Market update for Oct 2021 - Calgary and Okotoks

Nov. 01, 2021 | CREBNow

October 2021: Market continues to favour the seller

Calgary: There were 2,186 sales in October, a record high for the month and over 35 per cent higher than longer-term averages. Year-to-date sales are on pace to hit new record highs and are currently 61 per cent higher than average activity recorded over the past five years and 42 per cent higher than 10-year averages.

“Moving into the fourth quarter, the pace of housing demand continues to exceed expectations in the city,” said CREB® chief economist Ann-Marie Lurie. 

“Much of the persistent strength is likely related to improving confidence in future economic prospects, as well as a sense of urgency among consumers to take advantage of the low-lending-rate environment.”

New listings have improved relative to last year, but stronger sales caused further easing in inventory levels, which remain 16 per cent lower than last year and longer-term averages for the month. Supply levels have struggled to keep pace with demand, but much of the decline in the months of supply has been related to the strong sales levels. As of October, the months of supply dipped to just over two months. 

Persistently tight market conditions did cause some benchmark price gains this month. The benchmark price in October reached $460,100, slightly higher than last month and nearly nine per cent higher than the $422,600 recorded last October.

Okotoks: For the second time this year, sales outpaced new listings this month, dropping inventory levels to 74 units. This is nearly 60 per cent lower than traditional levels and resulted in the lowest months of supply ever recorded in October.

Conditions remain exceptionally tight, but prices trended down slightly compared to previous months. However, it is important to note that on a year-to-date basis, total residential prices have improved by over nine per cent.

Banning Blind Bidding - Will it Improve or Hurt Real Estate Prices?

How will the proposed Home Buyers Bill Of Rights by the Federal Gov’t effect property prices? The following report explains why we should consider getting rid of the current blind bidding multiple offer situation which most buyers hate. I personally feel transparency would lead to a much fairer real estate marketplace and eliminate unfair business practices. Click on the link to review and read the report funded by the Canadian Real Estate Association.

Canadian Real Estate Market update for September and what this means for Alberta

The attached market update for Canada shows Alberta’s price increases year over year are lagging behind the rest of the country. This means we have room to grow in Alberta to catch up to the rest of the country and now is a good time to buy.

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.