With the gradual reopening of the economy, arrival of spring weather, people’s acceptance of the new way real estate is done and a pent-up demand for homes, we saw a return of sales in May with 28 transactions. While sales rose 133% between April and May, year over year sales for May saw a 57% decrease in sales volumes. For the three month period between March and May, the 2020 sales volumes are down 60% from the same period in 2019.
Over the past few weeks, there has been a gradual increase in the active listing inventory. There has not yet been a huge spike in new listing; year over year, active listings are up 7% overall to 278 active listings. Interestingly, residential listing inventory is down 2% year over year. Month over month, there was a 15% increase in listings between early May and early June. We expected to see an increase in inventory even pre-COVID; this new inventory would normally have come to market earlier in the spring. The biggest month over month increase was for detached and semi-detached homes from 76 to 92 homes; however, year over year these listings are down from 105 active properties at the same time last year.
Hotel condo inventory in holding steady month over month at 44 listings and up from 22 at this time last year. This portion of the market is where we are starting to see some downward pressure on values. Well priced short-term rentals are selling but buyers are generally looking for a deal.
Overall, the market is well into a buyer’s market territory with nearly 10 months of inventory; the market has recovered from the 20 months of inventory last month. The market has shifted from a seller’s market last spring when there was four months of inventory. Currently, there are 10.5 months of inventory for townhomes, 11 months for apartments, and 10 months for detached and semi-detached homes. We consider 5-8 months of inventory a balance market and anything more a buyer’s market.
We expect to remain in a buyer’s market for the coming months for two reasons: a lack of buyers in the market and a rising level of inventory. Come fall, we may see an additional spike in listings as those who took mortgage deferrals are now potentially forced to sell. There are varying forecasts for the Canadian housing market from CMHC, CREA and the Banks. We expect to see some segments more effected by the downturn than others. Much of our economy is tourism based and depending on what happens with tourism this summer and fall will affect the entry level to mid-range of the market. Some buyers may not choose to make a planned move up and stay where they are. Additionally, with the new work from home opportunities, we could see more young professionals moving to the Bow Valley as full-time residents. The mid-range of the market will probably soften as there will be fewer move up buyers. The luxury home market has been in a buyer’s market for the past few years and we have seen prices trending downwards. This trends may be accelerated as there are fewer buyers in the market – Albertans who are putting their purchase on hold while they wait to see what the economy does, people from elsewhere in Canada who are hesitant to make a purchase that requires air-travel, and our American buyers who cannot yet easily travel to Canada.
Much still remains to be seen and no one has a crystal ball.