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Calgary 

The following table shows the percentage of properties sold compared to the available inventory or the absorption rate for single-family homes in Calgary Metro year over year for the month of July for the last four years.

The Single Family Median Price has shown the following progression:

The following table shows the absorption rate of Condominiums in Metro Calgary each month since July of last year.

The following table shows the percentage of properties sold compared to the available inventory or the absorption rate for condominiums in Calgary Metro year over year for the month of July for the last four years.

The Condominium Median Price has shown the following progression:

There is no sugar coating it – things look pretty bleak from a Seller’s perspective. However there is a positive trend in the numbers. Note that in both the single-family and condominium markets fewer properties were listed in June and July than in the three previous months. While both market inventories are still high, we will likely see the number of total listings begin to decline over the next few months.

What does all of this mean for our market? For those who need to sell it is very important to be accurately priced.

For anyone who wants to purchase residential property it has now become an excellent time to buy! It takes great courage to buy when many Buyers are waiting for the bottom of the market. However those who wait usually end up waiting too long.

Information provided by Susanita de Diego (click here to contact agent)
The Calgary Home Selling Team

September 2009

Graph 2 - No. of Sales per Month     Demand Analysis: A quick glance at the chart for No. Sales per Month shows the number of sales in July was par with the record of July 2007, making clear the rebound of demand in Calgary's market.  August's demand at 2,285 shows demand coming down as expected; however, it is at a fairly steep slope, and falls slightly below the average of the past 7 years.  Take a second look at this year's demand graph and marvel at where we have come from: 914 sales in January, way below average, to almost record sales in July and now back to average in August.  It's my guess we will see the rest of the year follow the average line.     Graph 3 - No. of Sales vs. Average Sale Price      Price Analysis: Average price has remained steady for the last three months.

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

April 2009

Graph 1 - No. of Avail. Listings at Month End

Supply Analysis:   Inventory, while still above what is required for demand, is stabilizing and now starting to show a normal pattern. A look at the graph shows just how much turmoil we've been through in the past 5 years. 2004 represents the last full year normal pattern for inventory: up gradually from the beginning of the year to a peak of inventory May or June, a gradual slope downward to September, and a slow decline toward end of the year holidays. Note particularly how the beginning and the end of the year inventory hovered around 5,000 and peak inventory that year was 6,820 at end of June. This is a normal annual inventory pattern.   January 2005 started this same pattern and then in April 2005 head office moves to Calgary changed the game with inventory dropping drastically (and the crazy price surges began). Since then, the normal inventory pattern had been lost:  until now. Note the close correlation between this year and 2004 and the beginning of 2005. Yes, there is a difference in numbers of about 3,000. However, this is not a huge difference when normalized by the increase in population and inventory growth in the meantime. We estimate the current difference when normalized at about 1,600. Also note this year's slight decline in inventory, compared to a normal slight incline at this time of year.   If our projections hold out, we expect inventory to reach a return to normal by the end of July, at about 7,500. Is the roller coaster ride almost over? If so, the current above normal inventory may represent the beginning of the end of the exceptional buying opportunity of the past year. One thing is very clear: inventory has been dropping month over month since May 2008. When inventory reaches normal, pricing will firm, and then we can expect price increases of at least normal inflationary levels.

Graph 2 - No. of Sales per Month

Demand Analysis: Sales are showing a definite trend and can be described as recovering, while numbers still need to increase to be at normal levels. Demand is still about 600 units (21%) below average; however, another strong month is very possible, as May is one of the three months that has highest sales for the year. Weather has been unseasonably cold and this has slowed demand. Should the increasing demand as from the beginning of the year continue, and we believe it will, we will return to near the average number of sales as indicated by the black line Avg 01-08. This would still be below what we would expect for demand normalized for population growth; however, another more fundamental mark will have been reached.   Since May 2007, every month has had a lower number of sales that the same month in the previous year. We predict that near the end of May we will break through the 2,330 sales of May 2008. This will mark the first time since May 2007 in which the sales of an individual month were higher than the sales of the same month in the previous year. Should this take place it will be the first definitive measure of improved demand in the Calgary Real Estate Market since market demand peaked two years ago in May 2007. It will be the beginning of a recovered Calgary real estate market.

