While Calgary’s single-family housing market is shifting towards stabilization, conditions are not balanced across the board. Still classified a buyer’s market, opportunities vary based on divergent trends according to price bracket, location and competition between new and resale product.
“After five years of weakness, we’re starting to see much more stabilization for the citywide numbers, but I can’t stress enough that trends will vary depending on price range and location,” says Ann-Marie Lurie, chief economist with the Calgary Real Estate Board (CREB).
As 2019’s detached sales slightly decreased over the previous year, activity remains low compared to historical numbers. “Detached sales really came down over the past several years, especially when the stress test changes came in in 2018. We saw a pull-back in sales activity and it’s taking some time to rebound,” says Lurie.
Creating some movement later last year, benchmark prices decreased over the previous year by over three per cent. “As they came down, it started to bring back some of the buyers. As we move through this year, we could start to see improved sales activity in the higher end, but not because prices are improving,” says Lurie. “It’s because there have been price declines and that should help support some sales improvement this year. But, especially in the upper end, we’re far away from seeing price stability quite yet.”
Homes priced over $500,000 currently account for nearly 60 per cent of the detached market so areas with excess supply could see more price movement. “The areas struggling the most in terms of the highest price decline are the city centre and the west end [which are] some of the highest priced areas on a district level basis,” she says.
These areas saw benchmark prices decrease up to five per cent, while the northeast saw the lowest price decline at under two per cent. Demand for homes under $500,000 grew with price declines, favourable lending rates and lower-sector job growth. However, those price declines are slowing in the more affordable areas, including the north, east, northeast and southeast districts. “That market is starting to see a lot more stabilization,” says Lurie.
Location is also tipping the scale. Increasingly robust as proximity to downtown advances, the single-family market weakens as it retreats, according to Christian Twomey, sales associate with Re/Max Landan Real Estate.
Illustrating this trend, Twomey recalls a recent experience with a client relocating from the southeast corner of the city to downtown. After struggling for three months to even pique buyer interest, the property sold.
But the downtown purchase presented its own challenges. “They went from clawing for a showing in the southeast, let alone an offer, to looking to buy really close to downtown and going into multiple offers,” says Twomey. “It was such a contrast they couldn’t believe it.”
Canada Mortgage and Housing Corporation (CMHC) findings confirm location is dividing this market. “In terms of area, the highest absorbed average price for a single-family home in Calgary occurred in what we call the North Hill survey zone and that was at just over $1.3 million,” says Heather Boyer, senior analyst for CMHC. In contrast, “We have the lowest occurring in the Fish Creek zone at just over $550,000.”
Meanwhile, moderate oversupply in the new-build market is also a factor, according to CMHC’s 2020 first quarter Housing Market Assessment. “We are seeing a bit of overbuilding in Calgary,” says Boyer “There is some upwards movement in inventory levels there and part of this can be attributed to the buyer’s market conditions. People may be choosing to go to the resale market where there’s a bit more leeway in average price than purchasing a new home.”
That competition within the new and resale sectors weighs in heavily, particularly in the suburban areas where new builds are predominant. While “brand new” appeal is high for buyers wishing to customize various features, they are typically responsible for the extra costs of finishing the property. These items, such as fencing, landscaping and building decks, are normally included in a resale purchase.
“I would say there’s more volume being traded in the resale market because people don’t have that extra liquid cash laying around right now to accommodate these things,” Twomey says. “What’s interesting is that we’re starting to see new-home builders recognize where their shortfalls are and they’re accommodating that need by adding these features into their specifications.”
While increasing buyers’ options, competition complicates matters for sellers. “Sellers have to be aware of how much supply is available in their region. Not just in their own neighbourhood, but in those around them so they are aware of competing supply,” says Lurie. “That’s not just on the resale side, but on the new home side as well.”
Still, with the right strategy, Twomey says today’s market provides an opportunity to move up while the potential equity gain is greater. “There are some phenomenal buys in Calgary right now. If you’re a first-time homebuyer, it is fantastic. Also, if you’re looking to move up, now is the time,” he adds. “There are huge advantages right now and I couldn’t imagine a better position to be in.”
Of course, this may mean a disadvantage for those in other positions. “If you’re equity locked and you’re looking at downsizing, my advice over these last couple years has been, ‘maybe now is not the right time. And if you can hold on – hold on.’”