Tightened housing supply curbs sales volume
First quarter sales improve in condominium market, while declining in single family sector
The inventory of active homes for sale in Calgary are the lowest March levels in more than five years. The decline in new listings hampered resale sales growth, which declined by more than two per cent in March compared to March 2012.
New listings in March are five per cent lower than levels recorded in 2012, and five per cent lower after the first quarter. The overall active listings stand at just 4,006 units, up from February’s levels but well below the number available one year ago.
“Less resale product available to consumers is ultimately limiting sales growth,” said CREB® President Becky Walters. “In addition, resale homes are selling in less time and with continued upward pressure on prices.”
Walters said buyers have grown accustomed to a market when they have more time to make decisions because there was ample supply. But, as market conditions have tightened, if they are serious about purchasing a resale home, they can no longer significantly delay that decision, she said.
“While market conditions are a far cry from activity witnessed throughout the frenzy in 2006 and 2007, there has been a noticeable change over what became the norm over the past few years.” Walters said.
Single-family, year-over-year sales growth declined by six per cent in March, a reflection of declining supply. Active inventory totaled 2,713 units, 22 per cent lower than levels recorded in 2012, and the lowest March inventory level recorded since 2007. The market balance continues to trend into seller’s territory in this segment causing a year-over-year price increase of nearly nine per cent, for a total of $446,500 in March 2013.
“Tighter rental conditions and continued employment growth has supported housing demand growth,” said Ann-Marie Laurie, CREB®’s chief economist. “However, for those looking for more affordable single family home products, their choices continue to narrow.”
She said new single-family listings under $500,000 are declining at double-digit rates, driving consumers at that price point to either surrounding towns, condominiums or the new home market.
The condominium townhouse market is the only category to record a year-over-year rise in sales activity for the month. This is in part because the level of new listings improved in March 2013 relative to March 2012. Condominium year-over-year apartment sales declined by nearly three per cent in March.
However, after the first quarter, sales activity totaled 830 units a 6 per cent increase over the previous year. Condominium townhouse sales totaled 652 units at the end of the first quarter, a 15 per cent increase over the previous year.
“The condominium apartment market remains in balance,” said Lurie. “While it has moved to the lower end of the spectrum, it remains better supplied then the single family market and the majority of product available is in an affordable price range.”
The benchmark apartment price totaled $257,700 in March, a six per cent increase over the previous year. Meanwhile, the condominium townhouse benchmark price experienced a year-over-year increase of 4 per cent, to $286,800.
“Despite tighter market conditions, it is unlikely that we will have another significant run-up in prices,” said Lurie. “Outside of easing economic factors expected this year, consumers have options in the total housing market.”