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 September 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
The results from September likely surprised a few people, consumers and industry insiders alike. But, in my opinion, this story had already been written last month, when I presented you with the “Showing Tracker” that displayed the incredible pace of active showings that were occurring at that time.
As we entered September we were 145% ahead of last year’s pace in terms of showings. Showings are the leading indicator of sales demand and even despite the pandemic, the constraints on our economy and everything else happening in the world, people were still out buying homes.
Why? And how? Well, that’s beyond my pay grade, but the facts are the facts and, as a result, we saw a tremendous September. Let’s take a look at a few graphs to help tell the story. This first one shows how in the last 15 years there have only been three Septembers better than this year. Two of those were the boom years of 2013 and 2014.
So pretty darn good. The numbers show a 25% sales increase in September 2020 over last September as a whole, and then the following sales results across the 4 property types:
Detached Homes 28%
Apartments 22%
Semi-Detached -1%
Row/Townhouses 48%
This little chart shows that about 350 more homes were sold than last September, and we nearly matched the 2nd best month of the year. And if this was last year, it would again be basically the second-best month of the year.
This is very rare for this time of year. In terms of September sales, this one was one to remember.
This graph shows the
sales per day throughout the month and, despite us transitioning further into fall, we saw an upward trend in sales throughout the month, likely positioning us to do quite well again in October.
These next two graphs show how much better on a weekly basis we did throughout the month. Pretty impressive all around. It really wasn’t close at all.
So, good for us. It’s nice to have a little good news after all we’ve continued to go through in this city.
This result, however, isn’t the same across all property types and we provide a more detailed monthly “Advanced Market Update” email, so message us in the comments or send an email to darren@ redlinerealestate.ca if you’d like to get on our mailing list.
I started this report talking about the showings… well, let me show you where we are at right now. As you can see, the orange line representing 2020 remains significantly above the blue curve of 2019. Right now we are 120% ahead of the same time last year. So, I would expect another strong sales month in October.
Thinking back to last year,
we actually saw a dip in sales followed by a little rebound in October. So, we will likely see an October that’s ahead of 2019, but not likely at the level of showings we experienced this past month.
So, a pretty rosey sales picture all around, with Apartments still being our underperforming segment. At an average sales-per-day number of 8 for the month of September, and an average new listing count of 19, it’s hard to picture a different story emerging for a while. We will need an incredible reduction of active inventory if the apartment market has any hope of pushing off its decline.
THE INVENTORY STORY
Let’s start off by pulling up another graph that shows how the listings-per-day activity went throughout the month.
As you can see, this trend was the opposite of the Sales numbers. We saw fewer and fewer homes hit the market as we continued towards October.
This is normally what we expect. And in relation to last year, the following graph tells the story. For most of the month we saw fewer new properties come to market.
This 3rd graph shows our total active inventory versus last year. As you see, we have built up a significant gap, to the tune of 12% – or 865 – fewer homes on the market.
Just as with Sales, the results are different across the 4 market segments. Here is the breakdown of September 2020 results versus the same month last year…
Segment New Listings Total Inventory
Detached -2% -18%
Semi-Detached -16% -26%
Row 2% -4%
Apartment 16% 1%
So, the Detached & the Semi-Detached markets are showing the biggest decline in new listings and inventory, while the Apartment market – despite its struggles – continues to add heavily to its already high inventory. As a very important half of the supply &
demand equation, I feel very confident in the Detached and Semi-Detached markets. It would take a big change to cause concern in those markets right now.
In the following chart you can see that the current market falls right in the average of the last 15 years in terms of our overall inventory. We have less overall inventory right now than we did for the last 3 years, and are in a very similar situation as the 2016 fall season.
THE PRICING PICTURE
Calgary has seen a benchmark price increase every month since June. We’ve gone from an average of $411,300. as we felt the worst effects of the pandemic shutdown, up to $421,700 at the end of September. Relative to last year, we are just slightly behind by 0.2%. This, again, is different for all 4 market types, so here are those numbers…
Detached +0.9%
Semi-Detached -1.8%
Row -7.10%
Apartments -0.4%
This graph shows the Pricing breakdown across the 8 districts in our city. As you can see, they differ, as well.
The best indicator of what is to come in terms of our pricing is the current momentum of the market, and not simply looking at the year-over-year numbers.
This simple little colour-coded chart shows the positive and negative indicators as they relate to pricing.
Similar to last month, of the 30 fields being tracked here there are 4 showing cause for concern, but the remaining 26 show positive or flat indicators.
As we push into October, based on the month that was and the leading indicators happening right now, we are positioned once again to keep our pricing from dropping. If we can maintain that, we are doing well. A healthy housing sector is a substantial indicator of the overall health of the economy.
As always, the pricing situations are quite different depending on the price range, property type and location. The following graph shows how much data is out there and how much should be analyzed for your specific situation. So, make sure you are being guided properly.
