Has COVID-19 Impacted the Housing Market in Alberta?
by Jay McDouall
on Thursday, April 30th, 2020 at 7:10am.
Market Report: March 2020
Has COVID-19 Impacted the Housing Market in Alberta?
Calgary, AB – March sales activity started the month strong, but the spread of COVID-19 and the dramatic drop in energy prices has caused an abrupt downturn in the demand for housing by the middle of the month, causing provincial sales to decline by nine per cent.
“This is an unprecedented time with a significant amount of uncertainty. It is not a surprise to see these concerns also weigh on the housing market. The impact on the housing market will likely persist over the next several quarters,” says Ann-Marie Lurie, AREA Chief Economist. “However, measures put in place by the government and lending institutions, to help support homeowners through this time of job and income loss, will prevent more significant impacts in the housing market.”
The drop in sales was met with a 15 per cent decline in new listings, causing a reduction in inventory levels and preventing significant gains in the amount of oversupply. Nonetheless, the risk and uncertainty regarding the economic situation also weighed on home prices which eased by nearly three per cent in March, compared to last year.
Calgary Region Slower sales in the second half of the month caused sales in the region to decline by nearly 10 per cent, which is nearly 24 per cent lower than activity occurring over the past five years, where sales were already slow due to the weak economy. At the same time, new listings in the region fell by nearly 19 per cent contributing to an inventory decline of nearly 14 per cent.
The Calgary market was already struggling with oversupply and price declines prior to the recent changes caused by the pandemic and oil price crash. The recent changes will likely continue to weigh on prices, but the reductions in both demand and supply will help prevent steeper price declines.
Edmonton Region Sales in the region did not decline as much as some areas, but March 2019 sales were particularly weak. Nonetheless, with 1,304 sales this month, activity remains nearly 20 per cent below the previous five-year average. Like other regions in the province, the supply levels also declined.
The supply decline was enough to cause the amount of oversupply in the market to ease. However, prices did ease this month compared to last year, in part due to the slower sales occurring throughout the higher price ranges in the city.
Central Alberta This was the only region in the province to record relatively stable sales this month compared to last year. However, like Edmonton, last March was one of the weakest levels recorded in over 15 years and sales this March remain nearly 17 per cent below the five-year average.
New listings dropped by nearly 13 per cent, helping reduce inventory levels and bring down the amount of oversupply that has persisted in this market. Meanwhile, prices continued to improve as most of the improvements in sales occurred in the higher price ranges in the market.
Fort McMurray Our thoughts are always with Fort Mac as it recovers from yet another disaster. March sales in the region dropped to the lowest levels recorded since 2016, a decline of nearly 30 per cent, pushing it 21 per cent below the previous five-year average. This region has continued to struggle following the first downturn in energy back in 2015, and recent events will likely cause further difficulties in the region.
Unlike other areas, the new listings in the area increased and inventories pushed higher. Despite these changes, prices rose compared to last year. However, this is likely due to some changes in distribution as sales improved for homes priced between $500,000 - $650,000.
Grande Prairie Following a strong start to the year, activity turned around quickly in March, with sales declining by 19 per cent compared to last year and falling nearly 18 per cent below the five-year average. Despite the drop in sales, new listings continue to rise, causing inventories to rise to 1,692 units, an increase of 19 per cent over last year.
Despite the supply growth compared to sales, prices rose over the previous year. This is related to the higher share of the sales occurring in the higher price ranges compared to the previous year.
Lethbridge Following a strong start to the year, March sales activity slowed as the impact of Covid-19 weighed on the market. At the same time, supply has not yet responded as new listings grew by 15 per cent keeping it in line with longer term trends.
Slower sales combined with gains in new listings caused inventories to rise. While prices have shown some signs of trending down over the past few months, overall prices in the region remained relatively stable compared to last year.
Medicine Hat Sales in the region were slowing prior to any impact cause from Covid-19. However, recent developments likely did not help the situation in the region where year-over-year sales eased by over 20 per cent for a second month in a row. March sales were 33 per cent below averages recorded over the past five years, representing the slowest March in more than 20 years.
Despite this, trend prices continue to trend up and remain higher than last year’s levels. This can be related to the greater share of homes being sold in the higher price ranges, pushing up both median and average prices.
Alberta West Economic conditions in the region vary significantly. As the housing statistics are compiled for the entire region, figures may not accurately reflect conditions in the local market.
Year-over-year sales in the region eased for the fifth consecutive month, with March sales falling to the lowest levels recorded since 2009. While new listings also eased in March, it was not enough to offset the pullback in sales and inventories rose. Prices in the region also eased, as there was a significant drop in sales occurring in the higher price ranges.
Lloydminster Slower sales in March added to the downward trend already playing out in this market. Unlike the first two months of the year, new listings also eased preventing a more significant rise in inventory levels. Despite these trends, prices continue to increase. However, the increase is likely related to a higher share of sales occurring in the higher price ranges of the market.
South Central Alberta For the third month in a row, sales in the region eased compared to last year. While new listings did come off for the second month in a row, inventories levels remain comparable to the previous year. Meanwhile, prices eased this month compared to last year as there was a rise in sales for homes priced under $200,000.