Calgary’s housing market remains relatively stagnant, but there are still continuing signs of upward improvement in demand conditions, and unlike other major Canadian markets affordability is certainly not an issue.
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RBC’s latest Canadian Housing Health Check found that the heightened mortgaged stress test enacted in January “foiled a burgeoning recovery in resale activity, causing market conditions to loosen” this year to date.
As a result, the sales-to-new listings ratio dropped since the start of the year and averaged 0.42 since March, at the edge of a buyers’ market, with prices “under mild downward pressure.”
Inventory jumped to an eight-year high in Alberta since March 2018, and active listings within the Calgary area soared by 25% year-0ver-year in July, based on local data. Home types that saw the largest increases were attached and detached homes.
It is unsurprising that there have been relatively few single-detached units under construction, but there is a growing risk in over-building multi-unit dwelling construction.
“The number of unabsorbed units surged since the spring of 2015 (when Calgary arguably had a supply shortage) to record-high levels throughout most of 2017 and the first half of 2018,” reads the report.
“The stock of unsold units was driven higher by sharp increases in condo apartment completions in 2015 and 2016 at a time when demand turned cold.”
The rental market is also seeing similar oversupply, causing a downward trend in average rents and revenue prospects for property owners. The vacancy reached a high of 7% in October 2016, and average apartment rents fell between 3% and 11% depending on the size of the unit.
There is still a long road towards a full recovery; the extraordinarily high unemployment rate remains a major factor on the depressed housing market, but the economy started turning a corner in 2017. As well, a sharp slowdown in Calgary’s adult population growth — from a high of 4% in early 2014 to a 23-year low of 1.4% in September 2017 — has finally started to reverse, with the growth picking up and reaching 1.8% in July 2018.