What makes Calgary’s market different?
No charts. No graphs. Barely any data.
This month’s Market Update will be quick and to the point, yet full of everything you need to know right now about the Greater Calgary Real Estate Market.
Let’s start off by talking about the elephant in the room – interest rates! Yes, in their infinite wisdom the Bank of Canada has once again increased its overnight lending rate by another 50 basis points.
So, in English this means that for the typical Calgary home buyer purchasing an average benchmark-priced home of $525k, it will now cost them the price of a Starbucks latte more per day to own their next property.
This isn’t the end of the world, but that additional $160 or so per month will adjust some people’s buying power as a result (something none of us want to continue seeing unnecessarily).
And this opens the question: Will this continue?
And will we see another bump? Right now it seems there are just as many camps suggesting that yes, another increase is needed, as there are saying it’s time to pause now and allow the consumer price index to show in the months to come how much these increases have truly dropped it (in essence, curbing inflation in Canada).
This remains TBD –To Be Determined. Stick with us and we will continue to report on this as it unfolds.
Okay, let’s take a look at the real estate results from the month of October.
THE SALES SUMMARY
Here’s the deal… sales are down, no question. When we compare to October 2021, our real estate board reports we are down by a full 15% year-over-year. This amount of change could be cause for concern without proper context. So, let me give it to you.
Last year we experienced the highest-selling month of October ever in Calgary’s history! This equated to a full 35% higher than long-term averages. It was a whopper!
And looking at the situation even closer, despite being down 15% from last year we still find ourselves about 15% ahead of long-term averages. So, this is a case where context really helps tell the true sales story.
Now, one thing to note here is that there is a tale of two sales markets. There’s the Detached & Semi-Detached market and then the Apartment & Row Home market.
Sales for Detached & Semis have had the decline in numbers, with about a 30% pull back from last year, while Rows & Apartments are continuing to sell significantly more than in years past, up by 18 & 20%, respectively.
The pace at which Apartments & Rows are selling right now are above levels we’ve ever had in our history at this time of year. So, hang on tight if you are in those markets to buy or sell!
And one more thing that I feel is equally important to note – overall in Calgary, sales month-to-month have barely adjusted at all. Despite the buyer pessimism, the recent rate hikes and the pending recession, we have yet to see a seasonal slowdown.
I think we sold about 40 fewer homes in October than in September. That’s absolutely negligible.
So, I’ll sum up the Sales Summary with 2 things:
Things remain positive on the ‘demand’ front (i.e. people want to buy homes)
And, under the category of ‘It Depends’…
Property type and price range details are required for you to make the most educated decision for your families buying and selling needs (be sure to get this from your trusted real estate advisor).
THE INVENTORY STORY
While the Sales story is a tale of 2 markets, ‘Inventory’ has just 1 major story. Inventory remains down all across the board.
We are seeing that the number of new listings coming to market is equal to, or considerably lower, than last year.
As a result of sales continuing to maintain steam and new listings coming to market continuing to lag, we end up with a market where the total amount of available homes to purchase is becoming extremely low.
Right now we have a record low amount of available properties to buy for any October in our city’s history. This amounts to a 20% reduction from last year and 31% lower than long-term averages. That’s a big-time drop!
But it’s not even across the board. The lower the price point of homes, the less inventory we have. This makes the below-average price points highly competitive right now.
Let me explain this a bit further before we talk about pricing.
We determine the pace of the market a few ways, and one of them is the ratio of Sales to New Listings that come to market.
Like I’ve said before… the higher the ratio, the faster and tighter the market.
City wide we are at 85%. This is nearly equivalent to our peak months earlier this year.
Detached, Semis & Apartments sit right at 83%, but…
Row Homes are at 106%. This means there are more sales happening than there are new listings coming to market (thus depleting the number of homes to view each and every day).
Any way you look at it, this remains a high buyer demand market.
In order to further drive this point home, I did make one graph (so I lied earlier 😄).
Looking at this Months of Supply vs Price Range graph, you can see that not only are the different property types acting differently, but the different price ranges are, as well.
‘Months of Supply’ meaning that, if we stopped listing any new homes on the market, that’s how long would it take to sell everything we have. The lower the number, the tighter and more competitive the market.
You’ll see that the Months of Supply for everything under $600k is under 2 months, and as the prices climb it goes up to 4 months (above $1M).
Two months of supply is Seller’s Market territory (i.e. in the favour of the seller).
Four months is a Buyer’s Market (i.e. favours the buyer).
So – as much as I wanted to make things simple – because the market is acting differently among the various segments, it does take a wee bit of explaining to get my points across.
Let’s finish up with the PRICING PICTURE.
For the astute ‘Numbers’ Guy or Gal, it’s likely you can sniff out where the market data is going to point us to because our pricing always follow the supply & demand fundamentals.
With sales staying steady…
With active homes on the market dropping…
The positive pressure remains in our Greater Calgary marketplace.
When this happens, it provides us with stability in our pricing. Which simply means – once again – NO CRASH is happening here!
As a whole, month-over-month, we saw a $3,500 adjustment downward in our benchmark price across all October sales vs September’s. That, again, is relatively insignificant and negligible.
Looking further back, we have only adjusted 4% from the mid-FRENZIES market peak (not even by as much as $20K).
This is in vast contrast to the other major Canadian markets of Toronto & Vancouver, where they are seeing pricing slide by hundreds of thousands of dollars – and, in some cases, all the back to pre-Covid pricing – erasing 2 years of hyper price growth.
Why are they dropping like a rock and why are we floating like a boat? It’s for a few reasons:
1. They hyper grew for years & years & years. It was overinflated, fueled by things other than economic fundamentals, and now they are paying the price
2. Our market slowly crept out of a dismal half decade on back of true economic fundamentals driven by supply & demand, not speculation in the market.
Calgarians are not immune to the recessionary times coming to Canada, but our real estate market is ‘battle tested’ and ready to hold its own among the best in North America. Even the naysayers are now saying that we will come out of this just fine.
So, do I have some advice for you right now? Of course, I do! 😀
There is absolutely no reason to delay your life plans as a result of any concerns regarding the Calgary real estate market.
If you need to buy – do it.
If you can afford it and want to buy – do it.
If you want to invest – invest proudly in Greater Calgary.
If you need to sell – feel confident, the market is there looking for you.
If you need to tighten up your personal balance sheet out of concern for the talked-about recession and economic uncertainty in your situation – you will have no problem making the necessary real estate adjustments to better serve your family’s needs.
With all the panic out there – don’t let Real Estate be the thing that concerns you. Thank you for reading. I hope this helped, and if you need more granular or specific advice for your personal situation, please don’t hesitate to reach out to us at Redline | Real Broker – we’ve got an army of specialists for each and every real estate niche you could imagine.