Market Report: December 2019

Prices trend down in 2019

Calgary, AB – Thanks to supply adjustments mostly in Calgary and Edmonton, inventory levels eased in the province in 2019. However, it was not enough to remove all the oversupply in the market and prices eased for the second consecutive year.

“The economy continues to struggle with slow growth and a weak labour market, preventing any significant change in home sales activity,” says Ann-Marie Lurie, AREA Chief Economist. “While the housing supply is adjusting to slower sales, supply adjustments take time, hence the persistent oversupplied scenario and further price declines.”

Activity was not consistent across the province. Mostly driven by supply adjustments, both Calgary and Edmonton recorded a reduction in the amount of oversupply in the market. Despite the adjustment, their markets remained oversupplied and prices still eased.

Meanwhile, results were mixed in the rest of the province where markets like Central Alberta, Medicine Hat and Grande Prairie recorded growth in supply relative to sales activity. Central Alberta was hit particularly hard by job losses this year, resulting in a pullback in sales. The pullback in sales was mitigated through the reduction in new listings, helping prevent more significant price adjustments. Meanwhile, rising oversupply levels have not yet significantly impacted prices in markets like Medicine Hat or Grande prairie.

Regional Breakdown

Calgary Region
Thanks to stronger growth in the second half of the year, annual sales activity improved slightly in the region. The improvements were in part related to adjustments in lending rates along with improving job growth and easing prices. However, much of the improvement was driven by the lower end of the market which is consistent with economic conditions.

Rising sales were met with easing inventory levels, helping reduce the oversupply in the market. However, conditions continued to favour the buyers and prices trended down.

Edmonton Region
Stronger sales in the last three quarters helped offset earlier losses, resulting in stable sales activity this year. However, the market was divided with growth occurring mostly for product priced below $300,000.

While supply levels are adjusting, the market has remained oversupplied, weighing on prices which declined by nearly three per cent in 2019. However, as conditions improved throughout the year, the rate of price declines had eased.

Central Alberta
The Central Alberta region faced significant job losses in 2019, causing a steep pullback in sales activity. However, supply levels also eased, helping minimize the impact on overall prices. Prices in the region eased by nearly one per cent.

However, unlike other regions sales eased across all price ranges. Meanwhile, inventory only eased for homes priced under $650,000. The result is price adjustments that are likely far larger at the higher end of the market versus the lower end.

Fort McMurray
Continued uncertainty in the energy sector is weighing on employment prospects and the housing market in the region. In 2019, easing sales in the region were met with a decline in new listings, helping reduce inventory levels and the amount of oversupply in the market. Nevertheless, months of inventory has averaged near ten months this year.

The persistent buyer’s market conditions have resulted in an annual price drop of over five per cent, making it the seventh consecutive year of price declines in the region.

Grande Prairie
Like many other regions in the province, the area struggled with some job losses. While it is not known how many of them occurred within the city of Grande Prairie, the region did see a pullback in sales. Yet, following strong sales levels recorded last year, it was not a surprise to see levels ease in 2019.

Easing sales were met with a rise in new listings, a change likely due to previous growth in the new home market. This caused inventories to rise and the months of supply to average nearly eight months this year, a significant gain of the under seven months recorded last year. The rise in supply relative to sales did start to weigh on prices, slowing the growth to just under one per cent.

Lethbridge
Given its relatively more diversified economy, Lethbridge continue to post modest gains in their housing market in terms of both sales and prices. In fact, it is one of the few regions where prices are in line with previous highs.

The concerns in this market have been related more to supply growth then demand. Supply growth continues to outpace the sales growth resulting in higher inventory levels and slightly higher months of supply. However, the months of supply in this market remain relatively consistent with the longer-term trends supporting price growth in the market.

Medicine Hat
Recent challenges in the natural gas industry is weighing on employment and confidence in the region. In 2019, sales were comparable to the previous year. Over the past quarter, the market has seen a significant rise in new listings, creating some supply gains and pushing the months of supply up to levels not seen for some time.

This recent shift has caused some price adjustments over the past quarter but was not enough to offset earlier gains and prices remained flat for the year.

Alberta West
Economic conditions in the region vary significantly. As the housing statistics are compiled for the entire region, resulting figures may not accurately reflect conditions in the local market.

In 2019, sales activity in the region eased. At the same time, new listings slowed, helping offset the pullback in sales and inventories declined slightly. Despite the inventory adjustment, this region has recorded higher levels of oversupply, yet prices continue to rise. The climb in prices is likely due to sales growth for higher priced product likely located in Canmore, where the economic drivers are different.

Lloydminster
Sales activity in the region improved slightly compared to the previous year. This combined with the easing in new listings helped reduce the level of oversupply in the market. This market continues to favour the buyer and prices eased by nearly five per cent in 2019. Since the slowdown in the energy sector, prices in this market are nearly 17 per cent lower. However, recent declines over the past year were likely enough to start bringing some people back into the housing market.

South Central Alberta
In 2019, conditions in the region improved with rising sales and declining inventories. While sales continue to remain low based on historical levels, levels are the best recorded in the area compared to the past four years. This is helping reduce the oversupply in the market easing the downward pressure on prices.

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