Sunday, August 23, 2020 / by Sergey Korostensky
Warmer weather has led to a hotter real estate market in Calgary.
The city’s resale housing market rebounded in July, showing year-over-year growth, following three months of slowed activity from COVID-19.
“Some of what we saw last month could be related to April and May being such weak months, despite those typically being the stronger months for activity,” said Ann-Marie Lurie, chief economist with the Calgary Real Estate Board (CREB).
The association released its figures for the resale market for July earlier this month, showing sales climbing almost 12 per cent compared to the same month last year.
That said, sales were down 15 per cent year to date as of July 31.
What’s more, the average benchmark price of a home fell 1.2 per cent in July, year over year, to $418,000.
Sales largely moved upward by the single-detached homes segment — by far the largest in Calgary. Transactions for the segment were up 17 per cent in July compared with 2019. And the benchmark price jumped slightly by 0.3 per cent to $485,000. Semi-detached also showed positive sales. Compared to July last year, activity in the segment rose by 37 per cent; however, Lurie notes it is a small part of the market prone to highly variable sales.
And while semi sales were up, their benchmark price fell by about three per cent to $391,500.
Row and apartment condominiums fared worse with sales falling two and 10 per cent, respectively.
“Those areas have been struggling for some time,” says Lurie.
She notes both segments suffered from falling demand and rising supply for several years prior to COVID’s arrival in mid-March.
For all segments combined, however, sales activity improved or was flat in July in almost every price range — even the long-struggling luxury market.
Lurie says this is largely due to the performance of single-family homes. She further posits a number of factors may be driving activity, including pentup demand. Many buyers stayed on the sidelines and started returning in June, which was a fairly good month.
As well, falling prices and low interest rates have likely drawn buyers back.
Lurie further notes affordability is still critical, pointing to even apartment and row options in the lower ranges showing growth in July, year over year.
With respect to single-family detached, the segment’s popularity may be a result of growing affordability, but it may also reflect changing buyer tastes.
“With COVID, what buyers are looking for in a home may have changed,” Lurie says, adding many may now seek more space — or social distance.
Falling supply may also be lending traction to prices. Lurie further explains that, because fewer homes have been listed in recent months, the market is now more in balance than it’s been for years.
“We have been dealing with oversupply for a long time, but now we’re seeing much tighter market conditions.”
Lurie adds, for example, months of supply for single-detached homes fell below three months for the first time in several years.
“If that persists, it’s certainly going to help with the pricing.”