March Madness!

I would like to start this post by comparing our current real estate situation in the Foothills Region to our last 2 booms in Real estate; 2006/07 and 2014. Sales volumes of detached homes for March in Calgary exceeded 2014 sales (March) by 9+%. and are 20% below 2007 sales volumes. Rural property sales for March 2021 have never been this high and exceeded sales volumes in 2014 and 2007/06 by 20+%. Okotoks sales have never been this high for March. 

What is driving our market? The perfect storm of events. Some points to consider when trying to make sense of our current real estate boom. 1) Resale pricing for homes bought in March are still just at or below past peak real estate boom years. An average gain of 2% per year should be expected over time as a min on real estate.  Given that, we should be 15%+ higher today than in 2014. So, there is room for home prices to go up to catch up to where they should be.  Prior to our current real estate market boom, we were at a 13 year low in pricing (June 2020). 2) Our current market could see price gains of 15% this year and we would just be where inflation says we should be compared to 2014.  If we compared to home values in 2007, we could have price gains of 25%+ and still just be catching up to a normal escalation of property values (2% per year). 3) February 2021 benchmark price was $502,500 for Calgary. This is about 5% lower than the last record high in 2014 (source-CREB). 4) Supply and demand in the lumber market is driving up the cost of new home pricing.  Covid and lumber mill productivity is partly to blame for this. As new homes go up in price, resale homes can also go up in price.  The economics of substitution. 5) Low interest rates 6) Move up market - need more space to have a home office as work moves away from the conventional. 7)  Large pool of saved money during Covid for many working people 8) Desire for affluent youth to own $1mil+ properties 9) Huge injections of cash into the economy by the Feds

All in all, March madness I predict will continue into the spring season with inventory low, new construction still a ways out before it is ready to move in and increased cost of materials driving up new sales pricing which will drive up resale pricing.

As I have always said, if you are buying and selling in the same market, it is all relative. However, if you wish to pull some cash out of your current home, pay down some debt or invest, NOW IS THE TIME!! 

Give me a call and I’ll help guide you through the options.

Hot Real Estate Market and Selling over List Price stats

Our Foothills region experienced sales volumes in Feb 2021 that we haven’t seen since 2014. The following are sold real estate stats to give you an idea of what’s going on; Okotoks; 6.9% of homes sold for over list price. 22.4% sold at list price. 15.5% sold within 1% of list price. Rural Foothills; none sold for list or higher. 10% sold within 1% of list price, 33.3% sold within 4% of list price. Of the sales, 30% sold for over $1 mil, 23.3% sold between $800k and $1 mil. The rest sold under $800k. Langdon; 13.3% sold at list, 13.3% within 1% of list. Calgary; 8.5% sold at list price, 8.55% sold over list. 13.6% sold within 1% of list price. 3,753 total sales. Total sales up 60% in volume from Feb 2020. Detached homes up 66% in sales yr over yr.

Hang on to your hat! 2021 is shaping up to be a wild year with events likely to happen that no one seems able to predict.

Market update: Calgary Detached home sales for Jan 15-31 2021 - A snap shot in time

This is a follow up from my post of Jan 27th. As of Feb 5th, 2021, we are still seeing a heated market.  Inventory has increased slightly as sellers jump in to take advantage of the increased sales volumes and demand for resale homes. A significant factor driving the market is the Move Up.  This is were people sell their home to buy a home that is larger or has a better floor plan to fit their needs. Ie; Home office. People in secure jobs are feeling more and more comfortable committing to spending more money on a home. Interest rates are incredibly low. Working from home for upwards of a year has made many employees and employers realize the benefits and that this maybe a permanent way of doing business. The savings in gas, parking costs, vehicle maintenance, and time savings are all factors that come into play when considering increasing ones mortgage payments. If on average, a person spends $250/mo in gas commuting, $400/mo in parking, $200/mo in wear and tear on their car, and on average 1 hour per day commuting it adds up to a lot of money. At a cost of approximately $40/mo per $10,000 financed on a mortgage, a person can afford a house worth $60,000 to $210,000 + more without changing their expenses. The most precious resource saved is time = 21+ hours a month. Imagine what you could do with those hours!

First time buyers are feeling the need to jump in while the market is strong on the hope of making some gains and getting in while they can before prices jump too much. This may explain some of the factors effecting our real estate market. 

Stats for the Calgary Detached Residential Home Market Jan 15 - 31, 2021;

Current inventory for sale 1,564

Sales in last 2 weeks of Jan 2021 = 506

Increase in sales volume over last year same time = 47%

% of homes selling at list price or higher = 19.4% = Multiple offers at the same time

% of homes selling within 1% of list price or higher = 32.6%

Last 3 years numbers for the same time frame:

2020 had 345 sales with 9.3% selling at list price or higher

2019 had 337 sales with 5.9% selling at list price or higher

2018 had 379 sales with 14.8% selling at list price or higher

Breaking it down by price category;

Jan 15-31 2021 vs Jan 15-31 2020

$400,000 and under; 11% gain in vol with double the number of homes selling at list price or higher

$400,000-$600,000; 52% gain in vol with 4x more homes selling at list price or over

$600,000-$800,000; 65% gain in vol with 3X more homes selling at list price or over

$800,000 - $1mil; Twice the number of sales with 65% more homes selling at list price or over

$1mil +; Twice as many homes sold with 3X number selling at list price or over.

Apartment sales were up slightly (15% gain in volume) with double the number selling at list price or over.

Multiple Offers and Short Supply - Real Estate Home Sales take off in Jan 2021!!

In the past 10 days, the real estate market has suddenly heated up in the Foothills region. Multiple offers are becoming common to the point where some sellers of hot properties are holding off for a couple days before responding to buyers offers which is allowed by the rules of engagement we are governed by. We are in a market situation we have not seen for many years. It is reminiscent of 2005/06/07. I believe we have a number of factors at play which have created the perfect storm; super low interest rates, the need for people to change up their space to accommodate home office(s) or home schooling, a certain percentage of people on the lower leg of the economic K curve that need to liquidate, and finally, investment organizations may be targeting our region due to our depressed market pricing which is the type of match that lights the fire and creates the type of market conditions we see ourselves in. How long this market will last is a very good question and requires some serious crystal ball gazing.

If you are thinking of selling, now is a great time to take advantage of the extremely limited supply of homes and acreages for sale. There are only 51 detached homes for sale right now in Okotoks and normally for this time of year we would have 125+. It looks like we should sell about 40 this month. That is double Jan 2020. Calgary only has 1,500 detached homes for sale. In the past 2 weeks, 572 have sold. That is more than double Jan 2020. We are tracking at 1.25 months of inventory to sales. A balanced market is 3-3.5 months of inventory to sales. Pricing hit a 7 year low in June 2020. Price gains have been made in the past 6 months. How high home prices will go will depends on supply and demand.