We are starting to see the market shift in different directions. The single family home market is recovering, while the semi-detached and townhouse market still have their challenges. The apartment condo market is far behind and still has a bleak outlook.
The single family detached home market is starting to balance out with fewer homes hitting the market and buyers finding the best value in this sector. This makes up 63% of the total sales this year so far. We currently sit at 3.0 months of inventory which is now into stable territory and we should see prices start to level out.
The semi-detached and townhouse market currently sit at 4.2 months of inventory which is out of balance and still in buyers territory. This market is improving but still has some kinks to works out in certain areas before it will balance out. New build inventory in the inner city is contributing to this higher level of inventory.
The apartment condo market is sitting at 6.3 months of inventory and looks to be getting a little worse. The downtown sector has seen a recent increase in new build inventory and this is placing more downward pressure on prices. Buyers have a lot more selection and with the new inventory being brand new, it negatively impacts re-sale units which don't carry the premium of a new build.
*Months of inventory is calculated as follows: if new listings stopped coming on the market, how many months would it take at the current sales pace to absorb all the inventory. This gives us a baseline to weigh current supply and demand and determine expected sales volume and price adjustments going forward. The higher the number, the more power buyers have and pressure on prices to move downward and sales slow. The lower the number, the higher number of buyers competing for each home for sale which puts pressure on prices to increase and sales rise.
What typically happens and from what we have seen over the last three economic and real estate market cycles here in Calgary is that the single family home market will be the first to recover and stabilize. This will be followed by the semi-detached and townhouse sector. The apartment condos will take the longest to recover.
Below is a look at the average price of all three sectors over the last 10 years. As you will see the single family home market shows more stability long term with a softer landing during a correction and quicker recovery. The apartment condo sector declines more rapidly and values decrease by a higher percentage. It also takes a longer time to recover but shows a quicker increase in value when the market heats up. Apartment condos show better value at this point and are the best type of property for rentals, which increases their allure to investors.
Expectations will vary for buyers and sellers across the board based on wants and needs. So it is important to know what to expect and how to make decisions using the right information going forward.
I hope you enjoyed this monthly update and if you have any questions or need anything give me a call at 403-975-5915 or reply to this email.
Author:David Jablonski Phone: 403-975-5915 Dated: September 1st 2016 Views: 10 About David: Active in Calgary real estate since 2007, David has seen every type of market and knows how to help ...
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David Jablonski - Team Lead - Jablonski Real Estate Group - Remax First