CREB Now July 2022 Market Update: Detached home sales decline as apartment condominium sales rise

Significant slowdowns in the detached and semi-detached market were nearly offset by sales growth in the apartment and row sectors. This left July sales three per cent lower than levels recorded last year. While this is the second month where sales activity has slowed, total residential sales this month are still amongst the strongest levels recorded in our market.

“Rising lending rates are causing shifts within the market and, as a result, new listings for higher-priced product are on the rise relative to sales activity,” said CREB® Chief Economist Ann-Marie Lurie. 

“Meanwhile, there continues to be a lack of supply for lower-priced detached and semi-detached product. This is driving consumers who are looking for affordable homes to purchase apartment- and row-style properties.”

Residential new listings in the city declined compared to what was seen in 2021, but when considering the dynamics between price ranges, we are seeing a different trend play out. Listings for homes priced below $500,000 fell by 18 per cent, while levels rose by 20 per cent for homes priced above $500,000. This has left conditions to remain relatively tight in the lower-end of the market while conditions are shifting toward more balanced levels in the upper-end of the market.

When considering the relationship between the supply and demand, the months of supply has continued to trend up from the exceptionally tight conditions seen earlier in the year. However, with just over two months of supply, the market remains far tighter than anything experienced throughout the recessionary period experienced prior to the pandemic.

As expected, the benchmark price did see some slippage relative to levels seen earlier in the year and rising lending rates have cooled much of the bidding war activity that was driving significant gains earlier in the year. However, prices currently remain over 12 per cent higher than last year’s levels, still outpacing forecasted price growth for the year. 

“As we move forward, we do anticipate further rate gains will weigh on housing activity and prices, but not enough to completely offset the exceptionally strong gains recorded over the first half of the year,” said CREB® Chief Economist Ann-Marie Lurie. 
DetachedIn July, detached sales reached 1,136, which is 19 per cent lower than last year’s levels. Higher lending rates are driving more consumers to look for affordable product, however, the detached sector has struggled with supply levels for lower-priced homes. While we are seeing balanced conditions in the upper-end of the market, conditions remain exceptionally tight in the lower-end of the market.

The decline in sales was mostly driven by pullbacks in the lower-price ranges due to lack of availability. Nearly 80 per cent of the inventory available is priced over $500,000 and new listings for homes priced under $500,000 are half of the levels seen last year.

With a benchmark price of $643,600 in July, levels are still nearly 15 per cent higher than last year. However, we are seeing some monthly adjustments as prices trended down across all districts in July compared to last month.
Semi-DetachedFor the third month in a row, semi-detached sales saw less sales than levels reported a year ago. While year-to-date sales remain over 11 per cent higher than last year’s levels, this is a significant shift from the 40 per cent growth recorded after the first quarter of the year. This pullback in sales was met with lower listings levels, but not enough to prevent some upward trend growth in inventory levels and the months of supply. The months of supply pushed up to 2.5 months in July, the first time it has pushed above two months since October of last year.

While conditions remain relatively tight in the lower-price ranges, the benchmark price did trend down relative to levels seen earlier in the year. However, like the detached market, prices remained significantly higher than levels reported last year.
 RowWhile levels cooled relative to the spring, row sales reached a new record high for July contributing to year-to-date sales growth of 54 per cent. Most of the gains were driven by product priced between $300,000 to $500,000, which also saw the biggest boost in new listings so far this year.

Both new listings and sales have trended down from levels seen earlier the year. However, the gap between sales and new listings narrowed over the past few months causing inventories to trend down compared to earlier in the year. This has ensured that the months of supply remained below two months. The persistently tight conditions prevented any significant adjustment in monthly prices in July.
Apartment CondominiumLike row properties, apartment condominium sales trended down from earlier in the year but maintained a record high level for July, contributing to a year-to-date gain of 66 per cent. Rising lending rates and available supply in the condominium sector helped support the year-over-year sales growth seen so far this year.

While trending down from earlier in the year, new listings in July remain 24 per cent higher than last year’s levels supporting a sales-to-new-listings ratio and a months of supply that reflect relatively balanced conditions. With conditions not as tight as earlier in the year, the pace of price growth has also slowed. In July, the benchmark price reached $278,800, slightly higher than last month and nearly 10 per cent higher than last year’s levels.
 

