I’ve been keeping an eye on these stats for some time now and in each of the years, regardless of what the external factors tend to do, there is seasonality to our market.
It ebbs and flows with the consumers' interest in it.
And despite this being one of our busiest years, we are still entering into that lull of the summertime. Albeit a little bit later than usual.
But let’s look at the numbers and what’s been happening this past month.
In the month of July, our active listings declined by 2% to 3,654 from the previous month while the number of sales declined 16% from the month before to 2,655.
These declines have led our absorption rate to drop from the second straight month to 73%. If you recall, we consider a seller market to be in place when the absorption rate is higher than 40%. This is also the first time the rate has dropped for two consecutive months this year.
Year over year, at this same time, the number of active listings has dropped 51% while the number of sales has increased 15%.
In terms of pricing, we have seen either prices maintain or slightly decline depending on the segment you are looking at.
The median prices month over month have remained steady in the detached segment, showed declines in the semi-detached (duplex) and townhome segments, and slightly risen in the apartment segment.
However, year over year on average we are still in a market of stronger pricing from 8-11% depending on the segment.
At this same time last year, we are up in price in the double digits across all segments.
The absorption rate declining by 11% is a significant cliff we have seen in our market this year. This is the first time we have seen it decline and the first time we have seen two months of consecutive declines.
However, this isn’t the first time our market has seen this drop. In the chart above, you will see in both 2021 and 2022 we see declines right after the spring market as more and more people start to focus on summer activities rather than looking for or preparing a home for sale.
This year is a bit different in that we saw this “cliff” come slightly later in the year than usual. This can be attributed to the bond yields that dropped earlier this year with the bank failures in the US. This event sparked lower interest rates, which created more purchasing power for buyers, leading to more activity.
But that has come and gone, rates are higher and the BOC is scheduled to make an announcement on their overnight rate in September.
Now we are seeing the decline due to seasonality taking hold. Usually, these declines occur over a 3-4 month timeframe before we see a slight increase in September.
And this is where we might heading as we continue through June to August or September.
This is also where buyers that are looking to purchase a home in a less competitive market might want to start thinking about purchasing now rather than later.
When September comes, and depending on the BOC announcement, if rates remain steady or even decline, a buyer that purchased in August or September with a closing a bit further down can take advantage of a quieter market and revisit their rates prior to closing with the lender they are working with.
That could potentially turn into a win-win for buyers.
For sellers, the market is still in your favour, but the activity might be slowing slightly depending on which price point and segment you are in. Apartments, specifically 2-bedroom, 2-bathroom units are in high demand while homes that are priced north of $700,000 will be sitting a bit longer.
If you do have an apartment or townhouse currently and have been thinking about selling, we should chat about your options and what the pricing might be. It might surprise you. A perfect example of this is one we just sold in Royal Oak in NW Calgary. 1 bedroom, 1 bathroom, and just over 605 sqft sold for $240,000.
The lull of the summer is as short as our Calgary summer and if the rates stay firm or decline slightly, another frenzy could be on its way come the fall. Being prepared is the best thing you can do if you are looking to buy or sell, and I’d love to be the one to help you through our market.
As always, I hope you find this article helpful. Some of you might not know this, but my advertising budget solely goes toward the listings I receive to market. My entire pool of business comes from referrals and this newsletter.
I truly enjoy writing these each month and providing you with this insight. I also cannot thank those of you enough for sharing it with your networks and allowing me to grow my business solely on referrals.
That is a badge of honour in our industry, and I love telling new clients my business is built on the wonderful referrals of my network.
So, thank you once again.