Credit: Image by pjurisic0 from Pixabay 

City of Calgary, March 1, 2021 – With gains in every price range, residential sales activity in February totalled 1,836.

This reflects the best February since 2014.

“Despite continued COVID-19 restrictions, housing activity continues to improve. Much of the strong sales activity is expected to be driven by exceptionally low mortgage rates,” said CREB® chief economist Ann-Marie Lurie.

“Confidence is also likely improving as vaccine rollouts are underway. Additionally, some of the worst fears concerning the energy sector are easing with recent gains in energy prices.”

New listings also improved in February, but the gap between new listings and sales narrowed. This is causing the sales-to-new-listings ratio to rise to 65 per cent, keeping the months of supply well below three months.

Conditions are far tighter in the detached sector of the market, especially for product priced below $600,000, where strong sellers’ market conditions are present with less than two months of supply.

The market has faced relatively low inventory levels compared to sales for the past several months and prices continue to trend up. In February, the residential benchmark price rose over the previous month and currently sits four per cent above last years’ levels. 

Detached product has the lowest months of supply and is also exhibiting the most significant gains in prices. On the opposite end of the spectrum, the apartment condominium segment still has a relatively high level of inventory compared to sales, which is impacting price recovery for this property type.

HOUSING MARKET FACTS

Detached

Detached sales improved across every price range this month, but the lack of choice in the lower price ranges likely placed limits on the gains in sales.

New listings did rise, but it was not enough to prevent further tightening in the market, as the sales-to-new-listings ratio rose to 71 per cent and the months of supply fell to under two months. This is the lowest months of supply recorded in February since 2007.

Tighter market conditions occurred across all price ranges, but properties priced below $600,000 saw the months of supply fall to just above one month. These conditions are supporting significant price gains in the detached sector, which recorded a February benchmark price of $502,500. This is nearly two per cent higher than last month and five per cent higher than last year. It is also the first time since 2018 detached prices have risen above $500,000, and currently sits under five per cent below previous highs recorded in 2014.

Prices increased compared to last month and last year in every district of the city. However, the magnitude of those increases varied, with the largest year-over-year gains occurring in the South East district at nine per cent, and the lowest gains occurring in the City Centre at under two per cent. 

Semi-Detached

Semi-detached sales in February recorded significant gains, pushing sales activity to the highest February levels seen in nearly 13 years. However, like the detached sector, the improvements in new listings were not enough to offset sales, ensuring this sector continues to favour the seller.

With lower levels of supply relative to sales, benchmark prices improved over both last year and last month. However, this was not consistent across all districts. The West district continues to see prices that remain over two per cent lower than last year’s levels. The strongest year-over-year price gains were reported in the South East and North districts.

Row

Despite a significant increase in new listings, improving sales offset the gains and the months of supply fell to three months.

Conditions for row properties are not as tight as what we have seen in both the detached and semi-detached sectors. However, they do reflect an improvement relative to the oversupplied conditions recorded last year. However, when considering activity by price range, pockets of oversupply persist in this market.

Citywide reductions in inventory relative to sales supported some price improvements in this segment. The benchmark price trended up from last month and currently sits just over one per cent higher than last year’s levels. Year-over-year gains did not occur across all districts, as prices remain lower than last year’s levels in the North, North West, South and South East districts.

Apartment Condominium

Driven by product priced mostly under $300,000, apartment condominium sales improved to best February levels recorded over the past six years.

However, the gain in sales was not enough to cause any significant changes in inventory levels. February inventory remained elevated compared to levels we typically see at this time of year.

While the months of supply has trended down in this sector, it remains above five months. This is preventing the same type of price recovery seen in other sectors. On a year-to-date basis, the benchmark price remains similar to levels recorded last year.

REGIONAL MARKET FACTS

Airdrie

February sales reached new record highs for the month.

The largest gain in sales occurred in the $400,000 - $500,000 price range. New listings also increased, but the sales-to-new listings ratio remained elevated at 71 per cent and the months of supply dropped to under two months in February. This is the tightest level seen since 2014.

Persistent sellers’ market conditions have resulted in further price gains in the market. The benchmark price has trended up for the past eight months and, as of February, it is over seven per cent higher than last year’s levels. Most of the price growth has been driven by the detached sector.

Cochrane

Cochrane sales more than doubled compared to last February. This represents the strongest February ever recorded for the town.

New listings also rose for the month, but it was not enough to cause any substantial change in inventory levels and the months of supply fell to below two months. This is the lowest months of supply for February seen since the record low in 2006.

Tight conditions supported price growth in February, as the benchmark price rose to $413,700, a four per cent increase from last year’s levels.

Okotoks

New listings have been trending up from the lows seen at the end of 2020, helping to support a significant improvement in sales in February. February sales reach levels not seen for the month since the record high in 2007. 

Inventory levels remain exceptionally low relative to sales and the months of supply dropped below two months. Like other towns around Calgary, the sellers’ market conditions caused prices to trend up. In February, the benchmark price reached $442,600, nearly five per cent higher than levels recorded last year.

Not intended to solicit buyers or sellers currently under contract.

Not intended to solicit buyers or sellers currently under contract.

Not intended to solicit buyers or sellers currently under contract.

Not intended to solicit buyers or sellers currently under contract.

 CREB® - Housing Statistics

Not intended to solicit buyers or sellers currently under contract.

by CREB®Now Feb 1, 2021

COVID-19 has had widespread impacts on the economy. The shutdowns had significant economic repercussions in the retail, arts and entertainment, tourism, service, and transportation (airlines) industries across the country.

