Market Report: June 2019

Reductions in supply occurring in larger centres

Inventory levels eased this month as the decline in new listings outpaced the easing in sales. These supply adjustments are starting to help reduce the excess supply across the province. Despite these changes, market conditions continue to favour the buyer and prices in the province continue to trend down.

The provincial decline in inventory was mostly driven by easing in Calgary, Edmonton and Central Alberta. Trends are not consistent across all regions in the province as many of the other regions have reported increases in the amount of supply compared to sales, ensuring their markets continues to favour buyers.

“With no significant changes occurring in our economy, resale housing demand has remained relatively slow. The adjustments are starting to occur on the supply side of the market,” says AREA Chief Economist Ann-Marie Lurie. “If the supply adjustments continue, the market could eventually start to move toward more balanced conditions, limiting the downward pressure on prices, but this will take time.”

After two months of improvements, year-over-year sales declined in June across all regions except Edmonton. June’s decline was not enough to offset the two-month gain, causing second quarter sales to rise above last year’s levels. However, after the first half of the year, provincial sales have declined by over three per cent compared to last year. While improved confidence could have supported some of the second quarter gain, high unemployment rates and recent pullbacks in full-time jobs will continue to weigh on housing demand over the near term.

Regional Breakdown

Calgary Region
Significant reductions in new listings relative to sales has caused inventories to ease in the region. While conditions continue to favour the buyer, months of inventory have eased compared to last year and levels recorded earlier in the year. While prices remain below last year’s levels, there has been some improvements recorded in the second quarter compared to the first quarter of this year.

Edmonton Region
Edmonton is the only region to record sales growth in June, pushing second quarter sales up by three per cent. However, it was not enough to offset previous declines causing sales to ease by nearly three per cent. While supply levels have been a challenge in the region, further easing in new listings has contributed to the 11 per cent year-over-year decline. While inventories and months of supply remain elevated, the adjustment is helping slow the pace of the decline in prices.

Fort McMurray
The region continues to struggle with employment with some full-time job losses and gains in unemployment rates. The economic challenges continue to weigh on the housing market. Easing new listings this month was not enough to offset the impacts of slower sales preventing any significant change in inventory levels in the region. Overall the months of supply levels have remained elevated, causing further downward pressure on prices.

Grande Prairie
While sales activity eased over last year’s levels, they remain relatively consistent with typical levels of activity both for the month and on year-to-date levels. However, there has been a significant jump in the number of new listings coming onto the market, causing inventories to rise and the months of supply to increase to the highest June level recorded since 2010. The oversupply situation was likely related to the rising supply of new product impacting the resale market. Rising supply compared to sales activity has started to weigh on prices, however, average prices remain higher than levels recorded last year.

Lethbridge
Despite a slight reduction in sales in June compared to last year, activity remains in line with long-term trends and consistent with last year’s activity. However, the area continues to struggle with supply growth. New listings continue to rise at a faster pace then sales causing inventory gains and months of supply to push up to the highest June recorded since 2012. Rising supply relative to sales has placed some downward pressure on prices. However, year-to-date average prices remain higher than last year’s levels.

Lloydminster
Despite easing sales in June, year-to-date sales activity rose just above last year’s levels, but remains well below typical levels of activity. At the same time, new listings increased this month, but remain just below levels recorded last year, preventing any further gains in inventory levels. Nonetheless, the oversupply in the market has continued to weigh on prices which remain well below last year’s levels and 2014 highs.

Medicine Hat
June sales continued to ease in the region, causing year-to-date sales to fall to levels not seen since 2011. At the same time new listings continue to rise pushing up inventory levels. Higher inventory and slower sales have caused the months of supply to rise to nearly six months. Despite some of these recent shifts, after the first half of the year, average prices have remained just above last year’s levels.

Central Alberta
Sales in the region continued to decline in June, causing year-to-date sales to fall by 10 per cent compared to last year. Some of this decline could be due to weakening employment conditions, as there has been some full-time job losses and rising unemployment rates in the region. While sales have remained slow, new listings have also been declining helping reduce the inventory in the market. However, the decline was not enough based on the sales and the months of supply have remained elevated. The oversupply in the market has contributed to the downward pressure on prices.

Alberta West
After the first half of the year sales activity have remained relatively stable compared to last year and longer-term trends. However, recent gains in new listings has kept inventories elevated. The months of supply has also risen slightly over last year’s levels and remain higher than typical levels. Despite rising amounts of supply relative to sales, prices have generally trended up. However, given the diversity within the region, it is possible that compositional shifts are occurring impacting pricing trends.

South Central Alberta
Slower sales in June were not enough to offset gains recorded throughout the year. Year-to-date sales growth was met with easing new listings, helping reduce the amount of inventory and oversupply in the market. Easing in the amount of oversupply has helped slow the price declines in the area.

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