May 2019: Sales activity improves for second consecutive month

Sales growth in May was met with a decline in new listings. This combination eased the pressure on inventory levels, which finished the month at 7,467 units, a decline of 12 per cent compared to last year.

Improving sales relative to inventory levels caused the months of supply to ease to just under four months. While still oversupplied, this is an improvement from the five months of supply recorded last May.

Citywide sales in May totalled 1,921 units, 11 per cent higher than last year’s levels. However, sales remain 10 per cent below longer-term trends. This sales growth was primarily driven by homes priced under $500,000.

“While sales activity remains low based on historical activity for May, the easing prices have brought some people back to market, while also preventing some others from listing their homes,” said CREB® chief economist Ann-Marie Lurie.

“This has started to push the market towards more balanced conditions. If this trend continues, it could limit some of the downward pressure on prices.”

Citywide benchmark prices totalled $423,100 in May. Prices have shown some signs of improvement month-over-month but remain four per cent lower than 2018 levels.

HOUSING MARKET FACTS

Detached

  • Detached sales in May totalled 1,182 units. This is a 12 per cent increase over last year, but still 13 per cent below long-term averages. The improvement in sales was driven primarily by gains in homes priced under $500,000.
  • Sales activity increased across most districts in May. However, year-to-dates sales have only increased in the East, South and North East districts of the city. Citywide sales remain one per cent lower than last year’s levels.
  • New listings in May pulled back significantly from previous year’s levels. Combined with an improvement in sales, this resulted in inventories declining from 4,504 units last May to 3,921 units this month. This is the first time since May 2017 that year-over-year inventories declined.
  • Easing inventory and improving sales caused months of supply to ease to 3.3 months. This is still elevated compared to historical levels, but represents an improvement compared to levels from the past year.
  • Prices have remained relatively stable over the past few months, with some modest monthly improvements. However, the oversupply scenario has left prices four per cent lower than last year and seven per cent lower than 2014 highs.

Apartment

  • The improvement in monthly sales was not enough to offset previous declines. Year-to-date apartment sales sit at 1,030 units. This is seven per cent lower than last year and 28 per cent lower than longer-term averages. Easing sales were met with fewer new listings, reducing the market inventory. This pushed months of supply to just over five months.
  • If the reduction in oversupply continues, it will eventually help limit price declines. However, this market remains oversupplied and prices continue to edge down.
  • May benchmark prices totalled $246,900, 0.6 per cent lower than last month and nearly three per cent lower than last year’s levels. This is resulting in a total price adjustment of over 17 per cent since 2014.

Attached

  • Attached sales activity continue to improve in May. Year-to-date sales improved by two per cent, making this the only sector to record a year-to-date improvement. Improvements occurred throughout most districts of the city, apart from the City Centre, North West and West districts.
  • New listings have also pulled back relative to sales. This is causing inventories to ease compared to last year and months of supply to trend down.
  • Benchmark prices remain five per cent lower than last year’s levels but have seen some modest gains on a month-to-month basis. Despite some signs of improvement, prices remain 10 per cent lower than 2014 highs.

REGIONAL MARKET FACTS

Airdrie

  • May sales activity remained similar to last year, pushing year-to-date sales to 514 units. This is slightly higher than last year’s levels. At the same time, there has been a sharp pullback in new listings coming onto the market. This is causing inventories to decline and the market to move towards more balanced conditions.
  • Despite some oversupply reduction, prices struggled to improve following declines last year. The May benchmark price in Airdrie was $331,900, similar to last month, but nearly four per cent below last year’s levels.

Cochrane

  • Year-to-date sales in the area remain slightly slower than last year, but higher than activity recorded throughout the recession. The number of new listings is continuing to ease, which is starting to reduce inventories from the highs recorded last year.
  • Supply is starting to adjust in this market, but conditions continue to favour the buyer, which is weighing on prices. May benchmark prices totalled $404,700, just below last month and over four per cent less than last year’s levels.

