What's Happening to the Real Estate Market in Calgary?
I've heard a lot of questions from clients and friends lately.
Is the housing market going to crash?
Should I wait to buy?
Should I wait to sell?
How are you selling homes right now when there is 'social distancing' happening?
Is anyone looking at homes right now? Are homes even selling?
It's Been a Crazy 6 Weeks
Sales dropped off in April for total residential in Calgary by 63% in comparison to April of 2019, but what's even crazier is that prices haven't fallen with the sales, they are remaining pretty steady.
The detached market has seen a 21% drop in sales and the total residential, meaning condos, townhouses and single family, overall has dropped by 18%.
If you're interested, here is where the prices sit at the end of April:
- Median Sale Price: $416,800 DOWN 1.4% over last year
- Benchmark Sale Price: $405,000 DOWN 1.4%
- Average Sale Price: $445,508 DOWN 2.8%
Now, you might be looking at your screen and think this guy is nuts if he things prices haven't fallen....remember what I said, they haven't fallen with sales.
Of course they've dropped but not as a dramatic of a drop as you might have expected.
Look, this is all about supply and demand. Demand is down, we see that with the massive drop off in sales for April. What noone seems to be mentioning is that supply is also DOWN, to the tune of 54% from April 2019 compared to April 2020.
Overall the supply in the housing market is down 20% from January 1- April 30th this year compared to the same time last year. If we look at pricing for last year and compare it to this year's numbers we are still in pretty good shape despite what's happening with coronavirus.
The Benchmark Price in 2019 from January to April were down compared to the previous year on average of 4.6%, right now our benchmark price is down 1.4%.
THIS is why I am saying that prices are holding pretty steady, because they are.
Ya But...What's Going to Happen to Values Later in the Year?
Good question and to be honest, I don't know for certain. I can predict with the best of them though!
Here's what I do know.....sales the last three weeks have been slowly but steadily increasing. There were 439 new listings in the last week, 337 the week before and 281 the week before that.
The government is slowly starting into a phased repoening of the economy here in Alberta starting today. If we continue to see a decrease in overall infections and deaths, there's a good chance our province could be open for business fully by the fall.
In talking to mortgage brokers that I know, they are telling me the same thing...we have a 'record number' of preapprovals for buyer's right now. With interest rates staying put or possibly even dropping further, there's a good chance that we could see our Spring market in the Fall.
That said, expect sales to remain low despite the uptick, my prediction is that sales will still be down by upwards of 10-15% year over year by the end of 2020. Where are prices going to be?
If I was a betting man, I would bet on them going down and probably matching where we wound up last year at a drop of around 3-5%.
I don't believe the soothsayers predicitons of an all out drop in prices of 20-30%, if you are waiting for something like that to happen, Calgary isn't the city to be watching. Why? Because our market has not seen massive and consistent double digit increases like Toronto or Vancouver, in the last couple of years.
If there is going to be a drop in pricing and one that the media will be eating up for days, weeks and months, then watch those markets.
This is Alberta real estate, home of the boom and bust economy....nothing to see here...move along.