A high inventory of homes for sale combined with a softening demand from potential homebuyers is starting to put downward pressure on Calgary MLS prices.
Preliminary and unofficial data for August month-to-date indicates prices are dropping from levels of the past few months in both the single-family and condominium market.
"We have almost the same number of buyers that we had in December but we have so many more listings," said Gary MacLean, a realtor with Re/Max Real Estate Central. "It's like having a Safeway that got two times as big but only has the same number of customers coming in the door and in order to get rid of the inventory they have to reduce the prices.
"It's a supply and demand issue. There's an oversupply of houses not only here but all across Canada and the number of buyers are decreasing."
For example, at the end of December one of every 1.6 houses listed for sale were selling. In July, that ratio jumped to one for every 6.6 listings. The month-end inventory of properties for sale in Calgary metro at the end of December was 3,258. It was 7,982 at the end of July.
MacLean said the inventory is starting to shrink but it's not as a result of increasing sales. Many people have simply taken their homes off the market.
According to preliminary, unofficial data on the website of realtor Mike Fotiou, of First Place Realty, there have been 661 single-family home MLS sales in Calgary for an average price of $441,469 month-to-date until Tuesday.
In July for the entire month, there were 915 sales for an average of $464,655 and in August 2009 there were 1,277 sales for an average of $454,130.
The average MLS sale price peaked this year in May at $483,240.
The condominium market is showing a similar story with sales so far this month at 271 for an average price of $283,485. In July, there were 396 condo transactions averaging $291,168 and in August 2009 there were 632 sales for an average price of $283,330.
The average MLS sale price for a condo peaked this year in May as well at $304,662.
Diane Scott, president of the Calgary Real Estate Board, said supply and demand is playing a role on current average prices but there's also the factor of luxury home sales.
"Homes sold over $1 million are down in numbers from last year for the same period," she said. "June to August last year we had 98 sales over $1 million. This year we've had 87 ... That will drive the average price down as well for sure."
On Wednesday, the Teranet-National Bank Composite House Price Index showed Calgary was lagging behind other major Canadian centres in the rate of change for home prices.
The index is estimated by tracking observed or registered home prices over time using data collected from public land registries and all dwellings that have been sold at least twice are considered in the calculation of the index.
The report said in June Calgary prices rose by 0.2 per cent on a monthly basis behind Ottawa (2.7 per cent), Toronto (2.4 per cent), Montreal (1.4 per cent), Halifax (1.3 per cent) and Vancouver (0.8 per cent). The national average was 1.5 per cent, the 14th consecutive month of increases.
On a year-over-year basis, the national average was 13.6 per cent growth led by Vancouver at 16.3 per cent and followed by Toronto (16.2 per cent), Ottawa (12.0 per cent), Montreal (8.7 per cent), Calgary (8.3 per cent) and Halifax (7.1 per cent).
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