Okotoks

  • Year-to-date sales of 208 units are similar to last year’s levels, but lower than long-term averages for the area. Like many other areas, new listings continue to ease, enough to chip away at inventory levels. This has caused months of supply to fall below four months.
  • The reduction in the amount of supply compared to sales is helping limit any further downward pressure on prices. Overall benchmark prices of $408,200 remain five per cent lower than levels recorded last year.

-CREBNOW

Bank of Canada senior deputy governor discusses health of housing market at Calgary Chamber

Ongoing weakness in Alberta’s housing market “can be explained by adjustment over the past five years to continuing challenges in the energy sector,” said Carolyn Wilkins, senior deputy governor of the Bank of Canada, during a recent speech at the Calgary Chamber of Commerce.

“Alberta and other energy-intensive regions have been on an economic roller coaster over the past few years. This has led to painful adjustments for many of you here and has also weighed on Canada’s bottom line,” said Wilkins.

“When it comes to the energy sector, we expect the current adjustment to continue. Between 2014 and 2016, energy investment dropped by 50 per cent. In April, based on discussions with companies, we estimated that investment in this sector would drop another 20 per cent before stabilizing. Investment should average around $40 billion over the next two years – that’s still 15 per cent of total investment in Canada.”

Outside of Alberta, she said the housing market has been a concern in other areas of the country as well, but signs of stabilization are emerging.

“ESCALATING TARIFF ACTIONS BY THE UNITED STATES AND CHINA, AND RELATED TENSIONS, HAVE UNDERMINED TRADE AND BUSINESS INVESTMENT. AND HOUSING, A LINCHPIN OF THE RECOVERY SINCE THE CRISIS, SLOWED SHARPLY.” – CAROLYN WILKINS, BANK OF CANADA SENIOR DEPUTY GOVERNOR

“The greater Vancouver market, which had been quite frothy, is still adjusting,” she said. “This follows changes in mortgage financing rules, past increases in interest rates, and the provincial and municipal measures aimed at discouraging speculation and foreign buyers.

“Weather likely affected the Toronto area in recent months, and, while we need to see more data, that market is showing signs of stabilizing.”

Wilkins said Canada’s economic performance had been relatively solid until recently, but the end of 2018 and beginning of 2019 have set it back.

“As you here in Calgary know all too well, there was the drop in oil prices last autumn and ongoing transportation constraints,” she said. “Escalating tariff actions by the United States and China, and related tensions, have undermined trade and business investment. And housing, a linchpin of the recovery since the crisis, slowed sharply.”

In its April forecast, the Bank of Canada predicted economic growth in Canada will slow to 1.2 per cent this year from 1.8 per cent in 2018.

“Slower growth isn’t all about trade uncertainty and the global slowdown. This outlook also takes into account the effect of lower oil prices and transportation constraints in energy-intensive regions,” the forecast report reads. “Growth excluding these energy-related factors would be 0.3 percentage points higher. The outlook also accounts for the housing slowdown, which has been deeper and more prolonged than expected, particularly in the greater Vancouver and Toronto areas.”

-Mario Toneguzzi

‘Easy as pie’: Why criminals look to Canadian real estate to launder their money

News that some $5 billion was laundered through British Columbia’s real estate market in 2018 comes as no surprise to experts, as Canada’s weak money-laundering laws make it an attractive spot to park ill-gotten cash.

Kevin Comeau, author of a recent C.D. Howe report on money laundering, says people in corruption-prone states who seek to hide the source of their wealth can’t just buy a big house in their community, so they often look to cache it abroad.

“Autocracies, kleptocracies, developing and transitioning nations — they’ve got corruption from politicians and they’ve got crime from drugs and human trafficking. They can’t keep that money in their own country without the risk of it being confiscated by someone closer to power,” Comeau said.

They often start by mixing ill-gotten gains with legitimate proceeds — from a restaurant or other cash business — and depositing them in a bank.

“What’s a bank to do? Go down and start counting the dishes?” he asked.