Alberta also faced the additional impact of struggles in the energy sector.

The reduction in global oil demand caused prices to drop to levels far lower than what we have seen over the past five years. This resulted in a significant drop in capital investment and drilling activity. While prices have been recovering from the lows of the spring, some energy forecasters expect prices to generally remain below levels recorded over the past four years and below $50/barrel in 2021.

The economic impacts of further shutdowns at the end of 2020 will likely flow into the early part of 2021.

Nonetheless, economic activity is expected to improve in 2021 following the significant retraction in 2020. However, with travel and social-gathering restrictions expected to persist until enough of the population is vaccinated, the hardest-hit industries – such as accommodation and food, travel, and energy – are expected to take longer to fully recover.

The government supports for businesses and households are expected to remain in place until the middle of 2021, helping to cushion the impact caused by the pandemic. However, given the global magnitude of the crisis, full economic recovery is not expected until late 2022 at the earliest.

Key factors impacting the Alberta economy in 2020

COVID-19 and the shutdown of our economy resulted in a sharp decline in growth, followed by a quick bounce back as the economy reopened. However, the economy did not bounce back to pre-pandemic levels and a second partial shutdown at the end of the year is expected to claw back some of the progress made.

The energy sector was hit particularly hard in 2020, as global oil demand fell and prices crashed. While prices have improved from the lows recorded early in 2020, they remain lower than the levels recorded when oil prices first fell back in 2014. While some mergers have already been announced, further consolidation in the sector is expected.

Final GDP figures for 2020 are not expected to be released until mid-2021, but Alberta is expected to be one of the hardest hit provinces in terms of economic contraction for 2020. It not only impacted our retail, tourism and airline industries, but also had a significant impact on the energy sector.

Low lending rates and government support helped prevent a more significant impact on the housing market.

Persistently high unemployment rates and significant job losses in some sectors of our economy dominated 2020.

Provincial figures point toward more people leaving the province than entering.This shift is due to some loss to other provinces, but also the significant drop in international migration. Thankfully, our young demographic has helped support population growth, albeit at slower rates.

Persistently high unemployment rates and significant job losses in some sectors of our economy dominated 2020.

Provincial figures point toward more people leaving the province than entering.This shift is due to some loss to other provinces, but also the significant drop in international migration. Thankfully, our young demographic has helped support population growth, albeit at slower rates.

Not intended to solicit buyers or sellers currently under contract.

Getty Images

Article By Barb Livingstone - Dec 16, 2020

Calgary’s downtown office vacancy rate is going nowhere but up.

By the end of this year, that rate is projected to jump to 29.5 per cent, and it will climb even higher moving into 2021, says Greg Kwong, regional managing director with commercial real estate company CBRE.

The year-end number is an increase from the 28.7 per cent vacancy rate in the third quarter of 2020 and represents nearly 13 million square feet of office accommodation that is currently empty.

The future, Kwong says, continues to be clouded by low oil prices and the ongoing effects of COVID-19.

“Companies are delaying decisions on office space because they don’t know who is going to be working from where,” he said, adding that in a normal market, downtown office vacancy rates are around eight per cent, so “there’s a long way to go.”

Next year, Kwong says the merger between Cenovus Energy and Husky Energy will result in a lot of additional sublease space, which could push the vacancy rate past 30 per cent, especially when other mergers are expected.

CBRE’s assessment is echoed by Calgary Economic Development CEO Mary Moran, who says to fill the current vacant space there would have to be another 130,000 employees moved into downtown (at 100 to 110 square feet per person).

“IT UNDERSCORES WHY WE HAVE TO PURSUE OTHER OPPORTUNITIES. THERE IS NO ONE SILVER BULLET; IT’S A LONG, DECADE-OR-TWO PROJECT.” – MARY MORAN, CALGARY ECONOMIC DEVELOPMENT CEO

Even a minor rebound in the energy industry – whether it came from, green energy, pipelines or another sector – is not expected to be the mega job creator of past booms.

“It underscores why we have to pursue other opportunities,” said Moran, including agriculture, aerospace, logistics, life-sciences, finance, insurance and tech industries. “There is no one silver bullet; it’s a long, decade-or-two project.”

She does, however, point to one bright spot in the form of four “unicorn” deals (when a company reaches a $1-billion valuation) done in Calgary in the last 22 months. The latest was tech company Benevity, which recently announced a $1.1-billion deal with a U.K. investor.

People currently working downtown are utilizing 25 to 30 per cent of the core’s office capacity, says Kwong, with the rest working from home or no longer working. That figure could drop even further, given the latest round of pandemic restrictions.

This all raises the difficult question of whether, and when, people will be comfortable going back to offices.

At the beginning of the shutdown, many experts predicted corporations would give up or shrink their office space and continue to have staff work from home even after the pandemic was over. However, Kwong thinks CEOs are going to recognize employees working from home isn’t an efficient solution long-term – except, perhaps, for small parts of their businesses.

Post-pandemic, he expects any new full-time work-from-home contingent will only result in a reduction of less than 10 per cent when it comes to the office space needs of an average company.

Kwong’s prediction is supported by a recent employer survey conducted by real estate firm Colliers, which estimates work-from-home employee productivity dropped by more than 23 per cent in November. This was attributed to a variety of causes, including potential erosion of workplace culture and “Zoom fatigue.”

The survey also found 54 per cent of businesses across Canada expect 100 per cent of employees to return to the office once a vaccine is available.

However, Kwong anticipates Calgary’s downtown won’t return to normal levels of office occupancy until the end of 2021.

Not intended to solicit buyers or sellers currently under contract.