Graph 3 - No. of Sales vs. Average Sale Price

Price Analysis: Average prices have stopped declining since a bottom in January and are starting to show a slight increase (2.9% this year). Similarly, the median is up $2,000 from $340k to $342k last month. These minor increases are not greatly significant in themselves, but indicate a level of stability which was missing from price in the past two years.

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

Graph 1 - No. of Avail. Listings at Month End

Supply Analysis:   Record high inventory peaked in May and gradually fell to December supply of 8,351. In this New Year, inventory has risen only very calmly compared to last year, so inventory -- while still well above what is required for demand and market balance -- is stabilizing. A little better for sellers. Inventory is expected to rise seasonally as sellers list their property with the intention to move in spring or summer. End of March inventory was 8,827. Relatively, inventory levels are high, but down considerably from 11,291 in March 2008. This indicates tightening of inventory, and indeed while in certain markets and neighbourhoods there is exceptional supply, it is not true in all segments. Careful research of your particular segment of interest is required, as it may not compare at all to the overall market.

Graph 2 - No. of Sales per Month

Demand Analysis: Sales were up on a straight line from December to end of March and a look at the graph shows it is a normal slope for this time of year. This is a solid trend and an indicator of strength, although absolute demand is lagging in the numbers of sales we would expect at this time of year. Relative to last year, the number of sales is down by 24%. March sales were the lowest since March 1996.

Graph 3 - No. of Sales vs. Average Sale Price

Price Analysis: Average prices have dropped to the levels of December 2006 -- a drop of 17% from the peak in July 2007 and a reduction of 13% year-over-year (March to March). We see prices in the bottom 10 percentile (up to $263k) being the most firm, as they are showing up as competitive with rental property, particularly for first time Buyers.

February 2009

Graph 1 - No. of Avail. Listings at Month End

 

Supply Analysis:  

Record high inventory peaked in May and has gradually fallen to end of January (8,142 up only slightly from 7,913 in January 2008).

Graph 2 - No. of Sales per Month 

Graph 3 - No. of Sales vs. Average Sale Price 

Analysis and Conclusions

December 2008

Click on the image to read the full report

Information provided by
Lynn Lamb (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.  

September 2008

Click on the image to read the full report

Supply Analysis:
# Available Listings at Month End describes the residential inventory available in the Calgary Real Estate Board. This year has had record inventory, mostly as a result of the factors of slowdown in immigration, speculators and investors bailing out of real estate and builders having built to full capacity up to 2007 trying to meet the demand of the increasing population. A look at the graph shows that inventory had just about caught up to normal levels of inventory in June 2007, coinciding with the first financial (Sub Prime) crisis in July 2007. New buildings must be finished, and along with speculators bailing out, Calgary's inventory continued to rise to a peak in May 2008. While remaining in record-high territory, inventory has stopped its rise in May this year and appears to be moving toward normal supply by mid-2009.  

 

Demand Analysis:

Demand is the interesting story in Calgary's market. While demand year-to-date is more in the range of years previous to 2004, it has clearly reached a solid base. September sales have moved into a normal range and while being 25% below the boom sales of September 2005 (2,767) it is 2% greater than September 2007 (1,935). Many people selling are exiting the market, but most are transferring from their current property to their next one inside Calgary. This is a great time for many who could not easily transfer when the market was so hot (short of inventory). Builders could not be counted on to deliver new houses on time and budget, and potential for loss in the transfer was a major risk. Now clients moving into a more suitable property can sell at the market price and have a choice of property to buy. Advising how to do this has become an important part of our business in the past year. A second major part of the current market is the first timer, who is finding the new possibility of affordable property. Interest rates have remained low and with the large inventory, sale prices have reduced about 15% since July 2007. This spells affordability for new entrants to the market, many of whom were previously frustrated from buying by competitive bidding and hyped-up prices.  

 

 

 

Price Analysis:
Currently, average price is down 10% to end of September 2008 from the peak in July 2007, and is similar to February 2007. Year to year, September is down 5%. However, this change in average price does not apply to the individual property. We see resales where the property value decreased in the range of 15% from the peak in 2007 and down approx. 10% year to year Sept. Simply put, buyers are getting much more house for the same dollars, and they can still afford to spend on average $400k. The reason is that the underlying factors of affordability--employment, wages and cost of borrowing-- have not changed significantly. However, increased inventory has made the market more competitive, leading to more value for buyers.

