Job market weakness and lending restrictions a common thread in 2018’s housing market

As oversupply continues in Calgary’s housing market, December prices eased by one per cent compared to last month and are over three per cent below last December.

“Persistent weakness in the job market and changes in the lending market impacted sales activity in the resale market this year,” said CREB® chief economist Ann-Marie Lurie.

“This contributed to elevated supply in the resale market, resulting in price declines.”

December sales totalled 794 units, a 21 per cent decline over the previous year. Overall year-to-date sales in the city totalled 16,144 units. This is a 14 per cent decline over 2017 and nearly 20 per cent below long-term averages.

Inventory levels in December sat at 4,904 units. This is well above levels recorded last year and 30 per cent above typical levels for the month. Elevated resale inventories in 2018 were caused by gains in the detached and attached sectors.

Throughout 2018, the months of supply remained elevated and averaged 5.2 months. This contributed to the annual average benchmark price decline of 1.5 per cent. Price declines occurred across all product types and have caused citywide figures to remain over nine per cent below the monthly highs recorded in 2014.

“Both buyers and sellers faced adjustments in expectations this year. Sellers had to compete with more choice in the resale market, but also the new-home market,” said CREB® president Tom Westcott.

“With less people looking for a home, it became a choice between delaying when to sell or adjusting the sale price. However, buyers looking for more affordable product did not find the same price adjustments that existed in some of the higher price ranges.”

More information on the 2018 housing market will be released at CREB®’s 2019 Forecast Conference & Tradeshow (www.crebforecast.com) on Jan. 30, 2019.

HOUSING MARKET FACTS

Detached

  • Detached sales declined across all districts in 2018. With citywide sales of 9,945 units, activity remains 21 per cent below typical levels for the year.
  • Detached inventories were higher than last year’s levels for each month of the year, including December. Slow sales caused the market to be oversupplied through most of 2018.
  • Detached benchmark prices totalled $481,400 in December, a one per cent decline over last month and a three per cent decline over last year. Overall, 2018 prices declined by 1.5 per cent compared to last year.
  • Prices have eased across most districts in 2018. The largest declines this year have occurred in the North East, North West and North districts.

Apartment

  • Apartment sales totalled 2,663 units in 2018. While the decline is less than other product types, levels are 22 per cent below long-term averages.
  • The apartment condominium sector has struggled with oversupply for almost three years and 2018 was no exception.
  • However, supply has been easing, as inventories this year averaged 1,584 units, one per cent below last year’s levels.
  • Despite slowing supply growth, the market remained oversupplied, causing further price declines. In December, benchmark prices were $251,500, over two per cent below last year. Annually, prices have declined by nearly three per cent for a total decline of 14 per cent since 2014.
  • Price declines this year have ranged from a high of nearly six per cent in the East district to a low of two per cent in both the City Centre and North West districts.

Attached

  • Declines for both row and semi-detached product resulted in 2018 attached sales of 3,536 units, a 15 per cent decline over the previous year and 14 per cent below long-term averages.
  • Slower sales activity prompted some pull-back in new listings, but this was limited to the row sector. Row new listings declined by four per cent and semi-detached new listings rose by nearly 15 per cent in 2018.
  • Despite some adjustments to new listings, inventory levels remained elevated, keeping the market in buyers’ market territory and putting downward pressure on prices.
  • In December, the semi-detached benchmark price totalled $397,500. This is a monthly and year-over-year decline of 0.8 and 3.8 per cent, respectively. Recent price declines have caused this sector to erase any of the gains that occurred last year, as 2018 prices remain just below 2017 levels. Overall, annual prices remain 1.4 per cent below 2014 peak levels.
  • Row prices have also been edging down. As of December, row prices were $288,400, a 1.5 per cent decline from last month and nearly four per cent below last year’s levels. Overall, 2018 prices remain two per cent below last year’s levels and nearly 10 per cent below previous highs.