ADVICE FOR BUYERS
We now find ourselves in the last quarter of 2020, a year that certainly didn’t go as planned, and if you are paying attention to this report you are probably in the market to buy, or at least considering it. I don’t blame you. If you have the means, this interest rate environment is absolutely incredible. Money is a free as it gets when it comes to making what is likely the biggest purchase of your life. So, what should you know as we transition into fall/winter?
The listings-per-day numbers will continue to drop off, which means you will see less and less new product come to market all the way through February. So, if the goal is to buy in the next 5 months, you’ll want to wrap your head around that and act accordingly.
Secondly, inventory in a few of our market segments has fallen off significantly from the last few years, leaving fewer active properties to consider as you search for your dream home. The market segments with lots of inventory continue to be the Apartment and Row categories.
But the good news is that any home seller remaining on the market right now is there for a reason – they want to sell, as most are not testing the market in Q4 of the year. So, we will start to see motivations rise and good deals will be on the table for you. I’ll caveat that statement with “well-priced homes new to market”. Based on our showing activity and current sales activity, it won’t surprise me if you’ll see them snapped up quickly all the way till Christmas.
So, if your goal is to buy, be sharp! Have your search dialed in with an agent that is highly responsive so that if that “one” great property hits the market you aren’t left missing it and waiting months for another good fit.
ADVICE FOR SELLERS
If you’ve followed this market update so far you are likely feeling pretty good. Except for those in the apartment market segment. And, honestly, you wouldn’t be wrong to. But I’m really hoping you’ll lean in for even more. Confidence can be a trap, and I’m seeing people fall into that trap all over the place right now. Here is a graph that I use often internally with the agents at Redline and with our clients.
This chart shows the “natural” sequence of events when a property comes to market, and specifically as we start the shift into the slower time of year (where the month-over-month price changes will start to become negative).
The top of the chart shows the price the seller wants, and as time goes on – if they don’t find a buyer – the value of the home in the minds of buyers. When home values start to seasonally adjust it’s very common for a seller to lose sight of this (and most agents facilitate it) and fall further and further from the true market price a buyer is willing to pay.
This second chart shows it in a different way. I’ve included the market interest curve. You see that upon initial listing the interest peaks. But you see the turquoise “Market Interest” line and how fast it drops off. This is indicative of the true market interest of a buyer in a “shifting market”.
This is the trap I want you to avoid. If you misjudge your pricing because you either started off too high or waited too long, the gap between you and the buyers grows at a rate that becomes very painful to bridge later on.
In a good market it’s simple. Like this chart. You are either in the market or you are out of it and you don’t see viewings.
In a shifted or shifting market – as is our case – there is a new band called “No Man’s Land”. This is when you get showings, and more showings, but no second showings or offers. Trust me, the market is seeing your home – it’s out there, it’s spread wide, and promoted loud and proud (with a quality brokerage like ours, at least).
As a result of a shifted market, the “in the market” zone is smaller, so you want to adjust out of “No Man’s Land” as quickly as you can and land one of the “daily reducing” number of sales.
So, basically, the market as a whole has positioned sellers in a better place than we’ve seen in a while, and I don’t want you to waste it by being over-confident and reluctant to adhere to the seasonal nature that is upon us, as well as the psychology of buyers during this time.
If you’d like any more information regarding this topic, please reach out for a consult anytime! One of our team can provide you with unbiased, fact-based information on how to best navigate your upcoming listing situation.
ADVICE FOR INVESTORS
I love this segment!
As always, the last 5 segments before this are a must for you! Please ensure you have studied up on all that information before moving on to this investors section. My message for investors is two-fold…
Builders are hungry hungry hungry right now. Especially those in the pre-sale world. If you are in the market to purchase, deals are out there in a big way. This covers pre-sale condos with built-in property management for years and rent assurance, to semi-detached product with legal suites, or even row home product with the same. Builders have gotten creative and they know they’ve had to improve the offering to convince buyers to deal with the uncertain Alberta marketplace.
If you are looking at re-sale investments, October may not be your month if you are searching for the best deals. With sales maintaining a strong pace and inventory trending lower and lower each month, you may want to wait for stronger motivation in the winter months.
As well, if you are purchasing in the re-sale environment you want to know what you are up against. I’ve been playing around with some deeper breakouts by property type and price point and it’s really quite interesting when you look deeper to see where the bulk of the sales are happening and, as a result, which target price points “deal seekers”, like most of you, should change your expectations about.
Just check out these 3 pie charts. I’ve purposely not labelled them, but they show the variety of high- traffic price ranges based on property type. Knowing this gives you an unfair advantage on your next offer.
If you’d like to be included in our advanced email marketing series with this information, please connect with us so you don’t miss out. Well, that’s it for another month. Thank you for your attention and I hope this has provided you with value and a different perspective than what you may have read in the headlines. I’d love to receive your thoughts and questions. I answer every single one.
