Like the weather, the real estate market is keeping us on our toes!

I thought I would drop you a line with my thoughts on what is going on in our neck of the woods.

I just listed a condo in the Willows in Hidden Valley and thought I would share this situation with you as it is typical for what is going on in the market throughout the city. This is a lovely four level split townhouse with quite a few upgrades. As with all of our listings, the home has been staged nicely and has a great presentation. Here is a look at this listing, along with the past two sales of similar type properties in the Willows, dating all the way back to February of last year.

In looking at the two sales, we found some interesting facts. The property that sold in December was on the market for 79 days, and prior to that they were on the market in 2010 for another 110 days to no avail. The property that sold early in 2012 actually sold for 8% less than the seller purchased it for back in April 2009, one of the most intense times in the market in recent history.  On the first day our new listing was on the market, we received an offer from the only viewing of the day that we accepted and are now awaiting the conditions to be met. What is interesting about the offer is how strong it was right off the bat, they pretty well wrote the offer as we presented it online. Why would the buyers do such a thing?

The answer lies in the fact that they have been looking for a new home for quite some time and according to their Realtor, actually lost out on a variety of listings that sold very quickly. They took a pro-active stance on this particular home because they did not want to lose out on another property being sold to someone else from under them. This is a very interesting phenomenon where the Buyers become more savvy and aggressive due to their experiences in losing out on previous listings.  

Single family homes in Hidden Valley are seeing similar action. At the moment there are 15 homes for sale in the community at various price points. So far this year there have been 61 sale in Hidden Valley, just over 15 sales per month.

In Kincora, there are 14 active listings and there have been 39 sales so far this year, just under ten sales per month.

Even in Panorama Hills, one of the largest communities in Calgary, there are only 71 active listings and they have seen about 27 sales per month.

In Hanson Ranch there is currently only one active listing. There have been six sales this year and there are two pending sales in the community.

It would certainly seem that we are in the midst of a “Sellers” market, the last time we were leaning so far toward the Seller was back in 2006, and we certainly recall what happened back then! The next questions would be, will that happen again to us this year?

I would suggest that there are a whole variety of variables that will help cool off the huge demand in the market at the moment. Perhaps the most influential cooling system will be the financial institutions. We are seeing more and more bank appraisals falling short of the price agreed upon between the Buyers and Sellers. As a matter of fact, I am currently dealing with another sale where the appraised value was about 5% lower than the agreed upon price. There are more and more deals falling apart due to financing, and that is a trend we will probably see continuing.  The banks, mortgage companies and insurers such as CMHC took a huge hit in subsequent years to our peak in 2006-2007 where there were many foreclosures due to the huge loss of equity in the market from 2008-2011. Rest assured that they have written and re-written policy to help hedge them from a similar situation happening again.

Although we currently have a lack of inventory, I would suggest that the supply versus demand crisis we are currently experiencing will be short lived. Typically we see more homes added to the inventory as the weather turns better, then as the summer approaches, demand typically slows as many Calgarians take advantage of our short summer. I would expect that the current situation may last until mid to late June where we should see the market settle down a bit. We should see values stay constant, perhaps even creep up a bit in the next six weeks, however, coming July we could see a reverse in that trend.

The economic forecast is uncertain at best for the rest of the year, and the outlook for 2014 is even more questionable. Although Alberta seems to be bucking the National and International economic trends, I would caution that it will be difficult to continue in that direction due to our reliance on the energy sector in Calgary and all of Alberta.

I would be happy to chat with you about the market, and any concerns you have with the current trends and where we may be heading in the next few weeks, months and years. I would also be happy to chat with you about your current and long-term real estate strategy. Please do not hesitate to let me know if you would like to book a real estate consultation.