For the sixth month in a row, sales in the Calgary market recorded a year-over-year gain.
Sales growth over the past several months has been the strongest seen in the past five years, but the activity has not been strong enough to offset the pullbacks from the spring.
Year-to-date sales remain over three per cent lower than last year’s levels.
New listings continue to slow, reducing inventory in the market. On a year-to-date basis, new listings have eased by nearly ten per cent and are at the lowest level recorded since 2001. This has reduced the oversupply that has been impacting the market for nearly five years.
Tighter conditions in the housing market have contributed to some of the recent gains in benchmark prices. As of November, the benchmark price was $423,600. This is nearly two per cent higher than last year’s levels.
However, conditions vary depending on price range. There is not a lot of supply for affordable homes in each product type because of high demand. This is likely causing differing price trends in the lower end of the market versus the higher end.
HOUSING MARKET FACTS
November sales activity improved across every district, contributing to a year-over-year citywide increase of 26 per cent. Improving sales over the past six months have helped offset some of the pullbacks from earlier in the year, as year-to-date sales were only two per cent lower than last year’s levels.
Like other sectors, inventory in the detached market has also eased due to the sharp decline in new listings. This has kept the months of supply below three months for the past three months. The tighter market conditions are supporting price gains. As of November, the detached benchmark price improved by nearly three per cent compared to last year for a total of $492,000. However, prices did not improve across all districts, as the City Centre continues to record prices that are one per cent lower than last year’s levels.
Activity for this product type does vary significantly depending on location and price range. The pullback in new listings relative to sales has caused significant reductions in inventory for homes priced below $500,000. Higher price ranges have also seen some declining inventory, but the degree of decline has not been as significant. In fact, the market is exhibiting sellers’ market conditions for homes priced below $500,000, while still favouring the buyer for homes priced above $700,000.
The Alberta government has mandated that professional services businesses, such as lawyers and accountants, be able to work by appointment only. Therefore, the AREA are reinstituting a ban on all in-person open houses for REALTORS® as professional service providers. Showings can continue with appointment only and limited to two family-unit members at a time.
Please continue to adhere to all the best practice safety protocols.
I hope this post finds you well and healthy as we all continue doing our part in social distancing as new cases of COVID-19 continue to impact the Calgary region. Throughout this year, there have been several hurdles we've all had to overcome as we adjust our lives to a new normal.
With that being said, the real estate market has been resilient following a slower than usual second quarter. June and July were the busiest months with 1,747 sales and 1,835 sales respectively.
At the end of September of this year, inventory levels were down when compared to levels in August. This is a good thing because it brings down the number of months inventory is sitting which ultimately begins to strengthen the price. These actions are leading us to the point where we’re beginning to slide into a sellers market.
The benchmark price of detached homes is $468,000, which is up 6.1% when compared to Q1 when the benchmark price was $450,000. Overall, the price of homes is up 1.3% when compared to September 2019.
3,237 sales occurred in Q1 and 5,110 sales occurred in Q3, which is an increase of 50% and tells us that people are actively committed to buying and selling. When looking at YTD sales from 2019 to 2020, sales are down by 9.3%. At the end of September in 2019, 12,956 sales had occurred and at the end of September in 2020, 11,747 sales have occurred.
When looking at the bigger picture, I believe sales and inventory are healthy; we will most likely see the price of homes continue to increase and we'll probably end the year with similar sales numbers to 2019.
Overall, the real estate market in Calgary is in a good place and I think it will remain the same for the next little while. I don’t believe things will return to the way they were when COVID-19 was first becoming a prominent force in our lives because we all have a better understanding of how to manage our processes so we can continue to buy or sell homes.
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Did you know? The Bank of Canada plans to keep interest rate near zero until 2023!
There are no plans to change the benchmark interest rate of 0.25% until inflation reaches 2% and stays there, which isn’t expected until 2023.
With over half a year gone since the beginning of the pandemic, the Bank of Canada has gained a better understanding of how containment measures and support programs affect the Canadian & global economies.
The Canadian economy is predicted to shrink by 5.7% this year, grow 4.2% in 2021 and grow 3.7% in 2022. These predictions are based on the hope that there won’t be a second or third widespread lockdown across the nation and that some sort of vaccine will be implemented.
Read more on the CBC wesbite by following clicking HERE
There are GIANT price increases being implemented on all new builds by all builders.
A few weeks ago, large lumber prices made the news and some builders reacted to the large jumps in price. Others absorbed the increases with the hope of the commodity price becoming less intense… so far this hasn’t happened which means prices will continue to go up steeply.
What’s the expectation? At the moment, the expectation is that there are still lots more coming.
Let me explain… for example, the price of OSB sheathing was $14.73 a sheet several weeks back and is now $33.45 today… that’s more than double!
Why is this important? The increase in price on wood affects every element required to build a new home or for any renovations.
As of right now, there have been increases of $10,000.00 on all homes that haven’t started construction or are currently under construction but haven't received their framing package.
So what does this all mean? It means that things could get really ugly for people who have homes under contract but not yet at the building stage.
So what’s the worst case scenario? At this point, some builders may have to go back to their Buyers to ask about increasing the price of the home and may even have to cancel contracts to rewrite them at the new higher price.
Residential sales in August continued to be stable and in line with levels over the last five years with 1, 573 sales occurring last month. Although national reports show a bounce back to record levels, Calgary has seen improvements over the lows recorded during the lockdowns but is not quite at said record levels.
New listings are easing and it's helping chip away at existing inventory and the pace of the year-over-year decline has eased as inventory levels have trended up relative to levels recorded a few months ago. The months of supply has also risen compared to the past few months and now sits at four months which has slowed some of the monthly gains on prices. The residential benchmark price in August was $420,800 and is nearly 1% lower than last years’ levels.
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