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After a strong start to 2020, economic conditions have dramatically changed, as COVID-19 is impacting all aspects of society.

The economic impact is starting to be felt across many industries. This includes the housing market.

March sales activity started the month strong, but quickly changed, as concerns regarding the spread of COVID-19 brought about social distancing measures. This had a heavy impact on businesses and employment.

“This is an unprecedented time with a significant amount of uncertainty coming from both the wide impact of the pandemic and dramatic shift in the energy sector. It is not a surprise to see these concerns also weigh on the housing market,” said CREB® chief economist Ann-Marie Lurie.


By the end of March, sales activity had fallen 11 per cent compared to last year. This is 37 per cent lower than long-term averages. The drop in sales pushed March levels to the lowest recorded since 1995.


“The impact on the housing market will likely persist over the next several quarters,” said Lurie. “However, measures put in place by the government to help support homeowners through this time of job and income loss will help prevent more significant impacts in the housing market.”


New listings dropped by 19 per cent this month. This decline in new listings compared to sales caused supply levels to ease and helped prevent a larger increase in oversupply. Overall, the months of supply remain just below five months, similar to levels recorded last year.


Prices were already forecasted to ease this year due to oversupply in our market. In March, the citywide benchmark price was $417,400. This is nearly one per cent lower than last year’s levels. The reduction in both sales and new listings should help prevent significant price declines in our market.


However, price declines will likely be higher than originally expected due to the combined impact of the pandemic and energy sector crisis.


HOUSING MARKET FACTS

Detached

  • Detached sales eased by 15 per cent this month, driven by pullbacks in all districts except the North, which remained flat compared to last year.
  • The decline in sales was met with a larger decline in new listings, causing inventories to fall by 17 per cent and keeping the months of supply slightly lower than last year’s levels.
  • Detached benchmark prices have remained relatively unchanged compared to last year at $480,800. Price declines this month continue to be the highest for the City Centre, North East and West districts.

Apartment

  • With 217 citywide apartment sales in March, this was the only category to record a year-over-year gain. Much of the gain was due to improving sales in the South, South East and North West districts.
  • New listings this month did ease, helping support a small decline in inventory levels.
  • Persistent oversupply has resulted in continued downward pressure on prices. In March, the citywide benchmark price eased by more than two per cent compared to last year for a total of $243,700.

Attached

  • Both semi-detached and row sales declined this month compared to last year. Like the other property types, there was also a significant reduction in new listings.
  • The decline in new listings helped push down inventory levels for both property types, but it was not enough to prevent a rise in the months of supply.
  • However, this segment was oversupplied prior to the recent changes, impacting prices. As of March, prices remained nearly one per cent lower than last year’s levels for both semi-detached and row properties.

    REGIONAL MARKET FACTS

    Airdrie
    Like many other areas, Airdrie saw a decline in sales activity, along with a reduction in new listings and inventory. The reductions in supply and demand helped prevent any significant changes to the months of supply. While the full impact of the COVID-19 crisis has not yet played out in the housing market, March prices remained comparable to last year’s levels.

    Cochrane
    Both sales and new listings fell this month compared to last year, causing inventories to fall to the lowest levels in five years. Like many other markets, Cochrane remains oversupplied, with easing prices.
    The March benchmark price was $398,700. This is nearly two per cent lower than the previous year.

    Okotoks
    Trends changed this month, with flat sales and a decline in new listings. The decline in new listings was enough to cause a significant reduction in supply levels and the months of supply fell below five months.
    Prices are trending down on a monthly basis, but remain comparable to last year’s levels, with a March benchmark price of $405,000.
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Posted in calgary real estate market, cir realty, market stats, market update
While lower Months of Inventory will lead to more balanced markets and stabilized pricing, we have noticed that the properties being sold have had an increased average price of 4% in Alberta to $375,649 from $361,131 in January 2019. Since the current Months of Inventory, and the number of sales in January do not support a market where we would see significant movement in price, it is primarily due to movement in the higher price ranges that is having this effect on pricing. The 6.3% increase in the average price for sales in Edmonton, and a 4.8% increase in the average price for sales in Red Deer had a big part in that jump upwards for the Province.
 
The sales activity in the higher price points is consistent with the showing activity that we have had for CIR's listings.  The month over month showings have continued to rise and we anticipate this to continue into Spring. The showing activity that has had the largest gains, is in the $500,000 to $800,000 price points, the move up markets. We have been anticipating the move up markets to start performing better as the lower price points had picked up activity in 2019.
 
The activity that we are seeing is closer to normal for the ten year averages, but is still a bit lower than average.  It appears that people are adjusting expectations to the "new normal", and confidence is continuing to return to the markets. Since Alberta's economy continues to outperform most of Canada for weekly earnings and opportunity, we are seeing the net migration into the Province continuing to increase. This has resulted in the rental markets continue to tighten, which will end up driving buyers and investors into the markets as well as help our move up markets as the first time buyers enter the market. We are also watching the unemployment rate which was seeing a drop through the Fall months of 2019, but has since started rising again in December and January.  There appears to be a lag of six months in the Real Estate markets to the employment markets, so we will continue to monitor the migration and employment trends.
 
All of this said, we are very happy with the results in January 2020. While the Province had an increase in sales of 4%, CIR Realty experienced an increase in sales of 15.6%!  Our agents continue to focus on educating clients on making good decisions to help them achieve their goals in Real Estate.
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