Once again, I’m answering the age-old question of “How is the market?” based on the stats, data and my personal analysis from the real estate activities that occurred in and around Calgary in October 2020.
First, we’ll look at “The Sales Summary”, “The Inventory Story” and “The Pricing Picture”. Then I’ll be offering advice for Buyers, Sellers and Investors.
THE SALES SUMMARY
Sales for the month of October were up significantly from the same period in 2019. We continued our strong push in September right on through the month of October. As discussed last month, the Showing Tracker was indicating that there was still substantial buyer demand out in the market, so it should not come to anybody’s surprise the sales results ended up where they did. As we finished last month, we were still experiencing a 100% increase from showings at the same period last year. As we enter November, has this slowed down? Well, yes, a little. As you can see, the total # of weekly showings has trended down a bit. But it still remains over 100% higher than this point last year. So, early indications show November will again shape up better than last year
These were the sales stats for October…
The total market saw a whopping 23% more sales in October than last year.
Detached Homes 35% (led the way)
Semi-Detached 21% (a strong month)
Apartments -6%
Row/Townhouses 9%
Again, each market is acting very differently, so you need to ensure your decisions are being guided by specific information and not the general picture.
All this said, October was our 2nd best month of the year. We actually tied the number of sales from June. We knew it would be a good month… we just didn’t know it would be this good.
Here is a graph that shows the “Sales per Day” trended out on a weekly basis. This chart shows data going back to the middle part of May as we were pulling ourselves out of the bottom part of the pandemic lull.
The trendline is showing a positive trajectory even though we are well past the seasonal peak of the year. It shows how strong the second half of the year has been so far!
The question we keep asking is how long will this last?
And this graph just shows the month of October, and again we see that sales picked up as the month went along.
This is better than expected and should start to trend down as we progress towards Christmas.
Trending up through the end of the month shows how the gap continues to grow between this year’s production and last year – it’s really quite impressive!
Well, that’s enough for sales right now. I will discuss a few more things in the Buyers and Sellers segments a little later that are critical pieces of info, so be sure to hang on for those.
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THE INVENTORY STORY
Let’s start off by showing you the following graph, which demonstrates the number of new listings we were putting to the market in comparison to the same time last year.
See the big bumps on the graph early in the month? In early October we were busy beavers in terms of adding new listings to the market, but then it started to normalize and then start to drop off.
This next graph shows this exact thing in an easy-to-follow way. Less and less new inventory as the month went along – exactly what we want to see.
And this third graph shows more than just the month of October, going back to when we started to come out of the low points of the pandemic. We have certainly peaked and are on the far downside of new listings per week. This is helpful for us as I’ll discuss next in the Pricing Picture. On this last inventory graph you see that we have about 13% less total inventory now than we had last year at the end of October. And this gap grew as the month went along.
Sales helped support selling through, and the drop in new listings did, as well. It’s the biggest gap we’ve had since the early days of Covid. Just as with Sales, the results are different across the 4 market segments. Here is the breakdown of October 2020’s results versus the same month last year…
Segment New Listings Total Inventory
Detached 0% 22%
Semi-Detached -1% -21%
Row -8% -6%
Apartment 26% 9%
As you can see, 3 of our markets are cruising with less total inventory, with the exception being Apartments, which has more.
Certainly, the detached and semi-detached markets have seen the largest inventory drop, partially due to their increased sales through most of 2020. As we will discuss next, the state of our inventory will largely support how things fair into the winter and how we are going to be set up as the new year’s market unfolds.
THE PRICING PICTURE
Well, here we go again. I’m happy to report that the benchmark price did increase from last month once again. Similar to how sales are outperforming seasonal norms, our benchmark price is, too. As a city we saw prices increase to $422,600, a 0.55% year-over-year change. For the year as a whole, we are sitting about 1% below where 2020 started. This is a very, very respectable place for us to be. All 4 markets are different, here are the straight facts.
Detached +1.8%
Semi-Detached -0.9%
Row -5.6%
Apartments -1.3%
The following graph shows the additional breakdown and benchmark prices across the 8 districts. As in recent months, I’ve created this simple colour coded chart. When you see GREEN & YELLOW it means things are looking good to push off any negative impacts to that property type. But when you see RED, it means that property type is in jeopardy of a negative pricing impact coming. What do you see? Well, there is only one market segment –apartments – with all the indicators pointing to a price drop.
