CREB Now April 2022 Market Update: Market continues to favour the seller despite slowing sales
For the second month in a row, sales activity trended down after all-time record high sales in March. While activity in the market slowed down in May with 3,071 sales, levels are still slightly higher than last year’s record high and are far stronger than typical levels of activity recorded in May.
It’s not a surprise to see sales ease from the exceptionally strong levels seen earlier in the year. Many buyers were eager to get into the market ahead of the rate gains that we are now seeing,” said CREB® Chief Economist Ann-Marie Lurie.
“While higher lending rates are weighing on sales activity, the market is still struggling with supply levels and rising prices which could also be contributing to slower sales, especially in the detached market. Nonetheless, if this shift continues, we could begin to see more balanced conditions in the market over the next several months, slowing the pace of price growth in the market.
Slower sales were met with a decline in new listings, but a strong pullback in sales was enough to cause inventories to trend up relative to levels seen over the past few months. While inventory remains well below historical norms, the monthly gains did take off some of the pressure in the market. However, with just under two months of supply, the market continues to favour the seller.
Tight market conditions continue to contribute to further price gains in the market, but the pace of growth has eased relative to what occurred over the previous four months. Overall, the benchmark price reached $546,000 in May, over 14 per cent higher than last year’s levels.
Benchmark home prices reflect a typical home to ensure price movements better reflect market activity. Over time, the typical home evolves and the MLS® Home Price Index also evolves to ensure the data remains in line with modern housing trends. As of today, the benchmark price was recalculated based on a modern typical home. Details on the model adjustments can be found on the Canadian Real Estate Association’s website.
Higher lending rates, steep price gains and exceptionally tight conditions in the market are starting to weigh on consumers and contributing to the pullback in detached sales this month. Sales trended down in all locations except the most affordable North East and East markets in the city, which continue to record sales growth. Slower sales were met with a pullback in new listings which prevented any steep gains in inventory levels. With 2,552 units in inventory and 1,620 sales, the months of supply edged up over last month but continues to favour the seller.
Persistently tight conditions did contribute to further price gains this month, but the pace of growth has eased compared to earlier in the year. Detached benchmark prices reached $648,500 in May, nearly 17 per cent higher than last year. Year-over-year gains have occurred across all districts with the gains ranging from a low of 10 per cent in the City Centre to over 22 per cent in the South East and North East.
Like the detached sector, sales slowed this month for semi-detached properties. However, sales still remain relatively strong and on a year-to-date basis are still higher than levels recorded last year. New listings also slowed, but at a slower pace than sales causing some modest monthly gains in inventory levels and some monthly gains in the months of supply. However, with less than two months of supply, this segment continues to favour the seller.
While prices continued to rise for semi-detached properties, the pace of growth has eased from earlier in the year. In May, the semi-detached benchmark price reached $584,700, nearly 15 per cent higher than the same time last year. Price gains have occurred across all districts with the strongest year-over-year gain occurring in the North district of the city.
Like other property types, sales activity trended down from the March high. However, sales in May were still higher than last year’s levels and reflect a new record high for May. Row properties in the city are generally more affordable than both detached and semi-detached properties. Higher prices in other sectors and rate gains are likely driving more consumers toward row style properties.
While some monthly gains in inventories did help push up the months of supply, with 1.5 months of supply conditions continue to favour the seller. The persistently tight conditions placed further upward pressure on prices, however, the pace of growth is easing. As of May, the benchmark price reached $363,300, nearly 17 per cent higher than last year’s levels.
Recent gains in sales and prices likely encouraged the boost in new listings this month for apartment condominiums. While sales did improve significantly compared to last year, the sales-to-new-listings ratio eased to 67 per cent and inventories edged up over relative to levels seen over the past five months. This rise was enough to push up the months of supply to over two months. While this segment of the market has been more sensitive to supply shifts, conditions still remain relatively tight supporting further price gains.
The benchmark price in May reached $275,300, over one per cent higher than last month and nearly nine per cent higher than last year. Prices trended up in every district helping support price recovery. Despite the growth, prices are still over 10 per cent below the highs set back in 2014.