Analysis and Conclusions
Risks - The possibility of (by no means certain) increasing interest rates due to inflation thereby increasing interest rates and reducing affordability of borrowing. Secondly, tightening of the availability of mortgages, i.e. currently we are seeing a surge in first time buyers entering the market before the end of 100% financing on October 15. New housing supply has slowed considerably. When inventory meets market demand, a price surge is likely in certain sectors.

Opportunities - Continued in-migration to western Canada. The slowdown in consumer spending will reduce manufacturing of North American goods. Continuing employment in the energy sector will attract those looking for new opportunity. Employment and wages in Calgary continue to attract newcomers. Speculation is out of the market. High inventory and consequent price reductions offer new possibilities for entrants and transfer.

Conclusions: The current fall in prices has made headlines, but there is a major difference here compared to the US or even other parts of Canada in that employment opportunity continues strong and will continue to attract newcomers. While housing prices have reduced somewhat in Calgary, this pales in comparison to most other places, and other financial investments where the owner is not provided the fringe benefit of a place called home... Many are quietly taking advantage of this slower market by moving to a new home without panic or concern of loss.  

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd. 

August 2008 

Supply Analysis:  Number of homes for sale is on a downward slope from May and we expect a continued seasonal drop off to the end of the year. There is still abundant supply and buyers can carefully select their choice of property at an attractive price. 

Demand Analysis:  As evidenced by the normal years (2004 and 2005) we would expect to see a slight increase in demand around August, September, and October after the summer slowdown. This year shows decreased demand from July to August. Sales may pick up in September due to Buyers getting in before the Oct. 15 deadline on changes to CMHC mortgage insurance. Also, many experts are projecting interest rates to increase by 1% by late 2008 to early 2009. This may be a good time to upgrade from your existing home. Give us a call and we'll help you sort out the best scenario for your personal situation. 

Price Analysis: Average price for August 2008 was $392,315 which is down 8% year over year from 2007. This is also reflected in individual neighbourhoods where you will continue to get more for your money than you would have last year. Many Buyers have been waiting since Spring for prices to "hit bottom" before locking into a purchase. However, we know the bottom is only visible after prices start going back up, and many Buyers are now finding that their desired lifestyle change is worth more than continuing to speculate on market timing.

Analysis and Conclusions Though current trends would point to this being a "quiet" fall market, Frank and I continue to enjoy steady business, doing good work for many Buyer and Seller clients. Well-priced listings still have the potential for multiple offers from Buyers who have been waiting for just the right property. First-time buyers who have built up their 5% down payment will continue to see opportunities open up this fall. Now is a good time to start planning any real estate moves within the next 6 months.

June 2008

Supply Analysis:
At the end of May we guesstimated that numbers of inventory would soon peak and with inventory down slightly at end of June, this appears to be the case. The fact that listings fell slightly in June is significant because the normal trend is toward increased # of listings in the summer months. Perhaps we've just seen inventory peak for the year.

 

 

 

Demand Analysis: 

The spring market didn't make a strong show this year, with an apparently weak straight line of sales numbers below those of the past 10 years. However, the line shows a strong base of continuing interest in Calgary area property. The demand slope, by going up slightly in June, is bucking the trend for this time of year. We normally see demand falling from May to June as the slower summer season begins. Also of interest: a continuation of this straight line trend for demand will place demand at a more normal level by the end of July. Right now in Calgary we have Stampede week which normally slows business to a trickle. But judging from the strength of our personal business, there's a good possibility demand will be steady into the fall.

 

 

Price Analysis:

Average prices remain strong on the graph as buyers are still affording their dream homes. Their dream homes, however, are much nicer houses than they would have purchased at this same time last year. The last market ended definitively when the sub-prime crisis hit in mid-July last year. Prices had peaked in Calgary in late spring to early July 2007, depending on which particular segment you were watching. Our current observation is that 20% of the inventory is being absorbed by buyers. Those purchasing at this time are able to cherry-pick from a very good selection and the prices being paid are the new market prices. When there was very little activity, prices were still falling and were difficult to read (all over the board). Demand has now stabilized and there are plenty enough sales to represent a stable market. Market price is becoming discernable. We believe that while there are still many catching up with the concept, the new market has arrived and is establishing itself, just about one year from the time the last market ended.