REGIONAL MARKET FACTS

Airdrie
Thanks to a pullback in mostly detached activity, sales in Airdrie slowed compared both to levels seen earlier in the year and levels recorded last year. These declines were met with some mixed results for new listings. New listings have trended down from earlier in the year but remained higher than the levels recorded last year. However, much of the growth in new listings, especially in the detached market, have been from homes priced above $500,000. Despite some shift in new listings over the past few months, the sales-to-new-listings ratio remains tight at 83 per cent and the months of supply is still below two months. 

Although prices have trended down over the past three months, they remain 20 per cent higher than levels recorded last year. The monthly slippage does not come as a surprise given the pace of growth seen earlier in the year. While conditions remain tight, more caution amongst consumers is weighing on their willingness to bid well above list prices.
Cochrane
Year-to-date sales activity in the town of Cochrane remains similar to levels reported last year. This is thanks to gains in the row and apartment sector. Higher lending prices and substantially less supply for affordable detached product has contributed to slower detached and semi-detached sales in the market.

Though conditions generally favor the seller, we are seeing some monthly adjustments in prices. Despite the adjustment, with a July benchmark price of $515,100, prices are still over 14 per cent higher than levels reported last year.

 Okotoks
While easing from earlier in the year, sales activity in Okotoks remained consistent with levels reported last year, contributing to a year-to-date gain of nearly 12 per cent. The pullback in new listings likely prevented stronger sales in the town as the sales-to-new-listings ratio pushed up to 97 per cent and inventory levels trended down.

Although conditions remain relatively tight, home prices did trend down relative to previous months. Home prices in Okotoks rose far above expectations earlier in the year and despite recent adjustments that have occurred over the past two months, July prices are still over 16 per cent higher than levels seen last year and nine per cent higher than levels reported in January. Click here to view the full City of Calgary monthly stats package.

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

https://www.creb.com/News/Media_Releases/2022/August/Detached_home_sales_decline_as_apartment_condominium_sales_rise/

Pete and Katelyn’s Market Update:

Pete: Hey everyone. It’s Pete and Kate here with Remax Professionals. I just wanna give you another market update. This is for July of 2022. So with respect to the market, and by the way, we’re gonna talk about pricing first, and then we’re gonna talk about supply and demand. And it’s really, when you look at supply and demand, in terms of what’s happening, there is supply outpacing demand or is it the other way around that we be able to get a bit of a crystal ball here. Be able to tell you a little bit about what’s going. Yeah, as best we can. Right. I mean, until we actually have a crystal ball..

Katelyn: We don’t really know. 

Pete: I’ve been watching Facebook marketplace checking, garage sales. I don’t, I don’t see them.

So the there’s a low supply of crystal balls apparently.

Anyways, with respect to pricing, Katelyn, what are you seeing? 

Katelyn: Yeah, well, we’re seeing with the total residential prices actually increased up to 12%. So now the benchmark price is at 540. Oh. . And now when we look specifically more into the market, let’s look InTouch prices Pete. 

Pete: Yeah. So in terms of the detach price, we’re up 14.8%. S o the detach price is now $643,000. But it’s interesting because the area of the market over 500,000 is actually having a bit of a tough go now. So yeah, it’s the market under $500,000 where it’s really still much more of a seller’s market yes. Than when you go over $500,000.

But we’re gonna get more to that into more of that. When we get into it. What about the semi-detached homes? 

Katelyn: The semi-detached homes, we’re actually looking at an increase as well up to 12%. And so that benchmark price is now about $576,000. 

Pete: Yeah. And, and townhouses have really taken off. So townhouses and apartments have both taken off.

Townhouse are now at 360, $2,000. Yeah. I mean, a couple years ago, that would be unheard of, but. 15% increase over last year. So again, you know, we’re hearing about the market softening and, you know, the reality is some parts of the market have softened a little bit from a month or so ago, but we’re still way up from last year.

