March 2016 has come to an end and I want to be the first to provide you with a look at the real estate statistics for the past month, as well as an in-depth look at how the different price ranges for single family homes (no condo fees) are performing. Contrary to the doom and gloom you have no doubt heard and read about in the media, there are certain areas of the market that are exhibiting balanced market and in some cases, even seller's market conditions (It's True).
Calgary sales in March totaled 1588 transactions. This sales volume is down 10.6% from the numbers posted last March and has resulted in the average price dropping just slightly 1.06% to $468,572. Listing inventory continues to rise and we now have over 6000 active properties on the market (6,084).
In order to determine whether we are in a Balanced, Buyer's, or Seller's Market, we need to look at the absorption of the market's inventory. A balanced market is considered 2.5-3.5 months worth of inventory. There are 6,084 active listings on the market and we had 1588 transactions in March, meaning the Calgary real estate market currently has 3.8 months of inventory and has averaged 5 months of supply for the first quarter of 2016. These supply levels indicate a buyers market which is no surprise to anyone.
However, the big picture doesn't tell the whole story. If we take a closer look at different price segments of the market, we can see that there are some areas performing very well. Below is a graph of the Single Family Inventory Absorption by price range.
Keep in mind, a balanced market is anywhere between 2.5-3.5 months of inventory. Instances where there are less than 2.5 months of inventory indicate a Seller's Market, and situations where the months of inventory are greater than 3.5 represent a Buyer's Market.
You can see that the market for homes priced above $600,000 is in favor of the Buyers. There's plenty of selection compared to the volume of transactions and the discrepancy between active listings and number of sales grows as the price increases. The decrease in sales and increase in inventory at this price point can be directly attributed to the decline of the energy prices and subsequent layoffs in the oil and gas sector. This has affected everyone in our city and, fingers crossed, a recovery in the energy sector will come sooner than later.
Single family properties priced from $500k-$600k are exhibiting balanced market conditions with 2.99 months of inventory. There has been a lot of downward price pressure on homes in this price range. Many dual income families have taken advantage of low interest rates and the allure of a good deal at this price range to make the transition to a move-up or estate home from their starter home.
The homes priced under $500,000 and especially below the $400,000 mark are actually experiencing Seller's Market conditions. The desire for home ownership is shared by many people, individuals and family alike. There are increasingly more single family homes being offered for under $500k, $400k, $300k. The growing affordability of these homes combined with record low interest rates is enticing enough for buyers to take that step into home ownership.
March sales didn't quite live up to my expectations but as we have seen there are certainly some bright spots in the market. Looking forward I think that there will continue to be more affordable homes coming to market that, coupled with persisting low interest rates, I am hopeful for higher sales numbers in the coming months which will help to support stable pricing.
Kyle Goudie-Century 21 Bamber Realty Ltd.