Low oil prices throughout January, combined with a shifting outlook in the energy sector, caused unease for consumers. As a result, monthly housing sales activity fell to levels not seen in five years.
This change is partly connected to continued low energy prices, which impact consumer confidence. A lack of recovery in oil has many concerned about their employment status and this concern is reflected through the weaker sales activity in Calgary’s January resale figures. Sales levels were over 35 per cent lower than the 10 year average and declined across all three sectors in the city (Attached, detached and apartment). Meanwhile, new listings increased by 39 per cent city-wide, causing inventory levels to rise.
While new listing activity increased in every price range this month, the rise in new listings was primarily due to gains in the higher price ranges. In the detached sector, new listings increase by 32 per cent relative to January 2014, all of which occurred in product priced over $400,000.
Despite the recent supply increase in the market, benchmark prices managed to remain relatively stable this month. January benchmark prices totaled $459,100, a 7.7 per cent increase relative to January 2014, but similar to December figures.
Although residential prices remained relatively stable, there was some variation in sectors. The apartment sector recorded the largest gain in new listings relative to sales and inventory levels nearly doubled reaching 1,148 units. The rise in supply relative to demand placed downward pressure on benchmark prices, which fell to $298,700 compared to $300,400 in December.
It’s important for sellers to set appropriate expectations in this market. Sellers need to consider their property type, the competition they may be facing in their community, their reasons for selling and, of course, when they ultimately need their property to be sold.
Detached benchmark prices totaled $518,600 in January, similar to December levels, but a 7.9 per cent increase relative to January 2014. Meanwhile, the attached unadjusted benchmark price in January totaled $356,200, similar to prices recorded in December.
Housing decisions will likely continue to be postponed for many consumers until they can see what happens with the economic climate in the spring. Nonetheless, if supply levels continue to rise at levels that exceed the pace of demand growth, we can expect this will start to impact prices in the city.