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 August 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 are a very strong indicator of the overall strength of our market. This first graph shows the TOTAL Sales happening per day. As you see, it jumps up and down throughout the weekly cycle.
But what else do you notice?
Yes, the trendline is going up! The sales-per-day numbers picked up as we continued through the month. This is a little out of the norm.
As we complete the summer and transition back to school and the fall market, we don’t normally see things pick up. This shows us that there is a continued momentum in our market and still some sustained pent-up demand here in the Greater Calgary Area.
The second graph (below) shows us how we were doing on a weekly basis versus last year. And again you can see that, for the most part, we are seeing stronger sales as a whole than this same time in 2019.
Again, this is good news for our “still in the pandemic” world we are living in. Now, this is vastly different across all 4 property types – the Detached, Apartment, Semi-Detached & Row homes.
If you’d like this extra level of detail, please email me directly so I can get you on our Insiders Market Update email.
So, as a whole, the data says we’re basically a dead heat with 2019. However, this information isn’t really that helpful. I’ll break that down a little more, and then for the extra info just message us so we can supply you the information.
Detached Homes +5.8% increase over last year
Apartments -20% decline over last year
Semi-Detached -12.4% decline over last year
Row/Townhouses +11% increase from last year
So yes, this is a tale of 4 completely different markets.
The other thing that provides us insight into the “upcoming” Sales Summary is the level of showings happening in the market. Here is a graph showing the number of showings vs. the same time last year.
This BIG GRAPH (Above) shows the trends going back to the beginning of the year, through the lull that happened in the ordered “Stay at Home” period, and then, of course, the far right side of the graph shows where we’re at right now. Here is a closer look. As you can see on the graphic below, we are currently experiencing a 145% increase in showings than at this same period last year!!!
So, if the “front end” of the real estate cycle, which is the number of showings being booked, remains as strong as we are seeing now, we will continue to see year-over-year sales numbers continue to outpace 2019, and I’d venture to say the gap will grow.
This bodes very well for the overall health of our market as we head into fall and winter markets.
THE INVENTORY STORY
Inventory is the second half of the supply/demand equation, which helps us to paint the Pricing Picture that’s coming next. The first graph (below) shows the Listing Activity per day throughout the month. Again, like Sales it goes up and down throughout the week. But what do you notice being different from the sales graph?
Yes, this graph is flat and actually has a slight decline happening. Which means the amount of new inventory coming to market is decreasing, which is something we would expect as we roll into the fall.
This next graph (above right) shows the weekly total of new listings vs. last time last year and, as most of the graph sits below zero, it means we are listing fewer new properties than we were at the same time last year.
Both of these graphs represent positive news for the overall health of our market. As with Sales, Inventory is vastly different in every market segment. But, as a whole, we finished August sitting about 10% less in the total number of properties on the market vs. last year. That equates to a total active number of near 6.100.
To quickly show you the vast differences happening in the market, here are the high level details for each property type:
Detached -6.5% fewer new listings this month & 15% less total inventory right now
Apartment -12.5% fewer new listings this month but basically dead even with total inventory
Row Homes. +2% more new listings this month and 3% more than last year on the market
Semi-Detached -26% fewer new listings this month and -23% total inventory on the market
So, each group couldn’t be more different. Again, if you want the detailed information please comment or email us direct to get on our Insiders list.
THE PRICING PICTURE
Just last week I shared an internal chart that broke down sales, new listings, total actives and pricing and the 4 different market segments. On this chart I created a simple legend, green meaning positive news,
red meaning negative, and yellow being “non news”.
Of the 25 different fields on the chart, 21 of them were either green or yellow. Only 4 were in the RED.
Our current real estate market continues to be one that most wouldn’t expect and positive signs remain everywhere.
So, as always, I urge you to read beyond the headlines and be informed with the real picture that is unfolding within our market. Now, of the 4 fields that were red, 2 of them were in the area of pricing.
The straight goods is that, within our real estate market, pricing has basically flat-lined. If I were to paint a broad stroke across the greater Calgary area, that is basically what I would say.
Here are the hard numbers:
Y/Y YTD
Total -0.61 -1.43
Detached 0.85 -0.54
Apartment -1.51 -2.59
Semi -2.06 -2.82
Row -8.37 -5.5
I know people would love to see the market turn, but that’s simply not possible under the economic environment we have in Alberta right now.
But without a turnaround, we have still created a position of relative stability. This, to me, is something worth cheering about.