 

Analysis and Conclusions

 

Inventory remains very high, but perhaps the peak has been reached.
Demand remains relatively low, but very stable and is showing signs of increase.
Price is much better than last year at this time when what you got for your dollars was at an all time low.

Projecting... expect a Buyer's market, but stabilized prices and with nicer property than in 2007. The big picture looks relatively strong, as much of the impact of the financial sub-prime crisis has worked its way through. While Canada's economy will apparently take a hit in manufacturing sectors and there is still a question with oil producers concerning the new Alberta Royalty Scheme and possible Federal Carbon Tax, the fundamentals of secure and available oil will underpin the Western, Alberta, and Calgary economies. Also, as Canadian cities go, Calgary is affordable and the demand for workers is still high.

 

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

 

April 2008

Supply Analysis:  Supply continues to break records this year, continuing the upward slope from the previous two months, albeit not quite as steep. Inventory is 2x the normal for April and provides good choice in all sectors.

Demand Analysis:  Demand, measured by sales in April, shows a flattening curve with sales essentially the same in March and April. Demand is 68% of last year's record demand, and 79% of the
5- year average for April (3,004 sales).

Price Analysis: Average Selling price shows strength in affordability, as the price curve remains relatively flat. Buyers continue to spend the same amount of money to pay for a home. Average sale price is the same as April 2007. Affordability has become better as a result of continually reducing interest rates, a trend that has been very positive for those buying. On the individual property, the price has dropped. Some segments are more steady than others. As in all real estate, the individual case is unique and actual value change can only be determined from a study of the individual property in context. However, overall the average buyer might now pay in the order of 10% less for the same property in mid-2007. 

Analysis and Conclusions
The steady increase in supply has been remarkable, but is unlikely to increase much longer. The unusually high inventory indicates a transition period. The last turn of the market occurred in July 2007, and it was no small coincidence that this was the time when the US sub-prime crisis became part of our consciousness. Currently there is over 5 months (5.36)  of inventory, compared with less than half a month only 2 years ago (record low inventory 0.49 months April '06). However, this does not compare to what media indicates in some US cities, where inventories are over 12 months.

Secondly, the economy remains strong. While net migration to Alberta has slowed, it has not stopped. There is less in-migration but considerable pent-up demand from those who wish to make lifestyle trades (up or down), and a large number of first-time buyers who are unaware of the opportunities in this market, and who have been scared off by thoughts of buying too high. Speculators and fix-and-flip  are mostly gone, but Investors (those who hold for longer term, and income, rather than solely capital gains) are returning to the market. 

This market is challenging and requires vigilance, patience and ingenuity of agents in deal making, not because of any inherent lack of demand, but because of differences of opinion of value. Negotiations can be lengthy, and in the case of trades, re-negotiation is sometimes needed in order to make both ends complete.

However, the prognosis is good: The financial crisis created by the US sub-prime fiasco will be a year old in a few months, and most  risk and losses will have been recognized. Alberta's economy is strong, affordability is up, problems with inventory solved, and the past two years' excesses of the market created by record demand coupled with record low inventories are over. For many this provides an opportunity to step up to a preferred accommodation they either couldn't afford or find last year. Those seeking good value in the market can start looking, and are likely to find what they are looking for.

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

From RBC's Special Report on Housing Affordability across Canada published March 2008:

Calgary & Edmonton - rapid slowdown underway?

The pendulum has swung quite rapidly from a red-hot seller's market to one that is decelerating at a remarkable pace. All home segments witnessed sizeable improvements to affordability conditions in the final quarter of 2007 with momentum expected to continue this year. Sales-to-new listings ratios in both cities continue to decline and still remain in the soft end of a balanced market. Year-over-year house price gains continue to slow sharply dropping in January to 8% in Calgary and 11% in Edmonton. The softness is also evident in the new home market. Housing starts in Calgary have slowed dramatically dropping 33% year-over-year in the final quarter of last year and a further 11% in January. The rapid run-up in house prices has triggered automatic stabilizers to kick-in by aggressively pricing prospective homeowners out of the market. As more supply gradually makes its way to market, the pace of price gains are expected to continue to fall closer in line with income growth and underlying market conditions. 

