Amidst economic challenges, housing market ends 2020 on a high note
by Billy Peshke
on Friday, January 8th, 2021 at 8:11am.
City of Calgary, January 4, 2021 –
With December sales of 1,199, this is the highest December total since 2007.
"Housing demand over the second half of 2020 was far stronger than anticipated and nearly offset the initial impact caused by the shutdowns in spring. Even with the further restrictions imposed in December, it did not have the same negative impact on housing activity like we saw in the earlier part of the year," said CREB® chief economist Ann-Marie Lurie.
Attractive interest rates along with prices that remain lower than several years ago have likely supported some of the recovery in the second half of the year. However, it is important to note that annual sales activity declined by one percent compared to last year and remain well below long-term averages.
New listings in December increased by 11 percent. However, the number of sales exceeded the number of new listings in December contributing to further declines in inventory.
Reductions in supply and improving demand in the second half of the year have contributed to some of the recent price improvements in the market. However, the recent gain in the benchmark price was not enough to offset earlier pullbacks as the annual residential benchmark price in Calgary declined by one percent over last year.
The pandemic has resulted in a significant shift in economic conditions, yet the housing market is entering 2021 in far more balanced conditions than we have seen in over five years. This will help provide some cushion for the market moving into 2021, but conditions will continue to vary depending on price range, location, and product type.
More information about the 2021 housing market forecast for Calgary will be available at the CREB® Forecast on Tuesday, January 26, 2021.
Stronger sales in the second half of the year were enough to offset earlier pullbacks as detached sales totalled 9,950, just slightly higher than last years' levels. Despite the modest gain, detached sales activity remains at the lower levels recorded since the stress test was introduced in 2018.
Supply adjustments is causing sellers' market conditions for detached homes across all districts except the West and City Centre. This has helped support some price recovery in the market over the past several months.
Annual city-wide price remains relatively flat compared to last year, but there were notable annual gains in both the South and South East districts which both recorded price gains of nearly two percent. Despite some of the annual shifts seen, prices remain well below previous highs in all districts of the city.
Sales growth in the North East, North, West and southeast district were offset by declines in the City Centre, North West, South and East districts. Sales this year of 1,663 were similar to levels recorded last year.
While sales did not improve across each district, there were reductions in supply across all districts and is helping to reduce the months of supply.
These reductions are starting to impact prices, but it was not enough to offset earlier pullbacks. City-wide semi-detached prices eased by over one percent in 2020, with the largest declines occurring in the City Centre, North West and West areas.
Slower sales in the west district were not enough to offset the gains recorded in the rest of the city. Row sales totalled 2,145 in 2020, nearly two percent higher than last years' levels. Despite the gains, levels continue to remain below long-term averages for the city.
Rising sales were generally met with a reduction in supply. This is causing the months of supply to trend down, especially over the second half of the year.
The decline in the months of supply was enough to help support some stability in prices. However, the adjustment did not occur soon enough and annual prices eased by nearly two percent compared to the previous year and remain nearly 14 percent below previous highs.
Price adjustments did vary depending on location. The steepest decline occurred in the North East with a year-over-year decline of five percent. The strongest gain occurred in the West district with a two percent rise.
Sales this month were the best December since 2014. However, it was not enough to offset earlier pullbacks as apartment condominium sales eased by ten percent in 2020. This is the slowest year for apartment condo sales since 2001 and the only property type to record a significant annual decline in sales.
Unlike other property types, supply levels have not adjusted in the same way and this segment remains oversupplied. Prices have trended down over the past two months due to excess supply. On an annual basis, the benchmark price declined by over two percent this year and is over 16 percent below the highs set in 2015.
REGIONAL MARKET FACTS
December sales reached a new record high for the month. Improving sales throughout the second half of the year contributed to the annual sales of 1,407, a year-over-year gain of 18 percent.
New listings also rose in December and is likely contributing to some of the monthly gains in sales. Overall, new listings have remained well below last year. Along with improving sales, this is causing inventories to decline.
Months of supply has remained below three months since June and prices have trended up. By December, the benchmark price had risen by nearly five percent compared to last year.
On an annual basis, the gains in price were enough to offset the earlier pullbacks and is creating stability in prices. However, this was not the case for all product types. Detached prices rose by nearly two percent on an annual basis. Benchmark prices for row and apartment-style product eased by a respective seven and one percent compared to last year.
Record sales in December contributed to the annual gain of 16 percent, making it the best year of sales compared to the past five years. New listings in 2020 also eased compared to last year. Rising sales and less new listings on the market caused inventories to ease to the lowest levels recorded since 2014.
With months of supply of only two months, prices continued to trend up. December benchmark price was $419,900 and is a 5 percent gain over last year. Prices have trended up over the past six months but remain relatively stable compared to last year. This is due to easing prices for higher density products offsetting gains in the detached sector.
Despite further declines in new listings, December sales improved. Year-to-date sales increased by nearly eight percent. The lack of new listings and stronger sales caused inventories to drop to 63 homes in December, the lowest level for any month seen since 2006.
The lack of inventory and high demand has supported increasing prices for the second half of the year. As of December, the benchmark price was $434,700, nearly two percent above last years' levels. Despite the recent gains, 2020 benchmark prices remain over one percent below last years' levels.
However, this could be due to steeper price declines for semi, row and apartment-style product.
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