There are very few places on earth that have the same economic pressures on their market like we have here in Alberta and Calgary, yet throughout all of the adversity we have been able to turn the supply & demand equation into a place where we have essentially flat-lined. That is a win in my books!
Now, we have some work to do in the Apartment segment, as its sales are way too far off and its inventory remains too high. The Row housing, as well, continues to see a major increase in inventory and its prices have adjusted the greatest over the year, and will continue to if inventory doesn’t start to ease. But, as a whole, we are positioned in almost as good of a position as we could expect going into our fall and early winter market. As always, if you are making a big financial decision for you and your family, you deserve to know the detailed facts, and if you would like more help in understanding your specific market please inquire with us today. We will set you up with a community expert in your area.
ADVICE FOR BUYERS
This graph represents the true pace of the market. Simply put, when the numbers in this graph are higher, the market is stronger.
What you are seeing is the Sales per Day versus the Listings per Day throughout the month for the total Calgary market. So, when we are selling more of the listings that are coming to market, the ratio is higher. And, as you can see, that has been happening more and more as we push through the month.
The last week of August had us averaging 70%. Yes, 70%!
That is a very healthy market, especially when you couple that with my earlier segment that showed that
our current active inventory is significantly less than we had last year.
So, as a buyer, it’s very important for you to know this – new properties coming to market that are priced fair are getting scooped up relatively quickly.
To prove this, I looked into the DAYS ON MARKET.
We finished the month of August with a reduction of DOM of -11% from last year. And each property type also saw declines vs. same time last year.
Now, like I was saying earlier, each property segment has a different Sales-to-Listing Ratio, and I’ve done all the math and created a series of graphs for each type. If you want that insider info simply email me to get on the list or to schedule a consultation to learn more
ADVICE FOR SELLERS
Let me pull back up the Sales per Day graph from earlier. Then we’ll take a look at the Weekly Sales versus last year’s numbers.
Both of these graphs are showing that we continue to build towards a positive market for you to accomplish your listing sale aspirations.
Most of the month of August saw our sales per week equate pretty closely to last year. But when I looked closer the gap started to grow and grow in the last week of the month. Our sales per day are starting to far outpace last year. This is great news for you.
Now, this isn’t the same across all property types and all price ranges within the property types. I have all this data and all the charts built out for that. So please message us to get clear on where your home falls within the pace of the market right now. Those details are very important to know in order for you to make the best decisions.
So, let me put it pretty bluntly. The market is better than we would expect, it’s better than the headlines are saying… but it’s not the time to be greedy or the time to test the market.
Price super FAIR – based on the sales activity and the insane showing activity we are experiencing for this time of the year – and you will be treated very well.
If I were a seller, I’d be optimistic but I’d be very smart! So, make sure you take the unlikely advantage you have been given. Don’t waste it by over-pricing. If you do, the market will pass you by!
ADVICE FOR INVESTORS
Make sure that you’ve understood the previous 5 segments so that you are fully educated about the state of our market. I know, as an investor myself, the more I know the better I can make the informed decision to pull trigger when the right deal comes across my plate. But, beyond that, what you need to know is this:
1. There are some very hurting parts of the market right now and it may be worth your time to explore them.
For instance, the apartment segment is being crushed right now. Sales are down over 20% from last year and they have the worst absorption rate by far.
In the last week of August, the average number of sales per day was 8, and there were over 1,700 apartments on the market. Compare this to 35 for detached and 3,400 on the market. The detached market is over twice as healthy.
Which means that segment’s inventory-to-sales is providing an opportunity for really good deals This may or not be your investing style – and you will come across those with no equity positions at all – but there are great opportunities in areas we couldn’t get before, and also opportunities for creative deals, as many people just want out of their property and don’t have the “long game” outlook that many investors do.
2. Row Home / Townhouse pricing has significantly adjusted from last year. It’s a combination of builders building different product lines that are more geared to affordability and also large discounts occurring in the inner city.
With the rent-to-price ratio in Calgary becoming a laser focused target for cash flow investors from all across Canada, builders have recognized this and have started to produce incredible product offerings to take advantage of it.
Right now we have product available with cap rates near 6 with builder warranty and free property management. The deals are HOT and astute investors are scooping them up.
That, along with incredible interest rates and new CMHC backed lending products, we’ve never been so excited about the opportunities for our clients.
Please, if any of this sounds interesting, please contact us for a portfolio assessment or to gain access to these unprecedented deals.
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 love your thoughts and questions. I answer every single one. And don’t forget to get on our Insiders List!