The funds are then funnelled through a series of shell companies and trusts registered in tax havens such as the Seychelles or British Virgin Islands. These states have tiny corporate taxes and, like Canada, offer anonymity by allowing the real, or “beneficial,” owner to go undisclosed.

With some of the weakest money-laundering laws among liberal democracies, Canada stands out as a place to launder cash, said Comeau, a retired lawyer and member of Transparency International Canada’s working group on beneficial ownership transparency.

Houses, mansions and whole floors’ worth of condominiums can act as a kind of bank account in bricks-and-mortar form, with the purchase made by a numbered corporation, incorporated in Canada by an offshore lawyer and owned by layers of shell companies in various tax havens.

“It’s easy as pie,” said Comeau. “You can do it in about five minutes and you don’t have to disclose anything.”

International money launderers typically leave the properties vacant, driving up real estate prices and hollowing out neighbourhoods, said Garry Clement, former national director of the RCMP’s Proceeds of Crime Program.

Renting the property out would involve a cheque or email transfer, which usually necessitates an account at a Canadian bank for the receiver and leaves them exposed to anti-money-laundering screens.

“For organized crime lords, $5 million is pocket change,” Clement said, noting the lack of incentive for rental income.

The property ownership timeline is typically medium- to long-term, rather than the quick cash turnarounds available through casinos and luxury car purchases, he said. “Most of it’s for parking money.”

Last year some $7.4 billion overall was laundered in B.C., out of a total of $47 billion across Canada, according to Thursday’s report by an expert panel led by former B.C. deputy attorney general Maureen Maloney.

“But Ontario is notorious for being a money-laundering front,” Clement said, adding that other provinces are far from immune.

More than $3 trillion in dirty money entered the international finance system last year, according to Comeau.

In a September report from the C.D. Howe Institute, he recommended tightening the regulatory regime with a publicly accessible registry of beneficial ownership and mandatory declarations of beneficial ownership, alongside meaningful sanctions for false declarations.

The British Columbia government introduced legislation last month aimed at preventing tax evasion and money laundering by shining a spotlight on anonymous real estate owners, making the province an anti-money-laundering “leader in Canada,” he said.

-Calgary Herald

April brings a slight inventory decline

There have been no significant changes occurring in sales activity, but the number of new listings coming onto the market continues to ease relative to 2018 levels.

The decline in new listings was enough to start chipping away at overall inventory levels, which have eased slightly compared to last year.

The slight adjustment in supply levels has helped support further reductions in the months of supply, which was 4.6 months in April. While this level still represents oversupply in our market, it does reflect improvement from the nearly seven months of supply that we saw at the start of the year.

“Demand remains relatively weak in the resale market. However, if supply levels continue to adjust, this could help reduce the amount of oversupply and eventually support some price stability,” said CREB® chief economist Ann-Marie Lurie.

As of April, the total residential benchmark price in Calgary was $415,900. This is slightly higher than last month, but still nearly five per cent lower than last year’s levels.

Citywide sales were 1,547 units in April, two per cent higher than last year’s levels. Year-to-date sales remain nearly six per cent lower than last year and are 26 per cent below longer-term averages.

“Sales have been improving mostly in the lower price ranges, causing tighter supply conditions in that segment.  This will likely have a different impact on price trends in the lower price ranges depending on location,” said Lurie.


HOUSING MARKET FACTS

Detached

  • Detached sales improved by nearly three per cent in April compared to last year, due to gains in homes priced under $500,000. However, with 930 sales, activity still remain 24 per cent below long-term averages.  Recent gains were also not high enough to offset pullbacks earlier in the year, causing year-to-date sales to fall by over five per cent.
  • Improving sales did not occur across all districts. In April, there was growth in the North East, North West, South and South East districts of the city. Despite some signs of sales improvement, overall sales activity remains well below 10-year averages throughout every region in the city.
  • April detached inventories citywide continue to remain just above levels recorded last year. Months of supply remain relatively unchanged at four months.
  • The amount of oversupply has varied significantly depending on the area of the city. Months of supply has only risen in the City Centre, South and West districts of the city.
  • Despite some of the adjustments occurring in the detached sector, overall April prices remain lower than last year’s levels across all districts. Year to date, the largest year-over-year declines occurred in in the City Centre, North West and South districts.