  Resale housing market conditions

Alberta on watch

Nationwide housing affordability deteriorated in every consecutive quarter throughout 2007 to end up at its most unaffordable level since the housing bubble peaked in 1990. Back then, soaring interest rates and a recession sparked much of the trouble. Today, however, a long upward trend in house prices driven by sounder macroeconomic fundamentals like job growth is primarily responsible. Adding more fuel to this housing cycle is mortgage product innovation that has expanded the market to more potential buyers since mortgage insurance liberalization began two years ago.

Only Alberta bucked the trend in the latest quarter. Outside of Alberta, affordability deteriorated in every single market and for each type of housing.

The lagged effects of higher fixed mortgage rates continue to be a significant part of deteriorating affordability, but our forecast sees the popular five year mortgage rate dropping by a further 75 basis points by year-end. Going forward, falling mortgage rates, cooler forecast house price gains and decent income growth should all lead to improved affordability across most markets.

It's premature to get too concerned, but Alberta's housing market is on watch for possible further negative developments. The average price of a standard twostorey home fell by 4.3% last quarter over the previous quarter. Bungalow prices fell by 7.3%, townhomes were off by 4% and condos fell by 5.3% in their second consecutive quarterly dip. The price of the benchmark two-storey home is still 63% higher than two years ago, and one quarter does not make a trend. However,
the year-over-year pace of price gains has gone from about 50% a year ago to only 11% today. Furthermore, the sales to listing ratios in Calgary and Edmonton remain at about 0.4, or about half the peak recorded over the past two years, which points to the risk of further price cooling in a market with more slack.

The arrival of slipping house prices in Alberta may well enhance a growing tendency to make comparisons between Canadian and U.S. household finances. Americans are still modestly richer, but much more heavily leveraged and further indebted with less liquidity (see table). That, in turn, makes them more vulnerable to ongoing credit market turmoil and risks to house prices than Canadians.

The sharp depreciation in the U.S. dollar over the past six years has made Canadians relatively much richer over time by raising the relative value of what their wealth will buy in world markets compared to Americans. The table uses figures in local currency terms and a C$ floating around parity makes for fairly direct comparisons. If, however, this were six years ago when the C$ bottomed out at 62 cents against the greenback, then Canadian household net worth would be over 40% lower than in the United States. Even if a long-run average C$ value say, 85 cents) were assumed, Canadian household net worth is still relatively much higher than years past.

Alberta's housing markets on watch

Affordability appears to have peaked about midway through last year. Conditions are now already on an improving track with more relief in the pipelines over the coming quarters. Healthy income gains (running at 5% year-over-year in the final quarter of 2007) combined with a decline in house prices led to overall affordability improvements for new homeowners trying to tap into the overvalued Alberta market. This marks the first time in over three years that the market has witnessed a broad-based affordability improvement across all home segments. This also marks the start of what we fear could become a trend. All of the key housing measures are in contraction mode right now including house prices, housing starts, and resale activity. The sales-to-new listings ratio has swung dramatically from deep seller's territory into a more balanced state and has remained in steady balance for the last six months. Further improvements are expected as the market continues unwinding and mortgage rate relief materializes.  

March 2008

Graph 1 - Number of Available Listings at Month End

Supply Analysis:

Current inventory is at an all time high (11,291) surpassing the previous record in October 2007 (9,758). As we see from the slope, the increase is faster than normal--a 20% increase in the last month. To further put inventory levels into context, I've added a new distinction of Relative Inventory. This describes a relationship between Inventory and Sales and is measured in # of Months of Supply. In a nutshell, it's the number of months it would take to deplete the current supply at current rate of demand if no new listings were added. Relative Inventory at March end is 4.8 months. This is down from the record of 5.06 months supply in October 2007, but is rising from last month. As a comparison, Relative Inventory was at its lowest in April 06 at 0.49 months.

Special Note: In June 2007, the historic data set maintained by the Calgary Real Estate board was dropped in favour of a brand new set that was not a broad a statistic (only Calgary city limits). We decided to recreate and maintain the historic set so our clients could compare past years with current market performance. You will not find this information elsewhere.