So even if there’s gonna be some price adjustments that are some downward price adjustments and slowing of sales month over month. Yes. We’re still gonna be seeing much better numbers than we did last year. Yeah. And my take has always been that this is gonna be temporary. People are gonna have to get used to these new rates.

And carry on with their lives and, and recognize that. You know, even at 5% there were, there was a generation that begged to see mortgage rates of 5%. So it’s all relative to and also relative to even where you’re moving here from, cause if you’re coming here from Vancouver or Toronto, it’s still pretty darn cheap.

What do the apartments do? 

Katelyn: Well, apartments are actually at almost an increase of 10% almost, but that’s pretty crazy too. So the prices are about benchmark price, about $278,000. For that. I mean, that’s a really good increase compared to last year’s 

Pete: That is, especially when you consider that a lot of the apartments are downtown and downtown is still the area of the city that, I mean, depending on, on what kind of person you are, if you’re optimistic or pessimistic, but it’s the area of the city that has performed the, the least positively. Is that how you would say that? The, yeah, the. Like prices have gone up the least amount in terms of city center. Yeah. Yeah. Where, whereas most areas of the city are like high teens or 20% price increases the downtown is only up 7%. So yeah, you can say that’s a negative. I’m saying that’s where the opportunity is. Exactly. Because as Calgary rebounds. There’s still lots of room for price growth within the apartment and condo market of downtown. I agree too, is where I think the the issue has been, the issue’s been downtown is, is, is a high vacancy rate.

I mean, there’s just been a lot of empty, empty apartments, and as they start to fill up, I, I still think that once they’re full again, You’re gonna see a, you’re gonna see a significant jump, but again, I don’t have a crystal ball. I don’t know the future. That’s just 22 years of real estate experience talking.

Yeah. So in terms of sales though, what have we seen over last year sales over last year? 

Katelyn: They’re only down less than 3% actually. So yeah, 2.6. Yeah, 2.6%. So it’s not as. Bad as everywhere else. That’s going on. I’ve heard Toronto and Vancouver, their sales have been plummeting. Plummeting. Yeah. Crazy amounts.

So, yeah, we’re actually not doing that bad. How about listings? 

Pete: But I, well, listings are actually down 3.8%. So it’s, it’s. As long as listings are, are decreasing faster than sales are, our prices should stay pretty stable, but again, there’s massive variances within within markets in Calgary.

So, like I mentioned, apartments have have really taken a, a good jump as have row houses, townhouses as we normally call ’em and that kind of thing. But homes under get this homes under $500,000 have seen an 18% drop in inventory. Homes over $500,000 have seen a 20% increase in inventory.

So, whereas when interest rates were super, super lower, everybody was buying these million dollar homes. Now that interest rates have gone up, everyone’s buying the buying the lower price stuff, lower price. Yeah. And of course the lower price stuff. Some of it has bumped up from $500,000 to $600,000. So we’ve lost all those ones too.

So yeah. Well, exactly. It’s, it’s pretty crazy in terms of the inventory altogether what’s happened? 

Katelyn: Well from last year, the inventory is actually decreased about 20% compared to last year, which is that’s, that’s a high number. Yeah. But I mean, what can you do with with the prices going up and everything?

Like what, what we’re hearing is that because of all the there’s less inventory and all the semi detached affordable prices, people are now going toward apartments. 

Pete: Yeah, people are buying up stuff under the $500,000 price range and that’s affecting inventory, but inventory being down 20% from last year, if you’re a seller, that’s a good new, that’s good news.

If you’re a buyer, you have to understand you’re still in a bit of a seller’s market. It’s not as, it’s not like it was a few months ago. We’re not into a lot of these multiple offer scenarios. Although we were in one on Monday. Yeah. But so they still do happen, but not nearly at the same rate they were before.

And in terms of, so, so what we’ll look at sometimes we’ll look at is, is the absorption rate. And generally speaking, the absorption rate, if it’s at 33%, it’s we have a balanced market. Yeah. Last year, at this time we were at about a 35% absorption rate. And this year we’re still over a 50% absorption rate.

So we’re still solidly into a seller’s market. 

Katelyn: That’s a seller’s market. 

Pete and Katelyn: Yeah. So again, depending. What your price range is where you are in the city, whether you’re looking at a detached house or an apartment and that kind of stuff, but overall, the market is still strong. We’re still looking at a two month supply.

