Hello and welcome to July’s market update! You get me, Brett, for this month’s video as Darren takes a little bit of well deserved time off, and you’re going to want to stick around for the whole video because our market is starting to feel the effects of a change in interest rates by the bank of Canada, and things will be a little different from this point on for Calgary.
So, our update this month is a bit of good and bad, just like a proper Calgary Stampede and the resulting hangover. We’ll discuss the market at a high level, and also cover all of the asset classes individually, including some advice for buyers, sellers and investors. Ready for the latest intel? Alright, well let’s get going.
Ok so let’s talk about my favorite real estate statistic – months of supply. The reason it’s my favourite is because it serves as a gauge between supply and demand and it can be counted on at any time of year in any market anywhere on earth. Prices and sales volumes don’t give context, but over 3 months of supply is considered a buyers market, and under 3 is considered a sellers market, and in July Calgary reported 2.37 months of supply – lower than last year, but not quite as solidly in seller demand territory as we observed earlier in the spring.
Now, seeing this statistic go DOWN is actually a sign of the market heating UP, as the lower the number is the less inventory there is relative to the pace of buyer demand. So, relative to where we were in 2021 we are experiencing more demand, but in terms of a 2022 trend we’re actually softening up just a little bit as you can see this number is climbing up from a low of about 1.4 months of supply earlier in the year.
Don’t let that worry you though, as Calgary has had a great year and prices are holding, as our current average price is well above $500 grand, currently sitting at $540,000 and up over fifty thousand dollars from this point last year, a great improvement for Calgary.
But a look at the trend over the last few months is a bit more indicative of what it actually feels like out there right now – flat over the last few months, despite strong year over year results.
And you can see this trend across pretty well all asset classes in Calgary, with Detached prices up 15 over last year at six hundred and forty three thousand dollars, but looking to have stabilized at the midway point of the year.
Semi detached and row pricing is about the same, increasing by 12 and 15 percent year over year, to average prices of five hundred and seventy six thousand and three hundred and sixty two thousand dollars respectively.
Ok I’m going to take a bit of a pause here to focus in on apartment condominiums a little more for July, and take a quick look at this graph which illustrates an important trend.
From my perspective, one of the brightest spots of 2022 so far has been the recovery of the apartment condominium market in Calgary. For YEARS I have been lamenting how soft it has been, but the strong spring market has us returning to balanced market territory for condominiums, as we have finally drawn down on the high inventory levels and achieved a balanced months of supply metric of 3 point 0.
But there’s a catch… The reason I wanted to single out apartment condos is because they are unique compared to other asset classes, in that it is much easier for Developers to add supply of apartments, which makes this asset class much more volatile to swings in demand. So buyers of apartment condos should be a bit more cautious than they were earlier in the spring as we are starting to see more inventory hitting the market while sales are dropping off, which means prices will level out and may even decrease heading into the fall and winter of this year.
Ok now, back to the overall market.
If you take a look here, you can see that prices are starting to stabilize and even drop just a little bit from the peak in the spring, but more importantly we are staring to see a trend of more and more inventory and fewer and fewer sales, which means we’re looking at a softer market condition heading into the latter half of the year, which is traditionally slower than the spring and early summer anyways. So a great time to buy for value as things will be more balanced for the rest of the year.
But what about if you’re a seller? Should this trend concern you? Well, you may have missed the peak of the market this year, but hindsight is always 20 20 so don’t beat yourself up about it. Prices are not as sensitive as sales volumes when it comes to reacting to market factors. I expect you will still achieve a very healthy price for your home in the back half of the year, it just may not come with several buyers competing for it at once.
Ok so the market is cooling a bit, and we are inching closer to a more balanced market. Is there anything else we need to know?
Well, we should take a moment to look at Calgary from a big picture view, and see how it stacks up against the two biggest real estate markets in the country.
First up is the GTA, which sits at an eye watering average price of over 1.2 million dollars
And next is Vancouver, which is about the same price
Calgary is less than half the price of these two markets, even with a 15% increase from our 2021 pricing. That presents a great story for both buyers and sellers – as each can have confidence that our market has a lot of room to grow to catch up to these two centers, who surely have more lose than we do.