December sales activity rises again but so does supply.
City of Calgary, January 2, 2018 – Sales activity for all product types improved in December and pushed monthly sales to long-term averages for the second month in a row.
However, new listings also rose, keeping inventory elevated compared to typical levels for December. With more supply remaining compared to sales, benchmark prices edged down for the fifth consecutive month.
“Many of the economic indicators continue to post modest improvements, including improving sales. However, demand gains have not outpaced the additional supply coming into the housing market. This is creating some of the bumpiness in terms of price recovery,” said CREB® chief economist Ann-Marie Lurie, who added that prices have stayed comparable to last year.
The gap between detached supply to demand closed in the first half of 2017 and supported early price growth. As prices improved, this was perceived as a signal for many who delayed selling their home and caused a late rise in inventory which limited price growth.
The rise in sales relative to new listings improved this month, helping ease inventory levels over the previous month and keeping the months of supply relatively stable. However, the amount of supply relative to the sales in the market remains elevated. This continues to weigh on prices.
Citywide benchmark prices totaled $436,700, 0.50 per cent below last month, but 0.46 per cent above last year’s levels. Both median and average prices recorded a more significant decline compared to last year. This should not come as a surprise, as more sales in the lower price range this year compared to last November would cause a more pronounced drop in average and median prices.
The average annual detached benchmark price eased across all districts in the fourth quarter compared to third quarter results, but remained higher than last year’s levels in most districts. This is primarily caused by inventories that were higher than sales activity. Annual total residential prices remain below peak levels in all districts.
Elevated inventories compared to sales weighed on apartment prices across all districts. Annual price declines ranged from a high of 6.2 in the East to a low of 2.4 per cent in the West. The City Centre, West and South districts contain over 70 per cent of apartment sales. Each of these areas have prices that remain 11.7, 10.7 and 12.5 per cent below previous annual highs.
Challenges continue to face the apartment sector, with elevated supply in the resale market. The new home and rental markets weighed on this sector. The excess supply caused average annual benchmark prices to decline by four per cent this year. This is a total annual adjustment of nearly 12 per cent since the start of the recession.
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