It looks like Calgary real estate 2015 may be in for a bit of a wild ride: Oil prices have skidded to the$53 per barrel level, and some analysts are predicting a one year price in the $61 range. I’m not an oil analyst or economist, but I know that house prices are linked to jobs and that in Calgary those jobs are linked to expansion in the oil patch. The real question is this: will these low oil prices stay? Or do the analysts predicting $61
per barrel at year end have some inside information about OPEC that the rest of us don’t know? Remember that it was only six or eight months ago when there “appeared” to be an oil shortage. If OPEC can open the tap and
push prices down 50 or 60% can they not close the tap and have prices rise just as fast? I’m not a politician either, so I won’t speculate about OPEC’s motivations, but it does seem like we Canadians are not in control of our own destinies. I am told that it cost nearly $70/b to produce oil from the sands. Back a few months ago in October oil was at $82/b and CBC and CTV reported that large projects were being questioned; many have now been reconsidered and mothballed. If that’s the case at $82/b I’m sure that it isn’t looking any better at $53.
With 30 years in real estate there is one thing that I know; there is now more downside than upside in our local housing market. If you are planning to sell in the next 12 months, sooner will likely be better than later. In a few days the market statistics will be released from the Calgary Real Estate Board. They will talk about the price
increases of 2014 and I’d bet that they will forecast a “balancing” of the market that will take some of the pressure off of buyers. If the past is a predictor of their commentary there will be little or no mention of anticipated price drops. CREB’s style of reporting is usually predictable and will help to maintain a reasonable selling environment if you do plan on selling in the next few months.
Below is the current Calgary real estate market synopsis:
Calgary Total Residential MLS Stats
This Month Last Month
Active: 3585 4073
Sold (30 Day): 1059 1892
Absorption Rate: 3.39 Months 2.44 Months
Vacancy Rate: 43.8% 39.5% of current active listings
90 Day Odds of Sale: 1 in 2.3 43.5% 1 in 2.22 45%
The absorption rate is the rate of turnover. That is how the amount of time that it would take to sell-off the current inventory if homes were to keep selling at the same pace. There is now 3.4 months of inventory on the market or about 13 weeks compared to about 10 weeks of inventory last month. This is a significant month to month change.
Two months is said to be a balanced market so it is now a buyer’s market. A somewhat higher absorption rate is to be expected for this time of year but not such a sharp contrast. Last April there was 1.4 months of inventory.
The vacancy rate that I calculate is not of rental vacancies but it is how many homes that are currently on the market for sale are sitting empty. A vacancy rate of 39.5% is concerning, 44% is more concerning. Currently, if you were to view 100 homes about 45 of those would be empty. Also, as I mentioned in last month’s report, some realtors do not report their properties as vacant because of security concerns from the sellers.
Typically investors are more apt to sell their properties vacant because they are easier to show and disgruntled tenants are then not present to make negative comments. If this is the reason there are so many vacant properties it could be a sign that investors are selling off because they feel that the market is past its top.
The 90 Day Odds of Sale is the odds of your home selling over a three month period in the current market. At 43.5%, we are below the 50% mark that indicative of a balanced condition. At this percentage we are not hopeless, that is if the other numbers were in line. Keep in mind that this statistic is from 90 days back so of all the number we’ve looked at it will be the most lagging indicator.
These are statistics of the over-all market trend and that each community has its own micro market. Some areas in the city still have relatively low inventory and relatively strong demand. These areas favour the sellers. While this is true, it is also true that there are communities where the numbers are softer and very much are in favour of the buyers with high inventories and soft demand. If you are thinking of buying or selling it is always a good idea to have an interpretation of your local micro market statistics to help you to make the most of your investment.