REGIONAL MARKET FACTS
For the first time in nearly two years, sales in Airdrie eased over last year’s levels. Meanwhile, the new listings in the market remained comparable to last month but were slightly better than last year’s levels. This helped push inventories and the months of supply up compared to last month. However, with the months of supply remaining at one month, the market remains exceptionally tight.
Despite tight market conditions, we did see prices take a pause this month, easing slightly over last month but remaining nearly 25 per cent higher than levels recorded last year. Prices have been trending up monthly for the better part of two years and the growth at the start of this year has far exceeded expectations. As rates continue to rise and the market shifts to more balanced conditions, we expect the pace of the price growth to start to slow.
Sales in Cochrane continued to remain strong in May, supporting a year-to-date annual gain of nearly seven per cent. While we have seen some signs of improvement in new listings, that was not the case this month. The sales-to-new-listings ratio rose to 98 per cent, higher than levels seen over the past four months. With no additions to the inventory in the market, the months of supply remained below one month. This supported persistent sellers’ market conditions.
The tight conditions continue to place upward pressure on prices. However, the pace of growth is starting to slow as May prices were 18 per cent higher than last year’s levels. Price growth remains the strongest for detached and semi-detached properties with year-over-year gains pushing 21 per cent.
Sales remained relatively strong this month, contributing to a year-to-date gain of nearly 17 per cent. This growth was possible as new listings did improve this month. However, with an 87 per cent sales to new listings ratio and a months of supply remaining below one month, conditions continue to remain relatively tight in this market.
The benchmark price reached $560,700 in May. This is a significant jump over last month and 19 per cent higher than last year’s levels. Like most locations, much of the gain is being driven by the detached sector of the market, which saw prices push up to $625,200 this month.
Pete and Katelyn’s Market Update:
Pete: Hey Kaitlin, what, what are you hearing about the market?
Katelyn: I’m hearing the market’s really good. I know.
Pete: It’s good?
Katelyn: It’s good. It’s up.
Pete: But I keep hearing about how the market is down.
Katelyn: Is it? I don’t know. I thought it was, I thought it was up or maybe it is down. Is it?
Pete: Yeah. I don’t know. I think it’s up. So you think the market is up or down now? Cause you said both. But then again I think I did too.
Katelyn: I’m confused now.
Pete: Yeah, everybody is. But stand by and we’ll tell you what’s really going on.
Hey, everyone. It’s Pete de Jong here with Remax. And I’m sitting with…
Katelyn: kaitlin. Hi,
Pete: Katelyn, Brecio, Brachio, what is it?
Katelyn: It’s Brecio.
Pete: She changes it all the time. I never really know what it is currently.
Katelyn: Yeah, apparently I do, yeah
Pete: Yeah. So we’re going to talk about the market a little bit today, there’s going to be a lot of numbers.
So if you want hit pause, and then go get a coffee and come back and hit play again to watch the rest. And then while you’re hitting things on the screen, hit subscribe. So you don’t miss one of these videos in the future because we do try to do one every month and give you a bit of a. What’s going on.
All right. So what we’re going to do at this time, there was a little bit deeper dive than we normally do. So we’re going to break things down a couple of ways. We’re first going to break it down by, you know, what’s happening across the entire Calgary real estate board, and then we’re going to do detached houses and then townhouses and then apartments.
And then we’re going to break it down again by different price ranges and see what’s happening there. And we’ll try to give you a bit of an overview as to what’s going on and maybe even give you a bit of it be looking into our crystal ball a little bit and see what the future might look like. Of course, yeah, we could.
We could be entirely wrong, but we’ll tell you what we think is going to happen. So let’s start with this. Across the entire real estate board sales are actually up 3% in May versus May last year. And just, you know, a lot of the numbers that we’re going to be talking about our year over year. We’ll break some stuff down by, by month and tell you what’s going on in terms of, of shorter trends.
