Welcome back to another Calgary Real Estate Market Update where I will be discussing the latest market data and providing my analysis on the stats from the month of December 2020.
As always, I will cover 3 key segments – The Sales Summary, The Inventory Story and The Pricing Picture. I’ll then summarize all the key findings into my advice segment.
THE SALES SUMMARY
Just like the rest of the 2nd half of 2020, sales in December continued at an impressive pace. In fact, this December was our best month in sales since December 2007!
Detached Homes: 42.5% Increase
Semi-Detached: 38% Increase
Apartments: 39% Increase
Row/Townhouses: 33% Increase
We finished the month with 1,199 total sales in the City of Calgary, which was a whopping 40% increase over December 2019. Wow! It was the most improved month in comparison to last year in all of 2020.
In this second graph you can see how all month long we outperformed last year and as we moved into the holiday season that gap grew even larger.
Now, as always, each market acted differently. Here is the quick breakdown.
Detached Homes: 42.5% increase
Semi-Detached: 38% increase
Apartments: 39% increase
Row/Townhouses: 33% increase
So, all across the board we saw a significant improvement.
You may be asking if this improvement was across the various price ranges? Did all price points see those improvements?
And the short answer is “Yes”. Check out the chart below, which shows how each price band did in comparison to last December. The bolded numbers in the far right column represent the % increase in sales in each price band this December over last. So, yes, it was all across the board.
THE INVENTORY STORY
In December we expect one significant change regarding inventory – that a lot of it will come off the market and we will finish the year with the lowest number of total properties on the market that we’ll have all year. It’s what always happens, and it is what happened this year.
But here are some important details about what happened with Calgary’s inventory of available homes last month. At the beginning of December we had 4,987 properties on the market. That was already – with 986 fewer homes available than at the same point in 2019 – a pretty low inventory balance.
So, how low would we go?
By the end of December we dropped all the way down to 3,669 homes on the market. That’s a drop of almost 1,300 homes, finishing the year with 944 fewer homes on the market than at the same time last year. But the gap between 2020 and 2019 actually grew to 20.4% less.
This equated to the lowest December inventory since 2013, as you can see in this graph.
This happened despite the fact that we were, for two thirds of the month, listing about the same as last year. Then we started listing a whole bunch more at the end of the month, as you can see in the following graph.
Our inventory continued to fall, caused by our continued unseasonal sales success during the month.
Now, each property type again acted quite differently, much more so than the sales numbers reported earlier.
Here is the breakdown:
Total Actives, as mentioned, was down to 20.4% by month’s end, despite new listings actually having increased by 10% as a whole.
Total active inventory dropped down to -31% from last year, with a jump of 8% in new listings vs. last year.
Semi – Detached:
Total active inventory dropped down to -39% from last year, and had a slight bump of 1.7% in new listings throughout the month.
Total inventory dropped to 33% less than last year and saw a bump of 11% in terms of new listings hit the market.
And then, finally, Apartments:
Its inventory continues to be the only one with more on the market than last year, and we finished the year at 2% more and about 2% more new listings hit the market.
THE PRICING PICTURE
Okay, so you now have The Sales Summary and The Inventory Story… now let’s show you what all this meant in terms of our Pricing Picture.
In December it’s not “un-normal” to see that we’ve hit our low point in terms of pricing in a given year. The winter market hits, inventory slows down, sales slow down and, as a result, the pace of the overall market softens and a few more discount deals end up being had.
But this simply wasn’t the case this year. Because of the strong push from sales and the very low inventory, our benchmark price in Calgary remained very steady.
The benchmark sales price for the month of December was $422,300. This equates to a 1.5% increase year-over-year. And for 2020, as a whole, we only saw a 0.7% decrease in the benchmark price from 2019. So, for a pandemic-stricken year with no end of uncertainty, unrest and fear, we held strong and our market price did the same.
Now again, each market segment and district in the city acted differently. Here, first, is the graph showing how each district performed.
And here are the quick numbers for each property segment in December 2020:
The Detached market saw a 3.8% increase year-over-year.
Apartments saw a year-over-year decrease of 2%.
Semi-Detached saw a 1.5% increase year-over-year.
And the Row Homes saw a flat market with a 0.2% positive change.
In summary, there are lots of positives going on in our market right now despite the continued effects of the pandemic on our lives, our livelihoods and everything we do. We start the new year with a very low overall inventory picture, and what looks to be continued sales strength fueled by people who fundamentally need to change their housing situation and are being helped by historically low interest rates.
I’m not sure what 2021 will bring, but for now things look pretty darn okay.
And if you need any specific location, price or property segment information please don’t hesitate to reach out to us.
Now, let me switch gears to my advice segment where I let you know “what to do” with all of this information.
ADVICE FOR BUYERS
Every year at this time the question gets asked “How will real estate go this coming year?”
With the turning of the clocks from one year to the next there is an imaginary dividing line that creates the expectation that, all of a sudden, things will just magically change. But like a New Year’s resolution, it’s an idea that’s often not rooted in reality.
In real estate, our market is driven by market fundamentals, economic factors and, of course, factors that are outside of our control, like the pandemic and the actions of government.
So, as we look to predict the year to come, we have no choice but to be hyper present with the exact status of things yesterday, the day before that and the trends that were already emerging up until this point.
Will we see inventory climb? Absolutely. There is no doubt we will follow some form of the upward seasonal trend into the spring market.
As the market wakes back up you’ll see the number of new listings grow and buyer demand start to strengthen from its holiday pause or late 2020 holding-out phase.
As a buyer right now you will feel a bit of a crunch and a lack of inventory to choose from. But this number won’t increase drastically and for the next few months you should expect only modest increases. So, if the goal is to find that next house in Q1, be aware that the market is fairly tight.
The following chart represents the trend that has been forming and it will take a few months or maybe longer to see its numbers back into balance, or maybe even back into the buyers’ market territory we’ve experienced for most of the last 5 years.
This also means, for the investors out there, that it may continue to be difficult to find those sexy winter-time motivated sellers.
The sales-to-list price ratio is currently just under 97%, which is nearly 2% better than we were at last year.
ADVICE FOR SELLERS
First of all, be in tune with your market segment. As I’ve been mentioning throughout this report, things range across the board in a lot of ways.
But if I were to provide a broad strokes message for you it would be this…
As much optimism as I have for 2021 – because God knows how much was thrown at us in 2020 – I have just as much apprehension.
Not that we won’t continue to find a way as a community, as an economy and as a city – but in the overall ability for our market to continue clicking as voraciously as it’s done over the last 6 months.
So, because none of us have a crystal ball or know what will come in the next year, I would suggest leaning closer to the side of caution despite all of the positive signs.
That means prepping your home well to list. That means pricing fair (not over-market).
That means ensuring your agent is marketing your home to the fullest extent. And if that’s not happening, find a new one.
Marketing matters more now than ever before as the challenges of the pandemic continue to affect every household differently. We need to be empathetic, and we need to lean into the tools of today to provide exposure for your home as well and as far as we can.
This will matter this year, regardless of the continued pace that early January has been showing us.
This will matter even more as the rest of the market wakes up and the inventory gap starts to close.
That’s it for this month. Thank you for your attention and if we can help in any other way please reach out to get connected with a local area expert from Redline. Have a great January!