Graph 2 - Number of Sales per Month

Demand Analysis:

Demand this March falls within the lower range of normal. It's down from the exceptional high demand years of 2006 and 2007. Analysis shows that peak buying activity each year falls within either March, April or May. The last two years (2006 and 2007) were early springs, with strongest demand having been in March. The slope from Feb to March this year was lower than normal, and does not show the acceleration we expect at this time of year. Either April or May are expected be the peak sales months this year. Personally, I predict a more gradual April, with the peak demand this year being later (May or perhaps June).

Graph #3 - No. of Sales vs. Average Sale Price

Price Analysis:

Steady and strong, average prices seem to be increasing again. How does this statistic jive with the general sentiment that property prices are down? Sellers have had to reduce their expectations of what their house might be worth to compete in a well-supplied market. I believe that the stable average price statistic indicates that the buyers are still quite able to afford Calgary prices. This makes sense as affordability has not been negatively affected in Calgary. There is a strong job market with increasing wages, and the cost of borrowing has come down. So my answer is that Buyers are still spending what they can afford, but what we don't see in the average sales price statistic is that they are getting better houses for their money than a few months ago.

Analysis and Conclusions

• 4.8 months inventory is near the top of supply statistics
• Average price not yet unaffected by large inventory
• Affordability not an issue
• Demand lower than previous two years to a more normal demand
• Spring market yet to prove itself

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

February 2008

Graph 1 - Number of Available Listings at Month End

Supply Analysis:

January supply followed a usual slope upward from December. The end of the month shows a record number of actives for January. As in the previous few months, inventory remains about 1.5 times normal, indicating a good selection of property for buyers, and the need for sharp listing prices for those wanting to attract buyers.

Graph 2 - Number of Sales per Month

Demand Analysis:

Sales for the month of January have increased as would be expected according to the annual cycle, up to 1,799 from December's 1,443. Demand has retreated from the previous 2006 - 2007 exceptional demand years to the more normal levels of demand associated with 2002 - 2005. While there is a large contrast with the past two years, demand is still relatively strong, especially considering the uncertainty that has developed since the sub-prime crisis in July. This part of the story demonstrates Calgary real estate's comparative underlying strength.

Graph 3 - No. of Sales vs. Average Sale Price

Price Analysis:

While the Average Sale Price took a $10k drop in December, it has since climbed back to $410k, the same as November and February 2007. As mentioned in previous newsletters, the resilience in sale price is remarkable, given the larger than-normal inventory. We see prices fluctuating slightly over the next fews months and ultimately stabilizing for a time. On another note, the recent up and down average sale price has made it more difficult to do Comparative Market Analysis in individual property. We can normally adjust several comparable properties to arrive at a price variance of less than 5%. However, in the past 6 months, it has sometimes been closer to 10% variance after adjustment. This is the time where the the service of a professional Realtor (especially one who carefully builds statistics!) can help you determine where you fit in the market.

So what next?

Inventory will follow the normal curve upward for the 1st quarter. Demand will likewise follow the normal curve upward, and in my opinion relatively increase (greater than normal slope). The reasons are that affordability is still good and selling prices are showing resilience. Pent-up demand, renewed confidence in Calgary's real estate market (compared to other markets) and a new emerging sense of price stability, along with stable and lower interest rates will help buyers look to their futures. Sellers who continue to expect 20% annual gains will find this belief only hampers their plans to move, and asking prices will fall in line with the stabilized market.

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

2007 in Review

It's been a year!  The highlights include:
Average Sale Price :   December 2006:  $361,640
                                December 2007:  $401,346

This year's return on your real estate investment: 11% increase

Average Sale Price peaked at $438,118 in July, with the year ending down 8.4% from the peak. Prices had been up 21% from the beginning of the year to the peak in July. This month's news:  Average Sale Price drops $10k (2.6%) in December. 

Graph 1 - Number of available listings at month end 

Supply Analysis:  December inventory shows the usual dropping off at year's end. We ended the year with a record number of listings (just under 7,000). The effects of the July sub-prime scare are still apparent, although we're now closing the gap to normality. The future of inventory isn't clear. Although it's receding, I believe it will continue toward normal. We are nearing the season when people tend to get ready to move and properties are listed for the spring market. I believe we'll have seen the end of over-inventory before the end of June 2008, by which time it will have been above normal for just under one year. 

