This edition explores…
“Is all Calgary real estate priced over $1 million selling better than in 2007?”
Recent Calgary Herald Business headlines have stated:
“Bidding drives home sale to $6 million, third highest in Calgary
Calgary’s economic stability fuels luxury home market” April 25, 2012
“Luxury homes sales booming in Calgary
Sales over $1 million highest since 2007″ May 16, 2012
“Luxury homes sales in Calgary set record in May
More sales than in 2007 boom” June 7, 2012
The headlines and the articles are true, but is there really increased real estate sales activity for all Calgary MLS listed properties selling over $1 million?
Unfortunately NOT. As newsworthy as these milestones are about the Calgary luxury home market, they do not reveal the true picture of what is happening with the number of single family homes and condominiums sold over $1 million in Calgary.
The $1 million mark is being used as a convenient benchmark, but can any residence over $1 million be considered a luxury home in Calgary or any other market? The short answer to this is NO and the question of what defines a luxury home is discussion for a separate future article.
Two different summaries based on historical sales data from the Calgary Real Estate Board (CREB) shed light on what has happened over the past 7 years and what is unfolding in Calgary’s ”higher-end” property market this year:
1. The year over year changes for the first 5 months (January 1 to May 31) for the years 2005 to 2012 for all single family homes and condominiums sold on the Calgary MLS system.
Number of Calgary SFHs + Condos Sold in 1st 5 Months – 2005 to 2012
2. The year over year changes from 2005 to 2011 for all single family homes and condominiums sold on the Calgary MLS system.
Number of Calgary SFHs + Condos Sold – 2005 to 2011
The first question that needed to be addressed was, “Is there a boom for properties sold under the $1 million price range?”
The numbers showed that only the $900,000 to $1 million category increased 20.5% in total sales for the first 5 months in 2012 over the previous record high reached in 2007. The other two categories actually declined 7% and 11%. Very interesting!
There was an 11.5% increase for all single family homes and condominiums sold on the MLS system over $1 million for the first 5 months of 2012 over 2007 – a definite sign of increased activity. Where was the majority of this increased sales activity taking place?
The $1 to $1.5 million category was actually up 22% in 2012 over the previous high reached in 2007, yet when this category was broken down further the analysis showed that the $1.1 to $1.2 million category had a 59% increase and the $1.2 to $1.3 million category showed a 60% increase. This is where the BOOM is happening! (A side note here is that for these two categories only, 2007 did NOT have the record sales numbers – they were achieved in 2008. The increases in these two categories were still 27.5% and 29% when comparing the 2012 sales numbers to those in 2008). The other two categories of $1.3 to $1.4 million and $1.4 to $1.5 million were actually down 12% and 35% respectively from their 2007 highs and relatively unchanged from 2011. WOW!!
Activity in the other categories above $1.5 million for the first 5 months of 2012 revealed the following:
$1.5 to $2 million – up 7.5% from 2007 & up 10% from 2011.
$2 to $2.5 million – down 28.5% from 2007 & unchanged from 2011.
$2.5 to $3 million – unchanged from 2007 & down 18% from 2011.
over $3 million – down 60% from 2007 & down 60% from 2011 (from 5 sales to 2).
The year over year statistics confirmed that the $2.5 to $3 million price category had it’s boom in 2011. It was the only category that showed increased sales activity of more than 5% from the previous 2007 record high – even more interesting!
Conclusions:
1. For the first 5 months of 2012, the real increase in sales activity has been in the $900,000 to the $1.3 million mark, where the number of transactions increased from 2011 and even surpassed the record high sales numbers set in 2007.
2. Every other category’s sales activity has been relatively unchanged, slightly down or down as much as 60% for the over $3 million category from the previous high reached in 2007.
Looking Ahead for 2012:
Only 3 categories continue to show signs of increased sales activity and will surpass their previous 2007 highs or the new highs set in 2011 for single family homes & condos sold: $900,000 to $1 million, $1.1 to $1.2 million and $1.2 to $1.3 million.
As for the headline: “Bidding drives home sale to $6 million, third highest in Calgary”, this is one of the 10 or 11 properties historically sold (annually) in the over $3 million category that represents a very small part of the upper-end, luxury Calgary MLS resale market. The bidding on this unique luxury home in a highly desirable inner city location was an exception rather than the general trend for properties in the $1 million plus category.
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