Medium Term Housing Market - Possible Trend

Based on low interest rate policies of the Covid-19 pandemic, it appears from the following excerpt out of a recent Economist article that high asset prices are all but guaranteed. This is predicted to last for many years to come. Alberta, given its current economic situation, may not experience the same level of house market value growth as the rest of Canada but fortunately we will be somewhat safeguarded from a housing downturn because of the fed’s interest rate policies. There are some bright spots!

“…Low interest rates also mean that high asset prices are all but guaranteed. This will reinforce complaints about wealth inequality and intergenerational unfairness—complaints that carry more bite given the unequal distribution of job losses this year. Homeowners, mostly drawn from the professional classes, will benefit as they can take advantage of cheaper mortgages. So will homebuyers. One reason why housing markets are holding up is that the downturn has not hit the typical house-hunter. Those without wealth or access to finance will feel understandably aggrieved.” The Economist, Nov1st, 2020

Q3 2020 market Update

In the early spring of 2020, not one would have predicted the Q3 (July/August/September) sales of real estate in the Foothills Region would grow in sales volumes over the previous year. And grow it did! There has been a significant trend of people moving out of the city and into a more rural setting. Acreage sales are up 43% !!! The outlying communities have seen significant sales growth of 40+ %! The main drivers appear to be the need for space that embraces the needs of working from home or home schooling. Also, there is a strong desire to get away from densely populated areas and into a more relaxed setting. This is a trend happening across the country.

Inventory levels of homes for sale are extremely low right now which means if you are thinking of selling in the near future, now is the time.

Click through the various graphs below to view the stats.

May 2020 Market Update :: Calgary, Okotoks, Rural Foothills Real Estate

Covid-19 has had an expected impact on the local real estate market. Okotoks sales volumes for the month of May were down 37% over last year, but this is better than Calgary which saw a 44% decline in sales volumes. (Detached, Attached and Apartments) The bright spot was acreages in the MD of Foothills - Sales volumes were only 3 units less than 2019 which equates to a drop in sales volumes of 12.5%. Across the board, prices have dropped by an estimated 5-15% year over year depending on the price point, and type of property. The market has definitely favoured buyers. The $ Million properties sales volume in Calgary was down a whooping 63%.

On a positive note, my sales volumes exceeded my expectations considering we are in the middle of a pandemic. A huge thanks to all my clients and those that support me during these difficult times. Technology has made a big difference allowing me to be able to navigate the challenges of covid-19 and keep my clients and my family safe.

Market Update :: Calgary, Okotoks, MD Foothills :: General Outlook

We are in interesting times in the real estate world. Sellers in Calgary and Okotoks are generally holding steady on price and are keeping their homes on the market for sale. New listings are definitely down for this time of year and current inventory levels are considerably less than the past few years. Price reductions in the past month have been following similar trends to what we would expect in a normal market for this time of year. Contrary to what you might expect, price reductions or sellers taking their homes off the market are actually far less than expected given Covid-19 and the price of Oil. 

Statistically for March:

• Calgary: Detached homes sold on average for $2,300 more in March 2020 than March 2019. The average reduction from list price to sale price was 2.92% in March 2020 vs 3.16% in 2019 (Selling price averaged $15,000 off list price). 662 homes sold in Calgary this March vs 786 homes in 2019. 

• Okotoks: Buyers managed to get 2.46% off the list price ($11,000 off list). In 2019 the average reduction from list was 2.8%. Sales volumes were down by 6 homes over March 2019. 

• Rural Foothills properties that sold ranged from $15,000 to $151,250 off list price. Sales volumes were down 6 properties year over year.

Sellers should expect buyers trying to take advantage of what they perceive as an opportunity to give low offers. We are seeing this now more than ever. The occasional seller needs to sell and thus accepts a lower than desired offer. However, this is not the norm. 

I believe that come mid summer/early fall we will have a considerable amount of pent up demand from buyers and sellers of homes that would normally have happened in Q2 (April - June). There are so many reasons why people have to move and no matter what the economy, these reasons don’t go away.  They may postpone, but eventually these people will need to move. During Q2, Calgary would normally have a total of 10,000-12,000 buyers and sellers involved in the sale of real estate. In Okotoks we would normally have 375-425 buyers and sellers involved in the sale of real estate and Rural Foothills properties would normally have 125-150 buyers and sellers. These people will come back once it is safe to do so.

The chart below shows how showings have really dropped off for the 70+ active RE/MAX Prime listings. This is to be expected given the public’s acceptance of physical and social distancing requirements of Covid-19. It should be noted that we have strict protocols in place for any showings that happen at this time. Any buyers out right now are seriously interested in buying.

Total # of showings on all RE/MAX PRIME Listings starting March 1 to April 4th 2020

On a positive note; 

• We can all make a difference and save thousands of lives by social and physical distancing and taking Covid-19 measures seriously. It is also important to remind ourselves we will be blessed globally with a population increase of approximately 100,000,000 people in 2020. 

• Alberta’s economy; the price of oil will eventually come back up once the geopolitical issues between Russia and USA get sorted out. 

• Albertans are a resilient bunch. We will come out stronger on the whole. So much positive change will come as a result of this Covid-19 event. 

• New opportunities will rise from the ashes. 

• I am seeing an incredible amount of compassion for our local businesses that are struggling. Hopefully they can all hang in there. I am also seeing an amazing amount of love in our community for each other as we all struggle in our own way through these times. 

Stay Safe, Stay Well. Stay Positive. We will get thru this together!