The one extra spot of RED you see is the year-over-year pricing in the ROW homes. This is significantly better than it was a few months ago because of its recent drop in inventory and improved sales in relation to last year. But you can expect to see it continue to adjust downward a bit longer. The apartment market has pushed off major price drops despite having mostly negative indicators, I think mostly because sellers don’t have much more to give and it’s near a baseline low. So, as mentioned, in all of these segments your property type matters. Be informed about your specific one, and the specifics of your area, and you’ll be just fine.
ADVICE FOR BUYERS AND SELLERS
Here is a graph that depicts the Sales-per-Week in October 2020 versus Sales-per-Week last October. The top line is now, and the bottom line is last year.
What you’ll notice mostly is the GIANT GAP between the two. Now, take a look at this second graph.
You can see that we floated around the 75% mark for the end of September and through the first three weeks of October… and then we’ve seen things trend up significantly. This graph shows the Sales-per- Day vs. Listings-per-Day. We finished the month, as a city, selling basically 1 to 1 everything that got listed. And then this graph shows “Total Months of Supply” week by week. This graph continues to trend down. All of these things together are painting a picture of an improved market! Improved and faster paced. When all 3 of these graphs are trended and viewed from the perspective of a Buyer, you may feel like properties are getting scooped up from underneath you.
As a Seller, you benefit greatly from these trends. The List Price to Sale Price ratios are closer to List and the Days-on-Market are shorter, all creating a scenario that allows you to accomplish your moving goals easier.
As much as Buyers feel the pressure in a market like this, it is a good thing to see a healthy market like we are having. Each property type is acting differently here, as well. The flowing chart depicts how the rolling months of supply right now is only 2.2. So, if sales kept up at this pace and no new listings were put on the market, our entire inventory of homes would be sold out in 2 months. That’s a fast moving market! Now, of course, sales will slow in November and, of course, homes will come to market. But, all things considered, it’s a very healthy market.
This graph shows Months of Supply in the Semi- Detached segment. As you can see, the Months of Supply sits under 4 months. So good, but not as fast paced as the Detached segment.
Here is the story for Row Homes. Again, its number is just below 4 months. So, similar to Semi-Detached.
And then there is the Apartment segment. The apartment market is the slowest, as you likely figured based on the rest of my analysis today. Its currently has 6 months of supply.So, knowing the “pace” of the market is critical to deciding the right price point at which to list, and also knowing the pace expectations as a buyer.
So, my advice here is don’t just play off generalities associated with the usual seasonal trends. And if you are getting this advice from someone, you are being ill-advised. I put these Buyer and Seller segments together this month, rather than defining them separately, because as a seller you need to understand the buyer dynamics, and as a buyer you should also understand the market’s pace and why sellers are doing what they are doing.
If you have any further questions about the market you are investigating, please let us know and we will line you up with expert advice.
ADVICE FOR INVESTORS
As an investor, this time of the year is generally when you are getting frothy and hungry. I get it… I am, too. But as I look at the data and see what is happening right now, the play for acquisition is more geared to finding great cash flow right now versus trying to score the strong under-market deal.
Now, they are out there – we are presented them daily – but when these people are having intelligent conversations with agents providing proper advice, the open market will generally provide a pretty strong candidate for them right now. That is, all except the Apartment market.
Now, I’ve mentioned this before, but it came up again with me and a large Calgary builder last week. Because inventory is so high in apartments right now, the new build products have a lot of competition for “Buy Now, Occupy Now” product, and pre-sales are lagging in a big way.
If you are okay with a “Buy Now, Occupy Later” product, I am 100% certain you will be able to command a heavy discount to get a deal done pen-to-paper with builders who need to get sales to happen with their projects. So, if that’s for you… don’t be shy. I have a few projects, as well, that I would be happy to introduce to you to.
October was a very strong month and we continue to perform very well, providing us with some security to handle some of the anticipated struggles the Calgary area is forecast to have as government money dries up and companies have to further pinch their pennies.
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