It’s like 2.3, 2.4 month supply. Which is amazing. Yeah. And so you know, is the market down? Yeah, it’s down slightly from from last month, but way up from last year. And I still think, like I said, with prices in Toronto and Vancouver being what they are, and then now with the added stick in the spokes of an extra percentage point on the interest rate and stuff.

Yeah. I think you’re gonna still see more migration towards I think so too. The land of opportunity. Yes. Yeah. Of opportunity in Alberta. There you go. Alberta is how they say it. Right? they, they like helping, what are you? You’re Alberta. Aren’t you? I am, but yeah, you know, that’s how they say it. I’ve who’s they?

What are you talking about? That’s what I wanna know. Who’s they people around . Cowboys. Yeah. , let’s talk about areas of the city. Oh, I worked out at the gym and now I can’t move that’s the last time I go to the gym. 

Pete: So in terms of areas of the city, that and how they’re performing versus a year ago number one area of the city Calgary’s Northeast.

Yep. Again, because that’s where the lower priced homes are. So we’re starting to see all the activity being in that kind of an area. So that area is up in terms of their benchmark price up to 428, 7 mm-hmm , which is an increase of 18%. Yeah. Wow. Over 18. Yeah. The worst performing area of the city.

Again, it, I mean, I shouldn’t say again, remains downtown. So I, I still look at it this way as downtown as the opportunity people, if you wanna, if you wanna see some ROI on a real estate investment, I’d still be looking at a condos downtown. You can still buy a condo downtown. It’d be an older one bedroom, but you can still buy a condo downtown for $150,000 bucks.

Try that anywhere else in terms of a major city. Yeah. So Calgary’s downtown is only up seven. So 7.1%. So lots of opportunity there. 

Let me just add to, if you wanna know what your market is doing in terms of your house, whether it’s a townhouse in Tuscany, or a bungalow in Beddington, like what I did there, a townhouse in Tuscany or a bungalow in Beddington.

That was poetic of me. I don’t care if any, see, no one else is gonna notice of either, but I was pretty proud of that anyways. Give me a shout or give Katelyn a shout and we’d be happy to help you find something or at least find out what we can sell your house for. We do it very transparently.

You’ll see how we do it. In terms of how we arrange at a price that we think we can sell your house for. We’ll also explain in detail the things that we do different, and I believe much better than other agents when they list your house. And of course, you know, I always recommend interview a couple agents.

Don’t just interview us interview two or three. See which one you like the best. I’m sure it’ll be Katelyn or me. But anyways, either way, and if you have any friends or family that are living in, in horrible places like Vancouver or Toronto, yuck, then let ’em know that there’s opportunities here to buy a home that they can actually afford.

Especially if they’re young finishing school got their first job and they’re looking around going, “how am I ever gonna afford real estate?” Tell ’em to get in touch with us or go to our Facebook group. Yes. Which is actually, you know, It started off real slow. We had five or six people on it, but now we’re up to what?

75 or something, 80, 80, we hit 80. So this is all organic growth. We’re not even, we’re not even promoting this thing or spending any marketing money at one on it or whatever, but it’s a great little resource for people that are thinking about moving out here. We’re happy to answer any questions they have with respect to whatever schools or taxes or yeah.

All that kind of stuff. So give us a show, anytime again. I’m Pete I’m at 403-818-7310. The number should be right above me. 

Katelyn: And I’m Kate, I’m at 403-615-2346. 

Pete: Yeah. Our email address is followed the video too. So feel free to email us or call us or text us anytime. We’re always happy to chat.

Especially if it’s real estate, but call us with a good joke. Otherwise we’re happy to happy to hear those two. And in the meantime, please, don’t forget to like, and subscribe. And like I said, if you know of someone that’s thinking about moving. Forward this forward this onto them. And they can get to know us a little bit and and how smart we are, how knowledgeable we are very much so.

Pete and Katelyn: And, and yes. And at least your nice smile. My weird 52 year old crooked one, but anyways, yeah, we’re happy to chatting time until next time. Bye. I think we killed it. Yeah, that was good.