Has the Calgary housing market hit bottom?

It's a question that is asked frequently these days. The answer depends on with whom you're talking of course; I doubt there is a consensus that we have or we haven't.

Market activity has increased as we move through the spring market, especially in the starter market. Sales figures for the month of May, 2009, will exceed May of 2008, and that is a positive sign with regard to activity. Last May (2008), 1368 single family homes were sold, and 577 condos sold in Calgary metro. In May of 2007, 1995 single family homes were sold in metro, and there were 877 condos sold, for comparison.

The average price (for what that's worth for evaluation purposes) for Calgary single family peaked in July, 2007, at $505,920 and the average price for metro condos peaked in May, 2007, at $332,237. Median prices were $435,000 and $308,000 respectively. I recall at the time that CMHC had commented about the SF average price in such a fashion to say that Calgary had essentially come of age - not that we had an impending housing crisis on our hands! So much for placing confidence in Government economic housing commentary, analysis, and forecasting.

Let's review some 2006 sales figures, and yes, we were in a strong market at the time. Metro SF in April: 2040, condos: 839; metro SF in May: 2040, the same, condos: 892; metro SF in June: 1948, condos: 875. In fact, the combined residential sales for May, 2006, set a new MLS record. It is worth noting the the average sale price for SF at the time was $415,815, and the median price sale price was $375,000, both in Calgary metro. The average price for condos was $273,407 and the median price was $257,000.

So, what's the upshot of all this? We are headed in the right direction, but is is essential to remember where we have been in terms of activity and prices. The market is far from reflecting normal numbers for a marketplace of just over one million people; and, it would be folly for sellers to expect another buying frenzy, driving up prices. For buyers, they might wish to note that an 8% reduction in price in our market is nullified by a 1% increase in mortgage rates. With those rates at record lows, how much lower can we go?

Common sense, and our economic situation, should tell us that housing prices have to remain affordable. Some builders are anxious to build, and with profits pared for now, sales are rebounding in some price ranges, to the extent that buyers perceive better value in that market.