Graph 2 - Number of Sales per Month 

Demand Analysis:  Demand is Still Strong - The year started off with sales above last year's record demand and continued until May. Demand then softened towards more normal and then slightly below normal numbers of sales. It looks like there is a lot of latent demand and now that potential buyers are aware of the good inventory selection they have awakened to new possibilities. Also, there are still corporate moves happening, although seemingly without fanfare, as Calgary is still clear as a major city in Canada's future. 

Graph 3 - No. of Sales vs. Average Sale Price 

Price Analysis: Average Price as shown in the graph above is simply, remarkably, resilient. In spite of inventory well beyond normal in the second half, prices have dropped only 8.4%. Given the previous volatility of prices (38% increase from 2005 to 2006) and this year's 21% increase in the first half, it would be unfair to characterize the second half as a huge drop at 8.4%, especially in light of other markets. It's important however, to recognize that a peak has been reached in 2007. Since July, we've been in a normal cooling off period that's mainly the result of extraordinary events outside the Calgary real estate market. We expect those extraordinary events to play a smaller role in the future.   What does the new year bring?  Continued strength in demand. A settling of market prices with less volatility and greater choice. Greater opportunities for those with good credit and fewer for those without. Renewed opportunities for those previously too reluctant to move inside the market for a lifestyle change. Better opportunities for first-timers. Huge opportunities for those who are invested in Calgary and wish to retire in other real estate markets. 

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

December 2007 

Prices down slightly; Seasonal drop in supply 

Our last newsletter showed supply levels had reached a new record of 9,758 at October's end and surmised several reasons. Now at the end of November we see the supply follow a normal cycle with listings reduced to 9,069.

Graph 1 - Number of Available Listings at Month End

Supply Analysis:

This supply is still high at 1.5 x the normal for this time period, and leaves one to predict two things: (1) Buying opportunity exists as long as the market demand remains strong, and (2) The current high inventory will reduce from the peak and we'll not likely see this many properties available for the foreseeable future.

As I write this on December 12, I'm reminded that it's been an exceptional November of me working with buyers. In December, the pace has only just slowed so that I can get the newsletter out to you. That said, a quick check shows that as of Dec 12, the supply has currently dropped to 8,092 listings.

Graph 2 - Number of Sales per Month 

Demand Analysis:

A figure of 1,863 sales in November shows the steady level of demand for the past 3 months. This year, demand has dropped below the past two years, more to the level of 2004 and previous. The relative plateau in sales is expected annually from October to December.  

Graph 3 - Number of Sales vs. Average Sale Price

Price Analysis:

Many readers will find this next statistic surprising if they've been listening to the media recently. Average prices have reduced by $3,400 (less than 1%) in the last three months from September to November. Overall average prices are up $50,000 (14%) from January 1st to end of November and down $26,000 (6%) from the peak in July to end of November.

- So What Does This All Tell? -

The market has dropped only 6% from the peak in July. Compared to other real estate markets and compared to potentially volatile financial markets, this is surprisingly steady investment. There's been an overall gain of 14% this year to date. And in spite of high inventory, the average price has remained steady in the past 3 months, indicating underlying strength of market price.

What next? Inventory will continue to drop to the end of the year as per the annual cycle. Indicators for this year point to interest rates remaining low . In Alberta, there will still be strong demand for labour and wages will continue to rise. Calgary area will continue to draw high paid talent, and move ever closer to being a top Canadian city. People will begin to realize that not all areas of North America will be as affected by the downturn created by the current financial crisis. There will be a renewed strength in demand numbers as is usual in the spring, and this will take out the excess inventory by end of June or sooner.

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

 November 2007

~ Prices down slightly; record level of Supply ~

Last month we witnessed a great increase in supply with the Sept. 30 statistic of 9,447 listings available at month end. Supply remains the major factor in the market at the end of October, with an increase to 9,758 residential listings in the Calgary region. Currently we have about 50% more than the normal amount for this time of year.