REGIONAL MARKET FACTS

Airdrie

  • In 2018, the Airdrie housing market was distinctly marked by oversupply and signs of buyers’ market conditions. Compared to last year, inventory levels and months of supply have been significantly higher, combined with lower levels of sales. This has led to downward pressures on the benchmark price for detached homes.
  • Annual residential sales exhibited a year-over-year decline of 14 per cent and were almost 19 per cent lower than activity over the past 5 years. This consistent decline was observed across all product types.
  • Supply in 2018 was at record-high levels, with new listings achieving a new year-to-date peak for most of the year. Inventories have also been continuously increasing throughout this year and are 12 per cent higher than in 2017. Months of supply have increased steadily and averaged 5.6 months in 2018.
  • Persistent oversupply has resulted in a decline in Airdrie prices.  In 2018 detached benchmark prices averaged $369,042, over two percent below last year

Cochrane

  • Declining by 64 units, 2018 sales in Cochrane were lower than the previous year. However, an annual count of 599 sales remains comparable to activity over the past three years.
  • In 2018 there were 1,288 new listings, the highest on record.  Elevated new listings and easing sales resulted in rising inventories and months of supply that averaged nearly 7 months.
  • Elevated supply has caused detached prices to trend down over the second half of the year, however, it was not enough to offset earlier gains.  In 2018, detached benchmark prices have remained comparable to last year.

Okotoks

  • 2018 residential sales in Okotoks were 463 units, a decline over last year and comparable to 2010 activity.
  • Gains in new listings combined with slower sales resulted in rising inventory and excess supply in this market.
  • Despite increased supply and weak sales, detached home prices in Okotoks showed modest increases in 2018. The average detached benchmark price totalled $434,875, which is one per cent higher than last year.
By

crebnow

Four common renovation nightmares and how to avoid them

Making sure your dream renovation doesn’t turn into a nightmare means doing some due diligence before signing on the dotted line.

Many potential problems can be avoided by simply choosing the right contractor to tackle your renovation project, says Danny Ritchie, president and co-owner of Ultimate Homes & Renovations.

“People need to do their homework a little bit more on the credibility and background of the company,” said Ritchie. “How long they’ve been in business, what their track record is, how much subcontracting they do.”

Here are four renovation nightmares you might encounter and, more importantly, how to avoid them:

1. Contractor takes a deposit then disappears
Consumer groups warn about smooth-talking, door-to-door contractors who offer to repair a roof or renovate a bathroom, accept a deposit and then are never heard from again.

Ritchie says people should never decide who to hire because “they like the salesman.”
He says get a business card, check them out first and then decide if it’s a good idea to hire someone who knocked on your door.

2. Costly “extras” start adding up
The price you are quoted is only useful if it spells out exactly what’s included. Otherwise, you might find yourself charged more during construction to get the renovation you actually wanted.

Ritchie says for a major renovation project, his company often provides the homeowner with a “scope of work” that includes 20 pages of specifications on the materials included, so there are no surprises.

“Even to the point of saying how many pot lights will be put into a kitchen, and not just (an amount) for electrical,” he said.

3. Renovation is taking forever
Ritchie says a disreputable renovator might tell a person “what they want to hear” when it comes to how long a project will take, regardless of whether that timeframe is realistic or not

“Quite often, I’ll tell a customer that it’s going to take three or four months to do this job, and they’ll turn around and tell me, ‘the other guy said he can do it in three to six
weeks,’ ” he said.

He adds a typical kitchen renovation takes two to three months – not two to three weeks – so be wary of anyone who promises such a tight turnaround.

4. Renovator doesn’t back up their workmanship
After a renovation is complete, there are bound to be a few things that might need a follow-up visit to fix or touch up, so a contractor who doesn’t respond will leave the homeowner in the lurch.

Ritchie says being a member of the RenoMark program is a good indicator that a company stands behind its workmanship, since the program’s code of conduct requires companies to offer at least a two-year warranty on a renovation.

By

Gerald Vander Pyl

Market Forecast Report

The forecast report provides a comprehensive look at key economic indicators that influence housing within CREB®’s region boundaries, from energy prices to employment and population trends, to name a few.

It also examines each market sector, explores housing by property type and clarifies how supply and demand is functioning at the district level.

To learn more and view CREB®’s latest forecast report, please click here.

Soft sales continue in April

Prices steady, but struggles in Alberta economy weighs on housing

City of Calgary, May 1, 2018 –

Changes to the lending industry and a challenging economic recovery are weighing on sales activity in Calgary’s housing market.

Supply levels have not adjusted to the weaker demand environment, and that is preventing price recovery.

“Slower sales do not come as a surprise, given the economy has not yet improved enough to offset the impact of changes in the lending industry,” said CREB® chief economist Ann-Marie Lurie.

“While the rising inventories are being monitored, prices have remained relatively flat as gains in some areas of the city have been offset by declines in other areas.”

