What a Difference 5 Years Makes!
What a difference 5 years can make when it comes to our Calgary & Area Real Estate.
I remember like it was yesterday shooting my monthly update throughout the years of 2015-2018 and doing everything in my power to find the good news among all the negatives happening in the market. And month after month there wasn’t much I could find…
Back then it was extremely frustrating because havoc rang down on our real estate market and overall consumer confidence due to the culmination of economic stalling and theoretical thinking from policies makers like Trudeau & Notley.
They ran their mouths and spread an anti-oil, anti-Alberta rhetoric that ultimately held us back and forced us to sit on the North American sidelines while the rest prospered & grew.
But now… now it honestly feels a little like an episode of ‘Stranger Things’ where we are operating in our own upside-down parallel world, except this time the world has flipped inside out and we are once again in the light, looked upon favourably and, as Albertans, once again standing tall.
As a result, this month I don’t have much in the way of numbers to share with you, it’s going to be a simple 3 point update I hope hits home and allows you to fully sink your teeth into Alberta Real Estate.
Point 1 – Expect 2023 in Calgary to once again be a sellers’ market.
Despite the continued higher interest rates and the headlines of ‘year-over-year drops in sales’, Calgary will experience a market mostly in favour of the seller.
So, what does this mean? And why do I say this?
Well, a sellers’ market – simply put – means that the amount of demand for housing is very close to the total number of homes available to buy.
Typically, in this industry we use the metric of Months of Supply to determine this, and if the number is under 3.0 we deem it a sellers’ market. The numbers for January were just released and we are sitting comfortably within that criteria at 2.0 months of supply.
Now, this is going to be different across price ranges and property types, so be sure you get real estate advice tailored to your specific property situation.
In general, this year again – due to the continued higher interest rates – expect the months of supply to be greater the higher you go on the pricing scale. The higher we go, the less affordable, and the less demand we are seeing.
And why do I say this?
I’ll echo my statements from past updates and those of the chief economist at the Calgary Real Estate Board (CREB), who presented her annual real estate forecast last week.
· People are flocking to Alberta in record numbers, and they are doing so from all over Canada (just check out this graphic)
· This is a trend that has been growing steadily for the past few years, and it has little to no chance of slowing down anytime soon due to our affordability relative to the other major Canadian cities (shown here).
· With this continuing to happen, the demand for housing will likely keep up with the new listings that come to market (and in some price points will surpass them), which will keep that Months of Supply low. The market will remain very tight and competitive, and sellers’ market conditions will continue.
Point 2 – Don’t expect things to get cheaper (most likely ever)
The pace of sales in the most affordable asset classes like apartment & row houses still remain on pace with the best of all time. This means that while our ‘new listings to market’ remain low (as they are), we will continue to gobble up the active inventory nearly as fast as it comes onto the market.
Also, for those looking for semi-detached & detached homes in the affordable price ranges, we are seeing the exact same thing play out. A properly priced home hits the market and it’s scooped up near instantly, with multiple offers and quite often for above the list price.
So, in these cases buyers will need to act quickly, place strong offers and, ultimately, by this spring those factors will drive our pricing upwards once again.
Now, this is happening inside the City of Calgary, but we are also seeing the consumer demand for single family homes push into the satellite communities because they offer great affordable options in our current interest rate environment.
So, Cochrane, Airdrie, Okotoks, High River and Chestermere are all experiencing continued high demand, low inventory and the resulting price increases month-over-month.
Now, all this being said, we can expect the higher priced markets to be the ones where we see a pause in values, or maybe even a slight decline.
But, in the same breath, there is upside risk for these markets, too. As the interprovincial net migration continues to flow into our city, we are seeing statistics about the demographics of these new Albertans, and they’re telling us that high-paying professionals are making the move here, too (not just young Canadians and average income earners).
So, , I believe it’s safe to say ‘it will never be cheaper’.
Point 3 – Albertans need to shift their perspective on this – and quick! So let me explain…
We are once again in the world’s spotlight, but this time for good reasons and not for the silly, unfounded headline-creating reasons from folks like Al Gore, Greta & DiCaprio we’ve experienced in our recent past.
No, this time is different. The world wants a piece of us, the world wants to move here, the world sees this as a place to achieve prosperity and a great quality of life and the NEW WEST is officially back in business!
And for those of us who have been living through all the ups & down, it’s a bit of a wake-up call.
No matter whether I’m chatting with an Uber driver, or talking shop with business owners stuck in the grind, or anyone in between – most people don’t understand what’s happening or, more importantly, believe it.
For the majority of Albertans, this new interest rate environment and our recent run-up in prices the last couple of years has us feeling like Calgary is expensive, but I’m here to tell you that the world sees us as a bargain.
So, I really need this perspective shift to happen for those of us here. Those of us raising families, those of us looking for investments, those of us starting our careers… all of us.
It’s not time to sit on the fence while so many are flocking here and setting up shop in our own backyards.
So, who is this message really for?
Do you have a stable job and sitting on the fence about home ownership? Get off of it, because interest rates are here to stay and rental rates will only go up. Now is the time! Your future self will thank you.
Do you have a growing family and need more room? Well, trading up now actually works out in your favour. The market is tightest on the most affordable parts of our market. So, you can sell fast and easy and for top dollar. And you can then buy your ‘move up’ home without as much pressure.
Are you considering investing? Yeah, rates are up, but so are rents. And they’ll keeping going up, keeping cashflow present for you. Get in before further price increases happen in this high-demand part of the market.
Are you making more money? So many of you have started side gigs, and they are bringing in new income to your household. Again, that upgrade you’ve been thinking about is only going to get scarier as prices climb. Now may just be your time.
My fellow Albertans, don’t be shy! Not now – not with all this amazing macro-economic energy driving confidence in our province.
If you need more specific advice for your particular situation, that is what we are here for. Do it now, before the spring, to ensure you can make the most of the current market conditions.
Now, I had said that this update would not be filled with stats and data, but I know some of you love that stuff as much as I do. So, here’s a link to the presentation from CREB’s chief economist that I believe will help provide you even more confidence. I urge you to check it out.
If you are in need of some help for your specific situation, please email us at firstname.lastname@example.org so we can hook you up with a specialist from our group of over 90 agents in the region!