Its no secret that the Real Estate market in Calgary and the surrounding area has been a challenging one through much of 2018. We are sensing rising frustration from our clients who are looking to sell their homes. We want to give some insights that may be helpful and calm the rising frustrations.
The first indicator when evaluating the market is the ABSORPTION RATE. The Absorption Rate helps to determine how healthy the market is. Simply put, this is how long the market can sustain itself if no new listings come on the market. Each community is Calgary is a micro market within the larger macro market and each varies from area to area. We consider a balanced market to be between 2 – 4 months of inventory. As a whole the Calgary Real Estate Market was at a 4.9 month rate at the end of May. An increased to a 5.15 month absorption rate as of June 8, 2018 tells us we are officially in a buyers market.
Next, we want to consider what factors may be causing the rising absorption rate across the board. The obvious indicators are the inventory levels and volume of sales. With rising inventory levels, our numbers within Calgary were 8,450 listings at the end of May. That is 36% higher than last year at the same time. We are also seeing a lower sales level of 1,726 – 18.4% below last year’s level. It is fair to see that with larger inventory levels there are more choices for buyers which lead to less showing per listing.
However, the true leading indicator is the total volume of showings across the board. While we don’t have access to all Calgary Real Estate board members showing data, CIR Realty does carry the largest inventory compared to any other brokerage in the city. CIR listing numbers are as accurate an indicator of showing volume we are able to compile. When examining our showings across our listings, we noticed that showings in May were down -17% from May 2017 and showings in June slowed down further – 24% slower from June 2017. This averages to a 19% slow down.
While slower showings seems like a negative thing, it is the most encouraging of all indicators! This number correlates with the slow down in sales. This number leads us to believe that the buyers who are shopping are motivated to buy. This differs from past buyers markets where we saw buyers shopping without making a purchase. It also leads us to believe that consumer confidence is not quite there for our Real Estate Market. People remain on the fence waiting to see what the economy will do.
We understand the frustration and exhaustion clients selling their homes are experiencing. This means we have to roll up our sleeves and continue to work hard for our clients. It is imperative to give our clients the knowledge they need to accomplish their goals in real estate. To ensure accurate pricing for the neighborhoods they are in. To encourage and ensure pristine showing conditions for the homes themselves.
We anticipate that as the economy continues to improve Albertans will settle into what appears to be a new normal for us. This seems to be the last part of a long downturn!