Supply Analysis: We can speculate about the reasons for the relatively large inventory: (1) On the International scene we have had investors feeling shaky about Real Estate values declining in the US (discussed in previous editions). (2) Closer to home in the past two months, Albertans have been concerned about the Royalty Review in which Oil and Gas industries will be charged more for the use of the public assets from the land. Fortunately, it has been resolved this past week. (3) Finally, there's going to be a peak in the numbers of people moving to Calgary, and perhaps we've reached it. There has been incredible and unsustainable immigration to Calgary in the past two years. Prices have jumped to meet the demand and we are now in a new comparative range of cities, some of which, (Houston for example) are cheaper than Calgary. Can we continue to attract people to Calgary at these prices? Yes, because this is where the future is and we have the highest paying jobs, but going down the road is not as easy a decision to make as a couple of years ago.

Finally, let's not forget the impact a speculator will have on supply. When the City of Calgary comprises 420,000 houses and someone in the speculation market says the sky is falling, watch for lemmings trying to be the first to get out. Remember that while there is a 50% above normal number of listings at month's end, this represents only about 4000/420000 = 1/100 of the housing stock.

Demand Analysis: # of Sales remains unchanged from last month (1,935 vs. 1,928) and fits right in amongst average past Octobers, but down from last year's record 2,566. Projecting, Demand should normally fall at this time of year as a result of seasonal cycle. However, I find that buyers are starting to recognize that the market is not so rushed and are considering buying. That, along with the Royalty Review situation solved and new federal tax cuts means that some buyers who were holding out are now looking at the market with renewed interest.

Price Analysis: Average residential sales price peaked in July, and at the end of October have reduced by 6% overall. This is down $2,000 from September to October ($415,315 to $413,253).

 ~ Projections ~

It appears that the increase in inventory is slowing. The royalty review situation has been solved this past week with a compromise. The realization that prices have stopped increasing is becoming part of consciousness. A number of properties that are overpriced will not be re-offered. The recent tax cuts at the federal level announced this week The seasonal trend to fewer available listings as December, all mean that we can expect supply to drop over the next few months.

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

Information provided by
Susanita de Diego (Click here to contact agent)
Coldwell Banker Your Calgary Home Selling Team 

October 2007 

~ Long-term Buying Opportunity is Here ~

The market this last month has been long awaited for those wishing to move to Calgary or to move within Calgary. The reason is that supply is very good, giving buyers a break from the recent past where tight supply drew competition on almost every property that was listed. Supply has continued to climb to a new high at the end of September with 9,447 listings.

Graph 1

Supply Analysis: Generally there are fewer moves in the fall, especially after school starts. The Supply graph shows an unusual upward slope for this time of year when we would expect it to be more flat. I wrote about the reasons for this increase in inventory in last month's newsletter, but briefly there was a financial markets fallout that started in July. Note that this year's supply parallels last year's; however, this was a recovery from a record-low inventory. I predict that inventory will begin to drop significantly after end of October. High inventory indicates buying opportunity. 

Graph 2

Demand, represented by the Number of Sales Graph above, has moved downward as expected with the annual cycle. There is a drop of 13% over last year (September 2006). The lower demand is likely a result of slowing numbers of people coming to Calgary in comparison to the previous two years' rush.  

Graph 3

Average Sale Price peaked in mid-June and now at the end of September we have seen the average price come down about 5.2% overall, to the same level as average prices in March this year.

Price is the quantity by which most people try to judge a market. Taken by itself, this drop may seem ominous and some media will make it appear so. However, note that the average price at this time last year was $369,928. The change in one year to $415,315 is a 12% increase in your asset. To those who have been watching the financial markets lately, this should contrast as very solid compared to other investments.

SUMMARY: The fall and winter to the very early new year generally represent the best selection of property, and a good time to buy within the annual market cycle. Last year at the end of September I noted a buying opportunity as the supply reached a normal level. This year I see the same timing opportunity only with better selection. It is also now easier to transfer to a new home within Calgary. Calgary, as Canada's Oil and Gas capital city will continue growth. The future remains bright as the natural assets of Alberta are in demand around the world.

Thanksgiving gives us a time to reflect on what matters. In this, we have only two assets: time and friends.

Information provided by
Frank N. McCullough, BBA, MEng. (Click here to contact agent)
Coldwell Banker Lifestyle Realty Ltd.

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We presently have 5525 Single family homes listngs on the market and 2257 condos. The sales to listings is 39% in both categories. That is our most recent stats as of late last week.

Information provided by
Christine Richard (Click here to contact agent)

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Calgary Stats

Information provided by
Wayne Thrush (Click here to contact agent)
Coldwell Banker Chinook City