Resale demand shifts toward lower priced product

Calgary, AB – Driven by year-over-year improvements in almost all regions, October sales activity rose to 4,535 units. While this reflects an eight per cent growth compared to last year, October 2018 sales were some of the weakest levels recorded since 2014. Overall year-to-date sales remain comparable to last year and over ten per cent below long-term averages.

“Given the current economic climate it is not a surprise that resale housing demand remains slow,” says Ann-Marie Lurie, AREA Chief Economist. “However, there have been some reductions in inventory as the amount of product coming onto the market is also slowing, helping push the market toward more balanced conditions. If these trends continue it should eventually support more stability in housing prices.”

Year-to-date, there has been an eight per cent decline in new listings, and an average four per cent reduction in inventory levels. The months of supply remains elevated based on historical standards placing downward pressure on prices.

There has also been a shift in some regional housing markets where the sales growth has been limited to the lower priced product in the market. This is consistent with our expectations, given the shift in the employment market and wages throughout most regions of the province.


Regional Breakdown

Calgary Region
For the fourth consecutive month, sales activity in the Calgary area improved over previous year’s levels and was enough to push year-to-date sales nearly two per cent higher than last year’s levels. However, it is also important to note that last year activity was one of the weakest recorded in nearly two decades.

There has also been a shift in where improvements are coming from. Improvements measured in terms of reductions in oversupply have been limited to the under $500,000 market, while higher priced product continues to struggle with slowing sales and rising supply. The general oversupply in the market combined with the shift to lower priced product is weighing on prices which remain well below last year’s levels.

Edmonton Region
Driven by improvements in the lower price ranges, October sales activity improved by over 10 per cent compared to last year. While the improvement in sales has helped contribute to the reduction in inventory levels, overall sales for the year remain comparable to last year and are still below what is considered the norm for the city.

At the same time, new listings continue to ease. The rise in sales and reduction in new listings has helped support a reduction in inventory levels and help shift the market toward more balanced conditions. However, the market continues to favour the buyer, and this is still placing some downward pressure on prices.

Central Alberta
For the first time all year, sales activity improved over the previous year thanks to gains in the lower price ranges. However, October’s improving sales were not enough to offset earlier losses as year-to-date sales activity have eased by eight per cent.

Year-to-date sales declines were also met with a pullback in new listings. This has helped reduce inventory levels and the months of supply. Nonetheless, the months of supply remains above 11 months, ensuring the market continues to favour the buyer. The persistent buyer market conditions are weighing on prices which have eased compared to last year.

Fort McMurray
With no change in the economic climate in the province, it is not a surprise that there is no significant change in the housing market in an area that reflects the health of the oil sands market.

While conditions are not as bad as the 2015-2018 period, slow sales combined with rising new listings has it made it difficult to see any substantial changes in inventory levels or prevent further declines in prices. Year-to-date prices have eased by five per cent, making the total downward adjustment in prices since 2014 amount to nearly 40 per cent.

Grande Prairie
Inventories continue to remain near historical highs, as monthly sales were not high enough to offset the number of new listings still coming onto the market. While sales have eased so far this year, they have generally remained in line with long term averages for the area.

Elevated inventories compared to sales pushed the months of supply up to over eight months. With conditions favouring the buyer, prices have remained relatively flat compared to last year. Sales eased across each price range except for homes priced between $400,000 and $499,999.

Lethbridge
Further improvements in sales this month pushed year-to-date sales to 2,187 units, nearly two per cent higher than last year. At the same time new listings also rose, keeping inventories elevated compared to last year. However, given the sales activity for the second month in a row, the months of supply has eased compared to the previous year and sits below longer-term trends for this time of year.

While earlier in the year this market was demonstrating some signs of buyer’s conditions, as of late, conditions have improved into more balanced territory and prices continue to improve over last year’s levels. The recent rise in prices could also be related to some shifts in distribution

Medicine Hat
Sales activity in the region have remained relatively stable compared to last year. However, further gains in new listings have caused some gains in inventory levels and slightly higher levels of months of inventory.

Despite some early signs of oversupply, year-to-date prices have remained one per cent higher than last year’s levels. This could also be related to the slight increase in sales for product priced above $300,000.

Alberta West
Year-to-date sales activity in the region has eased due to a pullback in homes priced below $400,000. Meanwhile, sales activity has improved for homes priced over $500,000. This is likely a reflection of the diversity throughout the region with some areas facing economic challenges more than others.

Regionwide inventories remained comparable to the previous year. However, prices have recorded gains of over six per cent. This is likely a reflection of the rise in activity for the higher priced product likely located around the Canmore area versus the Hinton area.

Lloydminster
Year-to-date sales activity rose slightly above last year’s levels but remain below historical norms. At the same time, new listings continue to ease, helping inventories generally trend down this year. However, the persistent oversupply has continued to weigh on prices which have eased by around six per cent so far this year.

South Central Alberta
Trends in the area remain consistent with last month. Further improvements in sales were met with a decline in new listings resulting in easing inventories. However, like last month the market continues to favour the buyer and prices are edging down.

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Data is deemed reliable but is not guaranteed accurate by the REALTORS® Association of Edmonton.