Photo: Michael Gil/Flickr
The benchmark price for a Calgary home clocked in at $440,400 in June, and while that’s a year-over-year decline of 4.11 per cent, the Calgary Real Estate Board (CREB) believes the news isn’t all bad.
Why? According to the organization, the bright spot is that home prices in the city are “not [falling] at the rate that many might expect” — while prices are still dropping, in the second quarter of 2016 they fell more slowly than they did in the two previous quarters.
Greater balance in the detached market is largely responsible for the slower overall decline in Calgary home prices. Last month, the benchmark price for a detached home in Calgary rose for the first time in eight months, reaching $502,400. That’s still down 3.4 per cent from June 2015, but the increase meant that detached prices fell just 0.7 per cent in the second quarter of 2016, well below the 2.2 per cent drop recorded in the first quarter.
“The detached market has been gradually moving towards more balanced conditions, helping to prevent price levels from declining at the faster rates we saw in the previous two quarters,” explained Ann-Marie Lurie, chief economist at the CREB, in a press release.
Balance has been harder to find in the apartment and attached markets. The CREB states that in June the benchmark price for an apartment in Calgary was $278,200, down 0.1 per cent from May and 5.89 per cent from June 2015. Meanwhile, the benchmark price for an attached home was $331,100, a decline of 0.3 per cent from last month and 4.91 per cent from the same time last year.
Excess inventory is the main reason those markets have seen less of a recovery. The CREB’s data shows that while the detached market saw a rise in inventory of only 5 per cent, inventory in both the apartment and attached markets has increased by more than 30 per cent. Overall, inventory in Calgary reached 5,973 units in June, 16 per cent higher than last June, while sales volume sank 7 per cent to total 2,028 units.
Overall, Calgary’s low housing prices and high inventory levels are the result of current poor economic conditions in the city, and Lurie cautioned that it’s “very likely that pricing
challenges will persist in the housing market until economic conditions start to improve.”
That said, the situation has come with at least one major benefit: many buyers now have a large selection of “previously unattainable” homes at their fingertips.
“This is especially true for homeowners with financial stability and a good amount of equity in their home,” said Cliff Stevenson, president of the CREB. “With so much choice out there, it’s giving consumers an opportunity to find their ideal home at a price they can afford.”