The easing sales trend persisted through April in Calgary’s housing market. Calgary sales totaled 1,518 units in April, which is 20 per cent below last year and 25 per cent below long-term averages.

The detached sector has seen the largest decline, with year-to-date sales totaling 2,991 units, 27 per cent below the 10-year average.

Inventory levels in April totaled 7,324 units. This is a 32 per cent rise over last year, but well below the monthly high of 10,129 units recorded in 2008. Supply compared to demand has risen, but city-wide prices have remained relatively stable, totaling $436,500 in April, a monthly and annual gain of 0.21 per cent.

“The reality is that there’s selection heading into the active spring market,” said CREB® president Tom Westcott.

“For many sellers, they have to decide what price they are willing to accept for a lifestyle change. At the same time, buyers need to understand the supply dynamics and price movements in the specific area, as they may not align with their expectations.”

So far this year, apartment and attached sales have eased to levels that are comparable to 2016. However, rising supply in both markets have pushed months of supply to the highest levels recovered over this four-month period, which is preventing any significant shifts in pricing trends.

Click here to view the full City of Calgary monthly stats package.

Click here to view the full Calgary region monthly stats package.

Housing Market Inventory on the Rise

Prices remain stable compared to last year

As expected, slow sales this quarter have persisted through March in the City of Calgary. This is not a surprise, after stronger growth in sales at the end of last year following the announced changes to the lending market.

First quarter sales totaled 3,423 units, nearly 18 per cent below last year’s levels and 24 per cent below long-term averages. Easing sales and modest gains in new listings caused inventories to rise and months of supply to remain above four months.

“Economic conditions are slowly improving, but it has not been enough to outpace the current impact of higher lending rates and more stringent conditions,” said CREB® chief economist Ann-Marie Lurie.

“We are entering the most active quarters in the housing market with more inventory, which could create some price fluctuations. However, the improving economy is expected to prevent overall prices from slipping by significant amounts.”

While prices trended down on a quarterly basis, they remained relatively unchanged over last year’s levels due to modest gains in the detached sector offsetting declines in the apartment sector.

The citywide benchmark price for detached product averaged $502,000 in the first quarter. This is slightly lower than the fourth quarter of last year, but comparable to levels recorded in the first quarter of last year. In March, the detached price reached $503,800, 3.6 per cent below pre-recession highs, but one per cent above the lows recorded during the recession.

“The market today is better than what we experienced at the peak of the recession,” said CREB® president Tom Westcott.

“You can find good value if you’re looking to buy a home, and you can also get good value if you’re selling. Being well-informed, in any economic condition, is the key, because there are differences in the market depending on what type of property it is and where it is located.”

Detached market inventories in the first quarter of 2017 were low compared to historical standards. This year, detached inventories have averaged 2,573 units over the first quarter, 10 per cent below first quarter averages recorded during 2015 and 2016.

Spring will have more inventory than last year, slowing progress on price recovery. However, the amount of price adjustment will vary depending on competing supply by location and product type.

Click here to view the full City of Calgary monthly stats package.

Home safety tips for summer

Heading out of town this summer? Get your home vacation-ready with a few simple security tips.

Lock it up: It may seem obvious, but it’s important to ensure all windows and doors are locked before you head out of town. If you have a home security alarm, make sure the battery is charged and that it’s set properly before you leave.

Adjust utilities: If you will be traveling for an extended period of time, turn off your main water supply valve. It’s a simple decision that can prevent a potential flood and water damage.

It is also recommended to set programmable thermostats for the summer heat. When outdoor temperatures are high, it’s best to have your air conditioner set to keep your home slightly cool while you’re away.

Set timers: Make it look like someone is home when you’re away with the help of some timers.

Time house lights and radios for hours of the day that they would typically be used, like in the evenings when residents are home from school or work. Timers not only make electronic usage look more realistic, they will save you money on your next electricity bill.

Monitor mail: Before you jet off, make sure you have a game plan for mail delivery.

A pile of newspapers on the front step and envelopes stuffed in your mailbox advertises that your home is vacant. Contact your local newspaper and post office about holding mail delivery until you are back. Alternatively, ask a close friend or neighbour to collect your mail regularly when you are gone.

Remove spare keys: When a home is targeted for theft, spare keys are the first thing that intruders will try to find. Make sure to remove any spare keys from the outside of your property before you head out of town.

If you have a friend or neighbour who will need access to check on your home, leave the key with them instead of the front step.

Enlist home check-ins: The best way to make your home look active is to have someone you know at the property.