But in terms of most of our numbers here that would be May of 20 22 versus May of 2021. So board wide sales are up 3% listings are down 6%. And of course it’s been the shortage of supplyvthat’s continuing to drive things here. And inventory is down 23% over last year, months of supply is actually what that means is months of supply is actually also down from last year, about 26%.
And, you know, last year May we were actually having a pretty decent little market. You know, we were having even a bit of a sellers market, right. I mean, it was. Right now we’ve got a an absorption rate close to 60%. But last year we had an absorption rate of 44%, which means it was a sellers market. We talk about an absorption rate being, you know, 33%, you know, and and at 44%, we were in a sellers market last year.
Now we’re at a 59%. So when people say, “Oh, the market’s really slowing down” yeah it is a little bit, it’s gone from crazy, crazy, nuts, hot to just a hot market. And it still is a hot market. And you’ll see that different markets segments, especially are harder than others. But prices are up in every area of the city except in double digits, by the way, except for city center, which has only up 9.3%.
So it’s 0.7% away from being a double digit price growth as well. So we’re seeing price growth across the city. We’re seeing a shortage of supply. Although supply is a little healthier than it has been in the last few months. And overall we’re seeing a lot of great news. The one area where things have softened the most is probably in the detached market.
And Katelyn, why don’t you tell us a little bit about that?
Katelyn: So for our detached market, this is actually the segment that’s been driving a lot of that market excitement. It has been. Yeah. So our sales have actually dropped by 15%, but I know that sounds bad, except that our new listings have also dropped 19% and our inventory is down 20%, but get this, our sales to a new listings ratio is that 73%.
Pete: So we still have a shortage of supply
Katelyn: We do. We only have a month and a half of supply, but I mean, with that being said, our average price has actually been steadily slowly decreasing, but it’s actually much higher than it was last year.
Pete: Yeah. But what do you think is going to happen? Six months to a year or something?
Katelyn: You know, I have a feeling, I don’t have a crystal ball, but if I did, I would think that the prices will probably increase over time.
Pete: I think so, too. Think it’s inevitable. I think we know what we’ve just got. You know, we’ve seen some really slight price decrease in the last three months. Like you said, still way higher than last year, but I mean, there’s, there’s still a shortage of supply. So I think, you know, the pendulum, as they say in, in economics or, or economists will say “the pendulum always swings too far”. So maybe it’s one too far, too quickly. It’s coming back. But I think it’s going to be like, I think there’s just such a shortage of supply in such a demand for housing here that I think time will tell in terms of the townhouse market here’s what’s going on there.
So sales in the townhouse market are not at all like the detached market. In fact, it’s catching up to where the detached market was. Sales are up 33%.
Katelyn: Oh wow.
Pete: Pretty outstanding compared to last year. Sales are up 33% listings are up 17%. So we’re getting lots more supply there as well.
Months of supply is down 41% from last year, which means we’ve now got about a month and a half supply there too. So we’ve kind of matched the detached market there. And the benchmark price is actually up 17%, which is as much as the detached market has gone up.
Pete: So after, yeah! After all these years of townhouses really struggling and really suffering they’ve just taken off in the last little while.
In fact, we sold one up in Ranchlands and sold in a day at full price. It was fantastic. And lots of calls for it afterwards and stuff too. So the biggest price increases or sorry, the biggest increases in unit sales within that townhouse market is between the three and 500,000 or market as you would expect.
And they dipped marginally from the two to 300. And I think that’s just because those prices went up. So most of those sales are just in or are above three now as opposed to below three. So overall, I mean, when you see an increase in sales, a 33% that’s pretty darn good.
Katelyn: All right. So let’s look into the apartment segment now. So our listings are actually up by 19%. Is that bad news? No. And that’s because our sales are actually up by 66%. So it’s actually, it means that our inventory is down 28%. Our months of supply is also down by 57%. Most of the unit sales that have been occurring in that market segment is actually between the $200-$300k price range.
So when we talk about our benchmark prices, they’ve actually been steadily increasing since December.
