It’s year end and Calgary real estate insiders continue to juggle a wide array of facts, details, influencers and emotions: market supply and market demand; migration; price stability; consumer confidence about the economy and the lingering impact of federal mortgage rules; frustration; and cautious optimism.
As analyzing, strategizing and speculating about real estate is usually a matter of experienced number crunching, Calgary’s 2019 data tells an interesting story.
According to Ann-Marie Lurie, CREB chief economist, the Calgary market’s most recent stats indicate 12,934 sales, slightly more than one per cent higher than last year. There were 6,810 listings, a six per cent drop from last year.
According to the recent Royal LePage (RLP) House Price Survey, the aggregate home price in Calgary decreased 4.3 per cent year-over-year to $464,542 in the third quarter of 2019. Broken out by housing type, the median price of a two-storey home decreased 3.9 per cent year-over-year to $508,860, while bungalows also decreased 5.8 per cent year-over-year to $492,511. The median price of a condominium decreased by 3.5 per cent year-over-year to $274,045 during the same period.
“The current market mood in Calgary has been a bit frustrated the last couple of years,” notes Corinne Lyall, broker and owner of Calgary’s Royal LePage Benchmark. “But we remain optimistic about increased activity in 2020. The spring market this year was late probably due to consumers still habituating to the stress-test mortgage rules and hesitant about the provincial election. After the provincial election, the pace picked up and was steady until August when we usually slow down because of the summer holiday season.
“Sales activity has increased as buyers take advantage of lower prices. Consumer confidence improved in the last quarter, compared to the beginning of the year, and inventory has tightened, causing increased buying decisions,” she says. “Eventually, prices will increase to reflect the decline in the number of listings on the market. Interest rates are still low, so potential buyers might want to consider entering the market now.
“Inventory is lower than it has been in several years, so as buyers decide to start taking advantage of lower prices and interest rates, we may see price increases in some markets.”
Most real estate agents and analysts agree that now, more than ever, Calgary real estate is driven by not only numbers but consumer moods. “The health of the housing market is tied to economic indicators like employment and net migration, but also to intangible factors like consumer confidence,” explains Alan Tennant, CREB CEO.
“When people feel confident about their job situation and income, they’re more likely to pursue home ownership. And an election year, especially a double election year with provincial and federal elections, can cause higher than normal hesitation in the market.”
As Lurie points out, some of the specific numbers are telltale indicators. “Despite a slight spike in sales, there is still an oversupply in the Calgary market. And the uptick in sales is not across all price ranges. The under-$500,000 is doing better, reflecting a shift in the market for more affordable product, and that specific market is moving into much more balanced conditions. We expect to see not just price stability, but maybe even move into price recovery.”
There is consensus that the under-$500,000 market may be gradually recovering while the $1-million plus remains flat. “There are simply more buyers in the lower price ranges, particularly in the attached and apartment sectors,” Tennant adds. “More traffic to listings equals more transactions in those segments of the market. It comes down to consumer confidence and the individual tolerance to take on risk. Given the economic climate of the past few years, it’s not surprising to see consumers add a little extra due diligence on big-ticket homes.”
“Most of our activity is taking place in the under-$500,000 price point in all types of property,” Lyall says. “Calgarians have always been attracted to turnkey properties and so maintaining, upgrading and staging your home is a must. We are also finding that they want to live in communities that are self-sufficient with residential, commercial and retail properties along with schools and other amenities.
“There’s no doubt about it. Calgary still has a wealthy population who own $1-million-plus homes. Many are waiting to see home prices recover before deciding to sell.”
Some real estate experts caution that too much analysis of numbers leads to invariably “looking back,” not forward. Switching gears to glance into the future, professional guesses reflect cautious optimism for 2020.
According to Calgary data in the RLP Report, “We are expecting stronger migration numbers than we have had since the end of 2017,” adds Lyall. “It will impact the Calgary resale market, as well as people moving from renting to buying. As consumers normalize to the mortgage rules (and if our new federal government chooses to relax the rules in our market) and interest rates stay relatively low, we should see more buyers enter the market.”
Tennant shares the optimism. “The housing market has a natural equilibrium. The pendulum can swing in favour of buyers for a pocket of time, but it will come back around for sellers as well.”