At first blush it would appear to be a classic supply-and-demand issue, but a second glance suggests it might not be that simple.
While perusing March’s monthly statistics package from the Calgary Real Estate Board, a couple sets of numbers jumped out at me on a page comparing the housing markets in three of Calgary’s suburbs – Airdrie, Cochrane and Okotoks.
The first set of numbers was the inventory level for each community, a metric in which Okotoks (96 units) lagged far behind Cochrane (213) and Airdrie (398), while the other set of figures was the benchmark price, where Okotoks was at the top of the list at $630,300, compared to $587,500 in Cochrane and $544,900 in Airdrie.
Looking at the numbers, it seemed simple enough to draw a line between limited supply and higher prices, leading to the conclusion that more housing is needed in these parts to address the situation.
Now, before those who shudder at the thought of growth have a chance to pick up their pitchforks, let me say that it's just as easy to interpret the numbers in the real estate board’s report in other ways that don’t support increased development.
It’s difficult to pin the dearth of listings in Okotoks on community size given Cochrane isn’t a whole lot bigger and Chestermere, which is slightly smaller and also included in the board’s stats package, has a rather healthy 235 units in its inventory. Airdrie is significantly larger than all three, but not to the extent it should have four times the inventory of Okotoks.
You'd think the total number of houses in a community would correlate to the number of real estate listings, and generally that’s the case, but Okotoks is proving to be an outlier to that theory. It’s been that case for several years now as it seems no one wants to move.
The numbers also don’t necessarily add up when it comes to prices either. Cochrane, which has twice as many listings as Okotoks, has a benchmark price that’s more than $40,000 less, suggesting abundant supply is keeping prices in check. That’s not the case in Chestermere, however, where the benchmark price is $713,800, more than $80,000 above the Okotoks figure, despite also having twice as many listings. So much for plentiful supply moderating prices.
I guess what I’m getting at is that it’s difficult to read too much into the numbers given there are so many factors – location/desirability of community, age/size of houses, volume of sales/listings, etc. – to consider when you’re comparing one real estate market to the next.
What you can definitively draw from the board’s monthly stats packages is that Okotoks has been dealing with a supply issue for several years now. There were fewer homes in town five years ago, yet the stats show there were twice the number of listings at that time.
Given Okotoks offers an enviable quality of life, it's understandable that homeowners aren’t in a hurry to put their places up for sale, but this reluctance to do so comes as bad news for anyone who is trying to get into the market.