Apartment

  • Despite the affordability of apartment condominiums, sales activity continues to fall across the city and in most districts. There have been 714 apartment condominium sales so far this year, the lowest level since 2001.
  • The decline in new listings has started to outweigh the sales decline, causing inventories to ease. As of April, resale apartment condominium inventories totaled 1,546 units, 16 per cent lower than inventory levels last April.
  • The easing inventories have also caused the months of supply to decline to just above six months. While this is still a buyers’ market, this trend could help ease the downward pressure on prices if it continues.
  • Apartment condominium prices in April totalled $250,400, comparable to last month, but over two per cent below last year’s levels and nearly 17 per cent below 2014 highs.

Attached

  • Attached sales activity improved compared to last year’s levels for the second straight month, almost offsetting the declines occurring in the first two months of the year.  Year-to-date sales were 1,113 units, nearly one per cent below last year’s levels, and 14 per cent below long-term averages.
  • Year-to-date sales have improved in all districts except the City Centre, North West and West.
  • Improved sales and easing listings have helped prevent further inventory gains in this sector and overall months of supply have trended down to five months.
  • Following several months of prices trending down, semi-detached benchmark prices in April rose over the previous month. However, prices remain over five per cent below last year’s levels at $395,300.
  • Row prices were $284,900 in April, over five per cent below last year’s levels.


REGIONAL MARKET FACTS

Airdrie

  • Stronger sales in March and April offset earlier declines, causing year-to-date sales to total 363 units, similar to levels recorded last year. New listings continue to decline, causing April inventories to ease compared to last year. Months of supply remain elevated at five months, but this is a notable improvement compared to last year, when months of supply was over six months.
  • Rising sales and easing inventories helped prevent further price declines in April compared to March. However, overall, April prices remained nearly four per cent below last year’s levels. Prices have eased across all property types, with the largest year-to-date decline in the apartment sector at eight per cent.

Cochrane

  • Despite improving sales in April, year-to-date sales in Cochrane eased by six per cent compared to last year. However, new listings have also eased, helping reduce some of the inventory in the market.  While inventories and months of supply remain elevated, for the first time since June 2018, the months of supply fell below six months.
  • Some improvement with oversupply has likely prevented further monthly declines in prices. As of April, total benchmark prices remain over three per cent below last year’s levels for a total of $415,100.

Okotoks

  • Despite some recent improvements in sales, year-to-date sales activity slowed compared to last year. New listings have also eased, but it was not enough to prevent further inventory gains, keeping months of supply above five months.
  • The amount of oversupply has impacted prices. April residential prices totalled $406,700. This is nearly four per cent below last year’s levels. Price declines were slightly higher in the attached sector, with a year-over-year decline of nearly five per cent.

-CREB

April brings a slight inventory decline 

 

There have been no significant changes occurring in sales activity, but the number of new listings coming onto the market continues to ease relative to 2018 levels.

The decline in new listings was enough to start chipping away at overall inventory levels, which have eased slightly compared to last year.

The slight adjustment in supply levels has helped support further reductions in the months of supply, which was 4.6 months in April. While this level still represents oversupply in our market, it does reflect improvement from the nearly seven months of supply that we saw at the start of the year.

“Demand remains relatively weak in the resale market. However, if supply levels continue to adjust, this could help reduce the amount of oversupply and eventually support some price stability,” said CREB® chief economist Ann-Marie Lurie.

As of April, the total residential benchmark price in Calgary was $415,900. This is slightly higher than last month, but still nearly five per cent lower than last year’s levels.

Citywide sales were 1,547 units in April, two per cent higher than last year’s levels. Year-to-date sales remain nearly six per cent lower than last year and are 26 per cent below longer-term averages.

