Looking Forward in the Real Estate Market

I have had the opportunity to chat with a wide variety of home owners over the past few weeks regarding the current real estate market in Calgary and area and thought I would share some of the information I have gathered. I have been reading in the news that many economic experts feel that we have “turned a corner” from the economic downturn we have been experiencing in Alberta since the chaotic fall of oil prices in late 2014. I am still looking for evidence of that in the real estate market…

The first half of this year did seem to see somewhat of a recovery in sales numbers when compared to our dismal market from October 2014 to the end of 2016. Buyers were coming back to the market in droves and for a few weeks supply had a difficult time keeping up with this new demand. I would suggest that a good portion of this wave of new buyers was from the pent up buyer pool created in the past two years. Many potential buyers were on the fence for a long period of time waiting “to see what happens”, those buyers contributed to the great run of sales in the first few months of this year. This large pool of buyers that had been accumulating in that time has quickly diminished as many found their new homes and many new listings were added to the inventory as sellers saw a great influx of sales – and increased values.
In the first three months of this year, inventory levels were between 25 and 32% below the same period of time last year. Moving in the opposite direction, single family sales increased 19% year over year in the first quarter. This increase in sales in combination with the lower inventory helped flame the buying frenzy.

Then a couple of increases in the Bank of Canada rate added to the turmoil, but contributing in the opposite direction… The first increase of a quarter percent in July was partially responsible for the 27% decrease in sales across the board from June to July. Granted we often see a seasonal decrease in sales this time of year – last year there was a 13% drop and in 2015 we saw an 8% decrease – but doubling last years rate and tripling the drop from the year before is concerning. The second increase in lending rates in September has contributed further to lower sales figures and an ever increasing level in inventory, there are now more detached homes for sale than we have seen in the past three years.

Looking at a few communities for a micro view of the market, we see similar trends throughout the city. In Panorama Hills, the largest community in Calgary, there are currently 90 detached homes for sale. This year there have been an average of about 16 sales per month, very close to the same as last year. Last month there were only seven sales, half of the 14 sales from last September. Next door in Evanston there are 88 active listings and they had 12 sales last month. In Hidden Valley there are 23 active listings and there were four sales in September. In my own community of Hanson Ranch, the last sale was back in August, there are currently eight active listings (although I did see a property inspector at the listing up the road from me today!)

Back in June I sold an apartment styled condo in Country Hills Village, a community comprised completely of multi family buildings. I noticed that the most recent sale in the area was a very similar sized home in the same building as my own sale. Back in June, my listing sold for $244,700, this last sale a couple of weeks back was 5% lower at $233k.

Looking south at Cranston, they have faired better than the Northern Hills. Although there are 100 active listings there today, they did see 25 sales in September, very close to the average of 26 sales per month they have maintained this year. A quick look through the seven sales so far this month brought me to the sale of a two storey home on Cranbrook Crescent that sold on Friday for $635k… this home had been on the market since late April when they originally were asking $698,888. The home was purchased only a year earlier for $670k, so looks like the sellers lost quite a bit of equity. Although this is not the “norm” in the area, it does go to show that there are some of these scenarios where ever we look.

Switching over to Killarney just west of the City Centre, there are 21 active listings. The nine sales there since the beginning of September averaged two months on the market and sold, on average, $47,560 below their original listing price.

Complicating the market further is the potential pending change in the qualification process for ALL mortgages, regardless of how much the seller is putting down. On a conventional mortgage with 20% cash down, that could mean up to a 20% decrease in one’s buying power. We are also heading into a typically slower sales season as we head toward winter. I suspect the average days on the market will increase week by week, creating a more anxious seller. If we continue our path of an ever increasing inventory and slowing sales, we could certainly be in for some challenging times in the coming weeks, months and possibly years.

Every neighbourhood has a different set of circumstances, and as you can see above, some areas of the city are doing better than others. There are still buyers, even though the sales pace has certainly slowed, and there are still good investment opportunities. In a volatile market such as our current situation, it is imperative that one is well-informed to the nuances of the market so that you can make well-researched and educated decisions on how to proceed with your real estate asset whether you are considering selling, or buying. 

Western Gold Real Estate is a premium boutique real estate brokerage dedicated to a client-centric approach to listing and buying real estate. We pride ourselves in offering in-depth analysis and strategic insight into selling, marketing and purchasing your real estate investment. A trusted real estate advisor is a huge asset and a prudent member of your team!

For more insight into the current real estate market, please do not hesitate to contact me at your convenience for a complimentary real estate consultation.