I’m waiving the Spring 2022 crazy market flag, right now. Here’s why …
Supply is ALREADY lower than this time last year. Unless there is a equal offset of buyer demand, plan for over list offers, no condition offers, homes selling instantly – oh the joy :-).
Let’s take a look at the data (link) together so you can form your own thoughts.
Detached Housing
Sales to new listings
This ratio combines homes exiting the market (sales or expired listings), with homes entering the market (new listings). This gives us a window into what near term changes to housing supply might look like.
A ratio of 100% means for every home entering the market, a home exits the market (1-1 ratio). Higher percentage sales to new listings ratio is indicating there will be fewer homes for sale in the coming months. This is a seasonal trend leading into the winter months. However, the elevation of these data points, when matched with continuously strong buyer demand, leads to home price elevation. Calgary’s market experienced this Feb – May 2021. Should this trend of higher and higher sales to new listing data continue, the more certain a crazy spring market there will be.
Year to date detached home sales continue to surge throughout this year. Why? Well, that’s a long story :-) (link, link, link).
Absorption rate
This number tells us in months, how long it would take to liquidate all of Calgary’s detached homes for sale, based on the current invetory and sales volume.
A traditional absorption rate, indicative of a balanced Real Estate market is between 2-4 months. Lower absorption rates suggest negotiation strength for the seller. Higher absorption rates present negotiation strength for the buyer.
Calgary’s detached market is seeing absorption rates flatline at about 2 months which is historically low. As mentioned above, low supply and incentivized home buyers are driving sales.
Average price
Calgary’s detached average price is trending higher relative to past years. Seasonally, we see prices head lower into the winter months. Let’s face it …looking at homes in the cold, dark winter months isn’t the “best” experience. Winter months typically bring a lower selection of homes for sale. However, potentially purchasing a home this winter might afford the buyer a bit more time to make a large purchase decision – compared to what might be a busy spring 2022 market? Nothing is ever perfect, right!
Apartment Housing
Sales to new listings
Apartment sales to new listings ratio continues to grid higher. I’m officially calling the bottom of the apartment market behind us! We are basically finishing a 6 year down trend of prices. Up from here! Who’s with me?
Absorption rate:
I adjusted the y-axis of this chart – absorption is down!! Absorption is down year over year and month over month.
As the overall narrative of Real Estate ownership has shifted to be enormously positive, buyers and investors are seeing value in Calgary’s condo apartment market. I am helping buyers purchase a second home with as little as 5% down payment. Ask me how!
Median price
Median price is trending on the lower end of recent historical pricing, but I think there is upward pressure on pricing.
Conclusion
Calgary Real Estate continues to draw buyers and investors into the market. This increased demand, with supply constraints is a recipe for rising prices. Buyers and sellers are wise to prepare for a spring 2022 market that is poised to be hectic.
How long this market lasts, and how high prices rise, is up to future buyers to decide. Perhaps prices go all the way TO THE MOON ;-)!!
I hope you found this helpful. Reach out if you are planning to sell or purchase a home.
Cheers,
Chad Moore