“Sales have been improving mostly in the lower price ranges, causing tighter supply conditions in that segment.  This will likely have a different impact on price trends in the lower price ranges depending on location,” said Lurie.


HOUSING MARKET FACTS

Detached

  • Detached sales improved by nearly three per cent in April compared to last year, due to gains in homes priced under $500,000. However, with 930 sales, activity still remain 24 per cent below long-term averages.  Recent gains were also not high enough to offset pullbacks earlier in the year, causing year-to-date sales to fall by over five per cent.
  • Improving sales did not occur across all districts. In April, there was growth in the North East, North West, South and South East districts of the city. Despite some signs of sales improvement, overall sales activity remains well below 10-year averages throughout every region in the city.
  • April detached inventories citywide continue to remain just above levels recorded last year. Months of supply remain relatively unchanged at four months.
  • The amount of oversupply has varied significantly depending on the area of the city. Months of supply has only risen in the City Centre, South and West districts of the city.
  • Despite some of the adjustments occurring in the detached sector, overall April prices remain lower than last year’s levels across all districts. Year to date, the largest year-over-year declines occurred in in the City Centre, North West and South districts.

Apartment

  • Despite the affordability of apartment condominiums, sales activity continues to fall across the city and in most districts. There have been 714 apartment condominium sales so far this year, the lowest level since 2001.
  • The decline in new listings has started to outweigh the sales decline, causing inventories to ease. As of April, resale apartment condominium inventories totaled 1,546 units, 16 per cent lower than inventory levels last April.
  • The easing inventories have also caused the months of supply to decline to just above six months. While this is still a buyers’ market, this trend could help ease the downward pressure on prices if it continues.
  • Apartment condominium prices in April totalled $250,400, comparable to last month, but over two per cent below last year’s levels and nearly 17 per cent below 2014 highs.

Attached

  • Attached sales activity improved compared to last year’s levels for the second straight month, almost offsetting the declines occurring in the first two months of the year.  Year-to-date sales were 1,113 units, nearly one per cent below last year’s levels, and 14 per cent below long-term averages.
  • Year-to-date sales have improved in all districts except the City Centre, North West and West.
  • Improved sales and easing listings have helped prevent further inventory gains in this sector and overall months of supply have trended down to five months.
  • Following several months of prices trending down, semi-detached benchmark prices in April rose over the previous month. However, prices remain over five per cent below last year’s levels at $395,300.
  • Row prices were $284,900 in April, over five per cent below last year’s levels.


REGIONAL MARKET FACTS

Airdrie

  • Stronger sales in March and April offset earlier declines, causing year-to-date sales to total 363 units, similar to levels recorded last year. New listings continue to decline, causing April inventories to ease compared to last year. Months of supply remain elevated at five months, but this is a notable improvement compared to last year, when months of supply was over six months.
  • Rising sales and easing inventories helped prevent further price declines in April compared to March. However, overall, April prices remained nearly four per cent below last year’s levels. Prices have eased across all property types, with the largest year-to-date decline in the apartment sector at eight per cent.

Cochrane

  • Despite improving sales in April, year-to-date sales in Cochrane eased by six per cent compared to last year. However, new listings have also eased, helping reduce some of the inventory in the market.  While inventories and months of supply remain elevated, for the first time since June 2018, the months of supply fell below six months.
  • Some improvement with oversupply has likely prevented further monthly declines in prices. As of April, total benchmark prices remain over three per cent below last year’s levels for a total of $415,100.

Okotoks

  • Despite some recent improvements in sales, year-to-date sales activity slowed compared to last year. New listings have also eased, but it was not enough to prevent further inventory gains, keeping months of supply above five months.
  • The amount of oversupply has impacted prices. April residential prices totalled $406,700. This is nearly four per cent below last year’s levels. Price declines were slightly higher in the attached sector, with a year-over-year decline of nearly five per cent.

-CREB