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October 2008 was a volatile month in many respects, all of which affected Calgary real estate. From the rescinding of 0%/40 year mortgages mid-October to the tumultuous stock market, economic worries, fear of recession, job cuts, etc. – all did nothing to foster a healthy real estate market, and the numbers show this. (Where to begin?)
Inventory / Absorption Rate
Month-end inventory for Single Family Homes (SFH) was up from September to 5522 from 5387. Condos remained virtually unchanged at 2640 units for sale.
With October sales, this gave us 6.7 months supply of SFH’s and 6.6 months supply for Condos for metro- Calgary. The absorption rate is illustrated in CREB’s graph below:
There were 820 SFH’s, and 399 condos sold in metro-Calgary in October. This is a significant drop (especially for SFH’s) from September when 1152 SFH’s and 465 condos sold.
Yes, the market does slow in October (normal seasonal adjustments) but it has slowed considerably more this year than previously. Take a look at the chart below (again, the DOM isn’t really worth paying attention to, read why here)
Vacancy Levels & Speculators
Of the homes for sale in metro-Calgary, 29% of the SFH’s and 37% of condos were vacant/new construction at October’s month-end which shows the level of speculation that took the city by storm the past few years. This percentage is actually conservative because there have been a number of homes that I’ve shown that were stated as “Seller Occupied” but were actually vacant upon viewing. (For more info on Vacancy Levels, click here)
There are also many condo projects that are slated to be completed in 2009 which will do nothing to ease the high level of inventory. At the end of September, there were 9,303 condo units under construction in the Calgary Census Metropolitan Area (Source)
Year-over-year, Condos in Calgary have been hit the hardest. October 2008’s month end median was $268,000 ($289k in 2007) and the average price was $289,148 ($331,617 in 2007) Condo prices have retreated back to 2006 levels. What’s different this time around is that we have much higher inventory and sales are down…
For SFH’s, average price has remained steady at $449k ($452k in 2007) while the median has dropped $22.5K to $390,000. Again, inventory levels remain high with low sales – not the right mix if you’re expecting prices to increase.
You might see the inventory levels drop as we head deeper into November and December, but this is because many sellers take their homes off the market before the Holidays. You can see in the chart below how Expired Listings peak sharply at the end of the year.
As always, feel free to post your thoughts and comments.