Is the wind out of the sails of Calgary & Area Real Estate already??
“Darren, have I missed the window?”
“Is the market starting to cool down?”
“I knew this wouldn’t last!”
“People were overpaying earlier this year and it bit them in the butt, I just knew it!”
Have you heard some of this? Or been a part of some of these discussions?
Come on, I know you have 🙂
Well, those thoughts are out there, even among members of the real estate industry.
You see, the reality is that most people – even Realtors – are ‘reactors’ to the news, or ‘reactors’ to the market, and not really in a position of strength to fully understand what is going on.
And that’s okay. (Well, maybe not the ‘your realtor’ part.)
So, that’s why I love creating these updates for you, to give you straight talk and curb any anxiety you may have about today’s real estate climate.
Let’s start with SALES.
The first thing you may hear is that sales have dropped. “Eeeeek!”
Well, yes, they have. Calgary & area did not record as many sales in April as we did in March. But honestly, nobody should have expected that. Nor was it needed to show a sustained positivity in our housing demand. March was a ‘unicorn’ month and one firmly planted in the record books.
April did, however, see an increase in sales over last April by about 6% overall.
This did vary widely between the property types.
Detached saw a 9% decline in sales, while Row & Apartments saw gains of over 40% and our Semi-Detached market was basically flat.
“How can there be such a wide variety of results?” you may be asking. Well, honestly, it comes down to a few simple things…
With more inventory hitting the market and more on the market to buy, you’ll naturally see a higher number of sales (while in a seller’s market, like we are). Each of the 4 market categories saw a drastically different number of new listings come to market in April.
As house values increase, affordability comes into question. So, for buyers who haven’t seen increases in their pay to match those increased home values, they turn from Detached buyers to Semi buyers, or Semi buyers to Rowhouses, or Row to Apartments.
Now, this variety of sales activity isn’t only being seen in the Metro market of Calgary. As we extend our lens to the communities around Calgary you’ll see a similar dynamic happening.
Airdrie recorded 24% more sales than last year in April, but Cochrane saw 20% less. And Okotoks, at 9% more, was similar to Calgary.
Again, the two factors I just mentioned – Inventory and Pricing – come into play here, and I’ll explain a bit more as we go through this update.
Okay, let’s turn our attention to the INVENTORY STORY.
As a whole, we saw fewer new homes hit the market this April than we saw come to market in April 2021. This was the first time in a while that this has occurred.
Now, it’s not even across the board again. Here’s the breakdown…
Detached homes saw an 8% year-over-year drop of new properties coming to market, while Semis dropped off by 17%. Row Homes, meanwhile, had a 24% increase and Apartments saw a slight inventory increase of 7%.
So, if you’ve followed me so far, you’ll notice this trend:
Fewer new listings in the Detached market for buyers to look at resulted in a drop in total sales.
An increase in new listings for Row Home buyers resulted in an increase in sales.
It’s just part of the ebb and flow of the market and there is no need to panic, as some seem to be doing.
The same thing is happening in our satellite markets:
New listings are up in Airdrie and so are sales.
New listing are down in Cochrane and so are sales.
And the same pattern holds true in the other local markets
Here are the hard facts:
As a whole, Sales remain up. Inventory remains down.
As a result pressure on our housing values goes up, which we see is continuing to happen.
So, let’s talk about that now… THE PRICING PICTURE!
Year-over-year our overall benchmark price in the region is up a whopping 17%!
Detached homes are up 19%, Semis are up by 16%, Rows up by 17% and Apartments are up by 8% for their biggest year-over-year gain since likely 2006.
Satellite regions are performing even better, with Airdrie stealing the show with a year-over-year price increase of 33%, Canmore at 29%, Cochrane at 24%, and it trickles down from there – all incredibly positive.
The home value increases we started to see in 2021 are continuing to build strength and the sustainability of this run is proving itself more-so each and every day.
Allow me to explain. First, it’s everywhere. Check out this graph – there isn’t a sector that isn’t at least achieving an 8% year-over-year price gain. The entire market is now getting into gear. It shows strength in all price ranges & all economic situations.
And we’re only just getting started.
As you can see, we’ve only seen really one year of this upward trend. Pre-Covid Calgary & area had very little to cheer about. The pandemic hit in April 2020 as our market was at rock bottom. 2021 was our awakening year and it handled a lot of the pent-up demand from 2020 and probably even before that.
Then, this year is our first true representation of our market performing fully on its own, without being influenced by outside factors. And when a market starts to adjust upwards, it doesn’t happen just once, it becomes a 3, 4, 5, 6+ year run. We are just at the beginning.
First fix, then get the reward.
You see, the biggest issue back in those dreary days from 2015-2020 wasn’t that demand for buying homes was so low. It was just that we had backed ourselves into a corner, with the total number of homes on the market being way too high, putting negative pressure on our housing market for years.
So, it took a few years to correct that, going from negative year-over-year numbers, to a flat-line situation, and now to a position of seeing value bumps.
This, again, is a situation that we are just starting to see.
And, like I said earlier, we are seeing this everywhere – all across Calgary’s 8 districts and across our entire region.
The re-writing of Alberta’s script from Covid, oil prices, diversification, the unaffordable costs of living in the other major Canadian cities and the still historically low interest rates (yes, despite the recent bumps), has created a sustained path to increased housing prices. And, as shown by the following graphic, this gap is here to stay for a while.
The red line represents the Benchmark Price while the green line shows the Months of Supply.
As you can see, our prices are rising while our months of supply are very low, indicating that we can expect to see continued price appreciation for some time.
Speaking of Pricing, I’ll share one very interesting fact for homeowners. As of this month, we mark a $100,000 increase in the benchmark sales price from the beginning of 2021. So, congratulations!! The average Calgary homeowner has added $100K to their overall net worth (without, of course, factoring in any of your household debt changes, etc.)
It’s a very positive sign for Alberta. With increased equity in our homes come so many positive things for economic growth in our region.
And that’s all for this month!
If you require any market information relating to your specific situation, please don’t hesitate to let us know so a market specialist at Redline can be connected with you!