Pete: Yeah. So we saw some slight price increase, the detached market, which has literally been on fire here for about six months or eight months. But we’re seeing pricing increases in every other market segment.
So that’s kind of the news is that the detached market, which has just been. It’s just been a storm here for whatever, six or eight months. It’s starting to ease off a little bit to where it’s balanced and these other market segments are taken off like mad, which is kind of what we’ve been predicting right over the last few months is that we said a rising tide lifts, all ships. Eventually you’re going to see right races and in sales numbers and in prices and these other market segments and that kind of thing. So that being said..
Katelyn: Speaking of prices..
Pete: Yeah! Let’s break the market down now by by price range. So in terms of price in terms of price ranges, here’s, what’s intriguing is three the, or sorry, really four of the price market segments that we look at have actually gone up and one went down.
So the one that went Dallas started with that one is the $400-$600,000 price range actually fell by 11%. And that’s the bulk of our Calgary real estate board business. So it’s kind of strange. I don’t know how to explain it. I’m going to be honest. I have no idea why that happened or what that means.
I will tell. The market segment under 400,000, like so that the cheaper stuff and some of the condos and stuff, they saw a 5% increase. The $600,000 to $800,000 market really took off that’s up. So right. That’s up 21%. The part that really took off is $800 to a million. That’s a 32% pricing or not 32% price increase a that market saw 32% unit sales increase.
And of course, you know, it’s a smaller part of the market, but we’ll take a 32% increase anywhere, anywhere we can get it. And then the million plus, which includes the $2 million sales and there were, there’s usually one or two, you bought one, right? One of the $2 million houses, not the other one. It’s crazy in our dreams.
Anyways, that market segment is up 5% as well. So again, we’re seeing price increases everywhere, except the detached market. We’ve seen some very slight price decreases on average. You always had to be careful with averages because it could just be that. Detached homes in one area of the city, you’re out selling another part of the area city or whatever.
We could always have to break it down some more to really know what your house is worth. So overall we’re generally seeing price increases across the city, mostly in double digits, some slight price decreases in the detached homes, pricing increases everywhere else. So in general, we’ve still got a shortage of supply.
We’ve still got you know, hundreds of thousands of people moving to Calgary and to Alberta. And it’s because, I mean, it makes sense. I mean, we’re allowing 400 thousand immigrants a year into this country and they can’t afford to live in Vancouver, Toronto anymore. So they’re going to be coming here. You know, it’s like, this is where you know, this is where commodity prices have taken off, which is just providing wealth for everybody.
Oil, gas, grain have all gone up substantially. So it’s going to provide lots of opportunities for lots of people, and they’re going to see it. You know, if you’re going to be moving to Canada, it’s going to be a simple IQ test as to where you’re going to live. You can live somewhere where you don’t have to pay three times the amount to live. Or are you going to live here? Where wages are higher. There’s no provincial sales tax and your housing is a lot cheaper. So in fact, we’ve started a Facebook group, right?
Katelyn: Yeah, we did. It’s called “Moving to Alberta”.
Yeah. So tell your friends and family if they, if you’ve got any that are in BC or Ontario, especially.
Join the group share it with their friends. We just, it just went live like yesterday. I think we got like eight people or something like that. So feel free to share it around like mad. And if anyone needs information about moving to Alberta Katelyn is actually just been putting a ton of really good information on there.
And we’re available to chat with if you have friends or family that are moving here too we can certainly help them with their move here. So again, if you need information, that’s more specific to your house, whether it’s a townhouse in Tuscany or a, or a bungalow in new Brighton by all means, give us a shout. We’re happy to help you. And give us a call at any time. My cell number is at 403-818-7310. It should be up here on the screen and Katelyn’s..
Pete: My number is 403-615-2346.
Give us a call. Anytime. Be happy to chat.
Katelyn: Bye! Take care! He’s so creepy.
Pete: Isn’t that what news casters do they just..
Katelyn: No! Dont they gotta just..
And then they put their pen on their thing and
Pete: I don’t know what I’m doing anyways.