

The apartment sector continued to be the hardest hit of the three sectors. Months of supply increased to 6.9 in November, causing benchmark prices to slide 0.5 per cent from October to $287,000. Meanwhile, year-over-year prices were off by 4.6 per cent.

Despite weaker absorption rates for most of 2015, residential benchmark prices have only recently started to decline – while average and median prices have dropped more dramatically. Lurie attributed that to slower activity in the higher-priced segments of the market, which can skew average and median prices. Benchmark prices represent changes for similar-type homes, minimizing the impact caused by changes in distribution.
“It is not a surprise that the average price has recorded a steeper decline than the benchmark price,” she said. “Last November, detached sales in the city over $700,000 totaled 159 units or 15 per cent of the market sales. This November, there were only 103 sales representing 13 per cent of the market sales.”
Lyall said knowing the difference between indicators such as average, median and benchmark prices is important for sellers.

“There is no question that this can be a challenging market,” she said. “However, because of these circumstances there is a greater need for market intelligence.”