CMHC Quarterly Housing Market Assessment

Calgary is still a buyer’s market, with the inventory of unsold new homes outpacing demand.

As of September 2018, the city had 2,087 completed but unsold housing units — half of those were apartments and condos. Per capita, the level of unsold units spiked in 2016 and remains elevated, in spite of evidence that the Alberta economy is in recovery mode.

“It is taking time,” said CMHC regional economist Lai Sing Louis. “Although there has been economic growth in 2017, and we’re seeing lots of indicators that that growth continues, we’re still not back to pre-recession levels.”

In addition, a large number of apartment and condominium starts continue to come onto the market. CMHC data shows 7,630 new apartment/condo units were under construction in September, posing a risk that inventories will rise if the units cannot be absorbed.

The elevated supply combined with Calgary’s stubbornly high unemployment rate as well as rising interest rates and stricter mortgage rules has had an effect on sales. According to the Calgary Real Estate Board, sales activity in the city totalled 1,272 units in September, a 13-per-cent decline over the previous year and well below long-term averages. The unadjusted citywide benchmark price was $428,700 in September, nearly one per cent below last month and three per cent below last year’s levels.

The apartment sector has seen a six-per-cent decline in sales so far this year and sales activity remains more than 20 per cent below long-term averages.

“We started to see some stability last year and now we’re seeing that trend reverse again this year,” said Ann-Marie Lurie, CREB’s chief economist. “I think (some buyers) went, ‘the recession’s over, the worst of what has happened is over.’ . . . And then as we moved into the midpoint of the year, reality started settling in and people went, ‘the economy hasn’t really changed that much.’ ”

Lurie said it’s not all bad news — the most recent city census showed higher-than-expected levels of net migration into Calgary last year. But she said for the price decline to level off, there will need to be more positive economic news — such as a decline in the unemployment rate.

“Ultimately, we just don’t think it’s going to happen this year,” she said.

CMHC is expected to release its 2018 rental market report in early November. The 2017 version of that report pegged Calgary’s rental apartment vacancy rate at 6.3 per cent.