Calgary Housing Prices Becoming More Affordable

REAL ESTATE REPORTER

The sizzle has gone out of Calgary‘s housing market as rising inventories and cautious buyers have ended the bidding wars and soaring prices that marked the first half of the year.

Price reductions of $40,000 or $50,000 have become common, realtors say, and some top-end buyers have even tried to back out of deals after realizing they may have overpaid by hundreds of thousands of dollars.

It all adds up to a drastic change from this spring, when it was common to get 30 offers for a single property and homes in desirable areas were snapped up as soon as they were listed. The change, also being felt in Vancouver, is happening at a time when the national home market is treading water and cities such as Toronto and Montreal are seeing only modest price gains.

“Anybody who thought it was going to continue forever was smoking something funny,” said John Riseborough, a 23-year veteran of the industry who owns Re/Max First in Calgary.

“Bizarre,” is how Mr. Riseborough sums up the first half of the year in the Calgary market. “It was too much. It was a scary thing.”

Sales of existing homes took a tumble last month in both Calgary and Vancouver, two of the country’s strongest markets. Numbers released yesterday by the Canadian Real Estate Association show that Calgary sales were down last month by almost 18 per cent over the same month last year, while listings were up by more than 50 per cent. Houses are sitting on the market for longer, and agents say many buyers are waiting on the sidelines, hoping asking prices will fall even more.

In Vancouver, conditions also cooled. Sales volumes were down by 17 per cent in October and new listings increased by almost 19 per cent.

Even with the slowdown, there is no indication that the Canadian market is heading for the drastic correction taking place in some parts of the United States. The average selling price of a Calgary home increased last month to $374,067, the second highest in the country behind Vancouver. And while Calgary and Vancouver are taking a breather, activity in Edmonton and Saskatoon is still at record levels.

For the country as a whole, year-to-date sales remain the highest on record, according to figures released yesterday by the Canadian Real Estate Association.

“We are expecting a gradual decrease,” said Gregory Klump, the association’s chief economist. “There is no bubble to burst.”

Most in the industry see October’s flat markets as a sign of things to come. For the country as a whole, a seasonally adjusted total of 27,225 existing homes changed hands last month, an increase of just 0.1 per cent from September. Nationally, the average sale price of an existing home was $301,516 last month, a 9.6-per-cent increase from last year, but well off the double-digit jumps reported earlier in the year. New monthly price records were set in Calgary, Vancouver and Saskatoon.

Don Lawby, Vancouver-based president of Century 21 Canada, said that with prices soaring by roughly 50 per cent in 12 months, Calgary buyers were bound to get sticker shock. “There gets to be a point where the consumer says, ‘I won’t pay that,’ “ he said.

For the same reason, Mr. Lawby said, strong markets will continue in Edmonton and Saskatoon, where average prices are still well below the national average. “The Western economy is still very strong.”

Indeed, some in Calgary already say they are seeing signs that the worst is behind them.

Mindy Selby, a Calgary homeowner who listed her bungalow in Upper Scarboro, just southwest of downtown, two weeks ago, said yesterday that buyer interest is picking up. “All of a sudden, I’m getting more showings,” she said.

Ms. Selby believes the market got out of whack in the summer because people put their houses up for sale to test what they could get. “They were asking nutty prices,” she said. “I think people started to get nervous.”

Still, she said she plans to rent her existing home, rather than cut her price if no buyers materialize.

Others also say the signs of a rebound are there. But opinion is divided on whether it will happen this month or early next year.

“It just feels like there is something happening,” said Corinne Lyall, an associate broker at Royal LePage Benchmark in Calgary. Listings have gone down since the beginning of November, Ms. Lyall said. That could be a sign of increased buyer interest or an indication that people are taking properties off the market with the holiday season approaching.

Either way, given the huge price gains the market has witnessed in the past 12 months, homeowners have no reason to cry. The shifting conditions just mean agents have had to “sharpen their pencils,” Ms. Lyall said. If a house is priced correctly, it will sell.

Getting homeowners to understand that the price their neighbour’s house fetched in June may no longer be realistic has been a challenge, agents say.

“As an industry, I guess it’s taken us a while to communicate that things have changed,” said Mr. Riseborough of Re/Max.

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