Market Report: September 2019

Modest shifts in market driven by supply adjustments

Calgary, AB – September sales improved by over five per cent compared to last year but fell short of the typical levels of activity recorded for this month. The gains were not enough to offset earlier declines, as year-to-date sales remained just below last year’s levels. Nonetheless, monthly sales growth was met with a pullback in new listings, supporting inventory declines and reductions in the months of inventory from eight months last September, to just over seven months this year.

If the modest improvements continue, it will help support more balanced conditions in the housing market and price stability. However, currently the provincial housing market continues to struggle with excess supply preventing any significant shifts in price trends.

“The province continues to struggle with job losses in some regions and rising rates of unemployment. This is impacting housing demand particularly in areas like Red Deer. Meanwhile, some markets are facing challenges with supply gains, impacting pricing,” says Ann-Marie Lurie, AREA Chief Economist. “The provincial figures are heavily influenced by the larger regions which are starting to trend toward more stable conditions, but these improvements are not occurring across all regions of the province.”

Province-wide prices continue to trend down. This is partially caused by distribution shifts in the larger centres where the lower end of the market is accounting for a larger share of the sale activity.

Regional Breakdown

Calgary Region
Driven by gains in the lower price range, sales activity in the Calgary region improved this month compared to last year. The improvements in sales are helping the market return to more balanced conditions, but the more significant shifts have been related to the supply adjustments.

Year-to-date new listings have declined by over 11 per cent so far this year, compared to the less than one per cent growth in sales. The combined impact is inventory declines and improvements in market balance as months of inventory has shifted from over six months last September to just over five months this year. As oversupply in the market eases, there is less downward pressure on prices. However, year-to-date average prices remain over four per cent lower than last year’s levels.

Edmonton Region
Following a one-month pullback in sales, September sales activity improved over last year’s levels and were just below long-term trends. Year-to-date sales are comparable to last year’s levels, but there has been a shift in the type of product sold. Sales activity has improved for product priced below $300,000 which represents 35 per cent of all the sales. Meanwhile, sales have eased across all other price ranges.

While new listings in September remained stable compared to last year, for much of the year new listings has eased, reacting to weaker demand levels and easing prices. This has helped place downward pressure on inventory levels and is slowing pushing the market toward more balanced conditions. While this will eventually support more stability in prices, current prices continue to ease.

Central Alberta
A weakening job market has been weighing on housing demand in central Alberta region. Year-to-date sales have fallen by over nine per cent. However new listings have also been easing, limiting the impact that slower sales would have on inventory levels.

Supply has edged down over last year’s levels, but the reduction in sales compared to the inventory is keeping the months of supply elevated. This has not yet caused a significant drop in prices which are remaining relatively stable compared to last year, but there does seem to be downward price pressure occurring for product priced over $500,000.

Fort McMurray
Despite the modest lift in September, sales activity in the region eased compared to last year. While sales activity is still higher than levels recorded during the peak of the recession in 2016, activity remains consistent with this lower level trend recorded since 2015.

While new listings rose this month, so far this year, levels have been stable over last year and are adjusting to the slower sales activity. While the market continues to favour the buyer, months of inventory has improved from the recessionary highs, although not enough to ease the downward pressure on prices.

Grande Prairie
Further gains in new listings combined with easing sales has pushed up inventory levels for most of the year. Some of the rise in inventories is likely related to the rise in completions for new homes, which can be influencing the resale market.

Rising inventory relative to sales has had minimal impact on prices as they remain relatively stable compared to last year. This in part can be related to a slight shift in the distribution with homes priced above $300,000, reflecting a greater share of the sales this year compared to last year.

Lethbridge
The growth in September sales along with the decline in new listing has some monthly influence on inventories, but they remain elevated compared to last year’s levels. While the sales to new listings ratio has tightened over the past few months, the overhand of higher inventories has kept the months of supply elevated compared to norms for the city.

Despite some signs of oversupply in the market prices have managed to still improve compared to last year. This in part is related to some shifts in distribution, as a greater number of homes sold priced above $300,000 this year compared to last year.

Medicine Hat
Despite gains in September sales, year-to-date activity remains comparable to the previous year. However, there continues to be upward pressure on inventory levels as new listings growth is outpacing sales growth.

While there have been some gains in the months of inventory, it has not yet had any significant impact on prices which remain slightly higher than last year’s levels. However, like many other regions, some of this can be related to shifts in distributions and product priced above $300,000 making up a larger portion of the sale activity.

Alberta West
Easing sales this month contributed to the year-over-year decline in sales, at the same time new listings rose slightly, supporting modest growth in the inventory levels. Despite some of these shifts in the market, conditions remain relatively unchanged across the region this year.

The economic diversity of the region is likely having divergent impacts on their housing market. For instance, sales activity has generally been declining for all product priced below $650,000, yet sales have improved in the higher price ranges causing overall price gains.

Lloydminster
Despite a pullback in sales this month, year-to-date Lloydminster sales improved over the previous year. Most of the sales growth was driven by homes priced below $200,000. At the same time, new listings have been easing, causing inventories to edge down. Despite these adjustments the market continues to favour the buyer and prices are trending down.

South Central Alberta
Sales in the region continue to modestly improve while new listings ease. This has contributed to both inventories and the months of inventory to decline. As this market starts to trend to more balanced conditions, it should limit some of the downward pressure on prices. Prices currently remain just below last year’s levels.

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