Calgary Market Waking Up
It has been a brutally slow spring, but early indications are that buyers are finally coming out of hibernation. As has been the case for 2011, it’s the SFH segment that is exhibiting more promise than the condominium market. Pending … Continue reading
April 2011 Calgary Real Estate Statistics
Sales are down. Prices are up. A third into the year, and the market is unfolding close to how some have envisioned. However, for CREB’s vision of a 19.9% surge in SFH sales and a 15.8% increase in condo … Continue reading
April 1-21, 2011 Calgary Real Estate Update
While single family home sales are still trailing year-0ver-year, the number of pending sales have risen to mirror 2010′s level. Through 3 weeks of April, SFH sales are nearly 9% lower than last year during the same time period while … Continue reading
Was Demand Really Pulled Forward?
The reason sales in Calgary have plummeted has often been attributed to pulled forward demand – buyers wanted to get in before the new regulations took effect in April or because rising interest rates were on the horizon. If … Continue reading
June 1 – 7, 2010 – Calgary Market Overview
The sales slowdown continues into the first week of June, on track for another monthly low. Prices are a different story with the SFH average price for the first week of June being the highest on record. The median price month-to-date is second only to June 2007. The year-over-year comparison will show a marked [...]
Sales Slowdown: Temporary?
A brief glance at the stats will reveal that while prices are up both month-over-month and from last year, sales have slowed down. Is this a temporary shift? Has the pulled-forward buyer demand now been satisfied resulting in a slowdown for the rest of the year? Or is this a momentary seasonal blip before buyers [...]
Calgary Market Update: May 1-7, 2010
Sales are almost equal compared to the first week of May in 2009, with 5 more SFHs selling in 2010, and 7 more Condos selling in 2009. However, we see that pending sales are trending lower than last year which will most likely result in lower year-over-year sales by month’s end for both SFHs and [...]
2010 Calgary Housing Market Outlook
The following factors will shape the housing market this year: Interest Rates. The Bank of Canada has made a tentative commitment to keep rates at current historic lows until the middle of this year. Question is, by how much and how quick will rates then be raised? Fixed rate mortgages are an entirely different animal [...]
1st Week of December 2009
0.25% – that’s where the benchmark interest rate will remain until next year the Bank of Canada reiterated again today. “Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010,” Governor Mark Carney and his rate-setting panel [...]
Calgary Resale Supply – Bankruptcy Threat Growing But Not A Problem Today
Much has been said about the growing amount of mortgage arrears in Alberta, but how much does that impact supply? As shown in previous graphs on this blog, the resale market has generally been rising whenever sales\new listings is greater than 50%. Given that Calgary condo and single family home average resale prices has risen over the last year, the supply\demand situation has obviously shifted to create stability in the market.
Most Calgarians know by now that mortgage arrears and bankruptcies are up. And most Calgarians I believe may think that the correction was due to the increase in bankruptcies. This couldn’t be farther from the truth.
2009 was a year that had a lot less new listings than in 2007, and 2008. So even while bankruptcies have increased, supply is down measurably as well. Supply due to bankruptcies remains a fairly small contributor to the overall resale supply picture.
One of the problems that caused the initial correction, was not a vast increase in bankruptcies, but that supply levels during the correction period were much greater than demand. Resale supply can come from many sources including death, divorce, and job transfer, but also low rental yields and offloading by investors, new housing construction and speculation of a market downturn.
Alberta bankruptcies are likely to continue to increase into 2010 (2.7 times January 2007 filings), as the rising mortgage arrears (4.2 times January 2007 amounts) have shown that banks have a bit of a backlog of mortgage arrears to clear out. Banks and the CMHC should communicate to developers and other market participants to expect more supply from mortgage arrears turning to bankruptcies going forward.
The following graph shows an estimate of Calgary consumer bankruptcies (estimated as 33.5% of the total Alberta population when compared to the Calgary CMA which includes the towns of Airdrie, and Cochrane in addition).
[click above image to enlarge]
Note that bankruptcies also include mortgages, bank and company loans, credit cards, taxes, student loans and utilities. In 2006, mortgages were declared as a liability in a bankruptcy only 17.5% of the time. Therefore, I believe the bankruptcy estimate as a component of new listings is a more pessimistic guess than actuality. One also needs to consider that bankruptcy filings have not kept up with mortgage arrears, and this may be because the judicial and banking system is in the process of staffing up to deal with a higher volumes as compared to the cylical lows in mortgage arrears that occurred in mid-2007.
Please vote below and feel free to elaborate on those risks further in the above comment section!
Data Sources: Bob Truman – First Place Realty , Office of the Superintendent of Bankruptcy Canada
