Jan 22/16 Market Report from AREA

Alberta home sales down year-over-year in December

The Alberta Real Estate Association (AREA) compiles provincial MLS® sales data for dissemination to REALTORS® and other interested groups. The data that is provided represents statistics provided to AREA by way of the Canadian Real Estate Association (CREA). For more detailed statistical information for Boards/Associations or for individual areas, contact your local real estate Board/Association or your local REALTOR®.

The Alberta Real Estate Association (AREA) reports that a total of 2,532 residential unit sales were recorded through the MLS® Systems of real estate Boards/Associations in Alberta in December, down 17.4 per cent from the same month last year. The average MLS® residential price edged down 0.3 per cent from December 2014 to $389,486.

Six of Alberta’s ten real estate Boards/Associations saw an increase in monthly residential average prices from year-ago levels:

Board Year-Over-Year Change Year-to-Date Change
Lloydminster Region (AB Only) +29.9 per cent +0.7 per cent
South Central Alberta +15.3 per cent -4.0 per cent
Lethbridge Region +14.6 per cent +2.5 per cent
Alberta West +2.4 per cent 0.0 per cent
Medicine Hat Region +1.9 per cent +4.0 per cent
Edmonton Region +1.0 per cent +1.9 per cent

The four remaining Boards/Associations saw the monthly residential average price decrease to varying degrees from December 2014:

Board Year-over-Year Change Year-to-Date Change
Calgary Region -0.4 per cent -1.5 per cent
Central Alberta -1.0 per cent +0.3 per cent
Fort McMurray Region -2.2 per cent -6.2 per cent
Grande Prairie Region -5.0 per cent +0.4 per cent

Note: The data above is national data and may not perfectly reflect the data reported by a Board/Association. The numbers represented are for the full Board/Association region, rather than city/town proper areas that may be reflected in a board’s name. Click here for a general guideline of Board/Association boundaries.

The value of all home sales in the province totalled $986 million for the month, falling 17.7 per cent from December 2014.

There were 7.9 months of inventory at the end of December 2015, up from 5.1 months at the same time one year ago.

New listings on the MLS® Systems of real estate boards in Alberta numbered 4,558 units in December, an increase of 13.7 per cent from a year earlier, while active residential listings numbered 20,067 units at the end of December, up 27.9 per cent from one year earlier.

Click here for the full release, including a breakdown of information by area. For more detailed statistical information, contact your local real estate Board/Association or your local REALTOR®.

expected in 2016, adding to an already elevated level of inventory. In this situation, the markets ability to effectively absorb more inventory will be limited, resulting in some downward price pressure across all housing sectors.

“As we move into the second year of this environment, we expect to see additional housing supply pressure and further price declines,” said CREB® chief economist Ann-Marie Lurie. “Weakness in the energy sector is overshadowing all aspects of our economy and with more people looking for work and fewer opportunities, we could see some families making adjustments to their housing situation.”

While price declines are forecasted in each of the detached, attached and apartment markets, steeper declines are anticipated in the higher density segments, a trend which already started in the fourth quarter of 2015. This is related to the near record high level of multi-family units under construction. As these units are completed, there will be more product available for a smaller pool of buyers.

“Market intelligence really matters in today’s operating environment. Pricing trends have and will continue to vary depending on product type, price range and location,” said CREB® president Cliff Stevenson. “Sellers in this market need to have a good understanding of activity within their specific niche of the market. This is where a real estate professionals can really help navigate market conditions and real estate options, which are always unique to each consumer.”

With oil prices expected to remain lower for a longer period of time, the additional impact on employment and the extent of the spillover to other industries is still uncertain. While current forecasts expect employment weakness to persist throughout 2016, further losses are not expected beyond this year.

“The main risk to the housing outlook lies with the deepness of the pullback in demand and how that will translate into supply gains,” said Lurie. “Any sign of sustained recovery in the energy sector could limit the impact on the housing market.”

Housing market conditions favour buyers

Weak sales activity relative to inventory places downward pressure on prices

Calgary, Dec. 1, 2015 – Persistently high inventory levels within Calgary’s residential resale housing market, combined with weak sales activity, contributed to buyers’ conditions in November.

Monthly sales totaled 1,263 units, a 28 per cent decline from last year and nearly 20 per cent below the 10-year average. Meanwhile, the amount of new listings in the market increased by five per cent over last November, and moved five per cent above 10-year average.

The combination of both soft sales and elevated listings caused months of supply to rise above four months. It represents the third consecutive month that housing supply in the city has remained near four months, which is an indicator that supports buyers’ conditions.

“The housing market is reflecting the realities of the economic conditions,” said CREB® chief economist Ann-Marie Lurie. “Calgary has continued to post job losses in the energy sector, unemployment levels are high, wages are down and recovery expectations have changed. All of these factors have contributed to the weak demand we have seen throughout the year.”

CREB® president Corinne Lyall pointed out that inventory levels still remained 27 per cent below the November highs recorded in 2008.

“Furthermore, price declines have not been as steep as those recorded during the last downturn,” she said.

The unadjusted benchmark price in November declined to $450,700, a 0.5 per cent drop compared to last month and two per cent from last year.

Calgary’s detached housing sector faired the best in November as months of supply increased to only 3.4. Nonetheless, the unadjusted benchmark price declined by 0.6 per cent compared to October, and 1.52 per cent from November 2014, to $510,700.

In the attached category, buyers’ conditions emerged as months of supply increased to 4.8. As a result, the unadjusted benchmark price declined to $352,400, a 0.5 per cent drop from last month and 1.5 per cent from last year.

The apartment sector continued to be the hardest hit of the three sectors. Months of supply increased to 6.9 in November, causing benchmark prices to slide 0.5 per cent from October to $287,000. Meanwhile, year-over-year prices were off by 4.6 per cent.

Despite weaker absorption rates for most of 2015, residential benchmark prices have only recently started to decline – while average and median prices have dropped more dramatically. Lurie attributed that to slower activity in the higher-priced segments of the market, which can skew average and median prices.

Benchmark prices represent changes for similar-type homes, minimizing the impact caused by changes in distribution.

“It is not a surprise that the average price has recorded a steeper decline than the benchmark price,” she said. “Last November, detached sales in the city over $700,000 totaled 159 units or 15 per cent of the market sales. This November, there were only 103 sales representing 13 per cent of the market sales.”

Lyall said knowing the difference between indicators such as average, median and benchmark prices is important for sellers.

“There is no question that this can be a challenging market,” she said. “However, because of these circumstances there is a greater need for market intelligence.”