Ask a close friend or neighbour who you trust to check on your home, inside and outside, on a regular basis. They will be able to ensure that everything in your home is safe, collect mail, water plants and keep an eye out for any suspicious activity around the property.

Add value before you sell

The housing market has aligned with your budget and you’ve decided to sell. This is an incredibly exciting time, but also stressful as working towards getting your home in tip top shape for maximum return may leave you with more questions than answers:

Where do I start? What should I fix? And, can I do it myself?

1) Get rid of the mess

Make it your primary purpose to ensure prospective buyers aren’t overwhelmed by the state of your untidy home—there’s nothing more important. Decluttering opens up the space, makes a home feel bigger and allows buyers to envision the space as their home. So straighten up that laundry room and put away your children’s toys. It’s a quick, low cost, high impact step that can result in big value.

2) Know the neighbourhood…

…and your market! When considering how much money to put into your home improvements, do your research on the market value of not only your home, but your surrounding area. Over or under improvements may be detrimental to ROI and could hinder the chances of your sale. So if you live in a starter neighbourhood or a super executive market, remember who you’re prospective buyers might be and keep your renos consistent with their expectations.

3) Trust the professionals

The DIY network may be your favourite television channel, but if you decide to take on a painting project, you may risk devaluing your home by hundreds or even thousands of dollars. Consider hiring a professional instead to make sure you meet the high quality standards potential buyers expect. Not in your budget? Totally understandable, but before you grab that paint brush, visit a couple paint stores and ask to speak to one of their paint specialists.These folks know their stuff and can give you some great advice on what colours/paint schemes to use when preparing your home for resale.

About property tax assessments

How much is your home worth?

It’s a simple question with a complex answer, but one thing’s for sure, if you want to find the current value of your home, you can’t rely on your property tax assessments alone!

Here’s our breakdown of city assessments and how they can be used to understand property value:

First, what are city tax assessments? 

Each year in January, home owners know to expect their property tax assessment from The City of Calgary. These assessments are created annually to place a value on properties for municipal and provincial property tax purposes, ensuring that tax distribution is fair and equitable.

Second, how are they produced?

Assessments are based on market value, property characteristics and property condition. Each property is assessed using a real estate appraisal method that compares each property to other properties with similar characteristics that have recently been sold. Estimates are created from information collected in the prior tax year, and include the property’s market value and condition at that time.

Third, are they accurate?

Since property tax assessments are created specifically for tax purposes, they do not accurately reflect a home’s current market value. The City relies on filed historical information to create the assessment, not a current physical property inspection.

And finally, how do I find out what my property is worth? 

To find the current value of your property, work with me to leverage my quality real estate experience and expert know-how for accuracy. Give me a call.

A transition in the making

Detached sales activity boosts February housing market

After the first two months of the year, Calgary’s detached sector continues to drive a slow transition in the housing market. February sales totaled 1,342 units, which is still 19 per cent below long-term averages, but an improvement over the past two years.

As sales kept trending upward, detached inventory levels continued to ease in February. These conditions caused months of supply to fall to 2.4 months, putting less downward pressure on pricing. Unadjusted detached benchmark prices totaled $501,900 in February, which is one per cent lower than prices recorded last year, but slightly higher than January figures.

“There seems to be a new sense of optimism these days,” said CREB® president David P. Brown. “Some sellers are feeling upbeat about the changing landscape and the improved chances of selling their home. Other people are looking at the spring market with caution and wondering if we’re going to see a higher than expected surge of listings. While there’s less product on the market right now, sellers still need to be realistic with their pricing.”

The amount of excess inventory eased in the overall market in February, setting the stage for a transition to a more stable market this year. Months of supply totaled 3.4 months, down from five months over last February. At the same time, the sales-to-new-listings ratio trended from a near record February low of 39 per cent last year to 55 per cent this February.

With sales improving and new listings and inventories contracting—two key measures of market balance, there’s good evidence to show that the housing market has started a trend toward more balanced conditions.

“The transition in the housing market appears to be underway,” said CREB® chief economist Ann-Marie Lure. “However, it is important to note that this change is primarily being driven by improvements in the detached market and stability in the labour market.”

“It will take some time for these conditions to translate into all housing segments and achieve price recovery,” said Lurie. “But all indicators continue to point toward a slow transition from a contracting market toward one that is stabilizing at lower levels.”

Click here to view the full City of Calgary monthly stats.