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Monday 30 July 2012

Calgary vs. Victoria Real Estate review

I just spent 2 weeks visiting friends in Calgary.  While there, I reviewed the Real Estate market in what is widely regarded one of the Nation's strongest markets and a thriving economy.  How does Victoria compare in sheer Real Estate sales numbers?  See below- first, let's review the July 2012 local stats to date.


Victoria Real Estate sales statistics, July 30 Month-to-Date



MTD July 2012
Sales                         481
Listings                     1114
Inventory                  4939

July 2011
Sales                         523
Listings                     1374
Inventory                  5094

At best, we'll closely match the sales number of July 2011.  A very interesting result to the month considering how strong it started off.  Let's also remember that the market started improving about this time last year so very soon comparing stats to 12 months ago will be of little value.  We expect the numbers for the rest of the year to match 2011 figures.  Stats which cause pondering are the total inventory which for once may finish below July 2011 and also the fact that new listing numbers are on the decline.

Calgary vs. Victoria Real Estate Review


Several years ago, I attended a spring Real Estate conference in Calgary which seemingly had very few local attendees. The reason was the market was white hot, with properties selling the moment they were listed and Agents scrambling to serve their clients.  Multiple offers were the norm and prices rising daily.  

Fast forward to today.  Every Canadian market saw correction in 2008/2009 with virtually all property values now slightly below the peak of 2007/2008.  In the case of Calgary, the average price for a single family home is around $480,000 or about 5% below the 2007 peak.  In Victoria, the average single family home is now $606,000 or 3.4% below the peak of 2010.  

Peak of 2010?  Most presume prices peaked in Victoria before the 2008/2009 crash but prices did indeed rise afterward and have adjusted little.  Strange town, our little Victoria!

As a native Victorian, I appreciate all of the amenities a city like Calgary has to offer.  Great food (fresh oysters 1000km from shore, anyone?), shopping and entertainment are just a start.  As a parent, I also marvel at available family recreation including rec centres, sports, lakes and skiing not far away.  With a Metro population of 1.2 million vs Victoria's 340,000 it's easy to see that the town has a vast audience to serve.

While in Calgary, we typically stay in a suburb called McKenzie Towne- about 20 minutes from downtown in moderate traffic (an hour during rush hour!).  It's a lovely place with a fine mix of detached homes, town homes and condos and serviced by its own sizeable Town square with Sobey's supermarket, banks, churches, restaurants & pubs, and so much more plus walkways and easy proximity to 130th which has requisite box stores such as Home Depot, Rona, London Drugs and Sport Chek.  To me, it's a fine example of what Westshore should be and likely will be once Victoria's transit issues are addressed.

Calgary area Real Estate statistics are very intriguing.  Take a look below, compared with Victoria:

Calgary June 2012
Sales                        2200
Listings                     3312
Inventory                  5712

Victoria June 2012
Sales                         637
Listings                     1449
Inventory                  5189

Some observations:
  • With over 3 times Victoria's population, it makes sense that Calgary generally has just over 3 times the number of monthly sales
  • The number of new Calgary sales relative to new listings is low:  a ratio of roughly 1:1.5 versus Victoria's 1:2.3. There is much more "churn" in Calgary's market.
  • Most alarmingly, Victoria's total inventory level is very high relative to Calgary's- in fact, it is not far off a city triple it's size!  There is an 8 month supply of Victoria listings (total inventory divided by sales in the month) versus Calgary's 2.6 month supply.


Other observations:
  • Calgary sales are currently about 16% above last year yet prices are up only about 4%
  • Even with Victoria's massive oversupply of properties, prices remain stable with a minuscule 0.34% drop in its 6 month average


You are likely asking yourself:  With such an oversupply in inventory, why haven't Victoria prices tumbled?

The reality is, many of Victoria's current listings will not sell just based on sheer numbers.  While sales continue, it is just a clear indicator that most properties are priced beyond what the local market will support.  Whether these are sellers simply speculating, Agents who take listings just for something to post or a combination of both, the reality is that many current listings need not be on the market.  Even when compared to Calgary, a strong but by no means "white hot" market, the number of Victoria listings should be closer to 2000, not 5100.

In comparison, the number of monthly sales relative to population is appropriate.  This is especially impressive when considering Calgary is a growth town with increasing population and many economic attractions.

I've said this countless times before:  Victoria has a diverse economic makeup.  We are not a "One Industry" town, rather one which benefits from net migration as a result of :
-Government
-Tourism
-Military
-Lifestyle (weather, anyone?)
-Education
-Technology

Those who are waiting for significant price drops will be disappointed.  If you are in the market for a home, do yourself a favour and buy now while inventory is high so you can move in sooner and enjoy home ownership!


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