Is The Housing Stall Coming? (Market Update November 2021)

Mayday! Mayday! Mayday!


Have you ever watched an action movie where the airplane is lifting at too sharp of an angle? What happens? The engine gives way and all lift is gone.


Is this where we are heading with the real estate market here in Calgary?


Possibly.


Let me explain.


Absorption Rates For All Segments in Calgary

From the chart above, we can learn a few things about how the market has been reacting this past month.


In November, we saw the absorption rate increase 7% from last month to 50%. This increase is not the highest we have been in recent times, but it is the one where we have seen significantly sharp declines in our inventory.


The last time we were over 50% in absorption (which means 1 in every 2 homes is selling as a whole in Calgary) was back in March and April of this year. If you recall, during this time, the interest rates were at historically low levels (check out my update from then to get a refresher below)

When we were at this level in March, we had over 5,700 active listings and we're seeing around 2,900 sales. Now, we have just over 4,200 active listings and sales of just over 2,100 in November.


Our market hasn't increased in the number of transactions occurring as we can see with the decline of buyers from March to now, and a decline from buyers from last month to now by 4%.


The concerning decline is situated around the lack of inventory. From March to now, the inventory levels have dropped 26% in Calgary as a whole. Month over month, we have seen a drop of 17% alone in active listings available for today's buyers.


The higher interest rates that we have seen (currently around 2.5% for 5 years fixed) have slowed buyers a little bit in addition to the lack of selection for them to purchase their next home. Buyer activity dropped 4% month over month from October to November.


On the apartment side, we have not seen much change.


Apartment Absorption Rates


For apartments, the story is much of the same as we were back in March to now, with a very stagnant rate of sales, 22%. This means, nearly 1 in every 4 apartment homes are selling in today's market.


This segment is not flying off the shelves as the pricier and bigger homes like townhomes, attached, and detached homes. This segment of homes had one of its strongest months in November.