2021 Real Estate has started strongly. Here’s why!
- Low inventory. I think people are less willing to list their homes for sale in a pandemic (shocking).
- S.T.I.M.U.L.U.S. A lot of stimulus. Look around – it’s everywhere. The system is flush full of money.
- Pent up demand. 2020 was a pause in life, for many reasons. I think people are wanting to move forward. Buyers who held off on their purchase are entering the market.
The data is reflective of what is happening. Low inventory, increased sales, stimulated/low interest rates.
I’m having clients lose out of offers to purchase …because it’s now a bidding war. Let’s settle down a bit Chad. There is not a bidding war on all homes. But some are getting multiple offers. And I’m seeing this happen more frequently than anytime in the past 6+ years.
Speaking of data, here’s how January 2020 played out in detached and apartment housing.
Calgary Detached Housing Data:
Sales To New Listings:
This ratio considers new homes entering the market combined with home exiting the market (sales & expired listings).
We can see the month over month improvement of this ratio continuing. Less homes are entering the market, and existing inventory is selling. This is limiting supply, which is helpful for price support or a price lift.
Absorption Rate:
Absorption rate is an indicator of total monthly sales volume and overall inventory. Again, the month over month trend is lower and lower absorption rates.
Sellers, if you tested the market in prior years and were not happy with the list price suggested to you OR the offers you were receiving from buyers. Think about how that might be different today.
Other interesting data:
January Sales: 2020 – 515. 2021 – 731
January days on market: 2020 – 61. 2021 – 53
Average Price:
And here we are, continued month over month and year over year price increase. Scroll to the top of this post for the three main reasons why this is happening.
Apartment Data:
Sales To New Listings:
For years, excess condo inventory has bogged down the condo market. There is more evidence of less future inventory being available for sale which is helpful for price flooring.
Absorption Rate:
Further evidence of price flooring support is beginning. This absorption rate is still high, but now moving in a positive direction.
Median Price:
Apartment median price digging out of the basement!
Conclusion:
Increased demand plus limited supply = upward pressure on pricing.
I can talk myself into how Calgary’s housing market seems counterintuitive …12% unemployment, cancelled Keystone XL pipeline, recent Husky/Cenovus layoffs, economic shutdowns putting pressure on business owners, closed borders with less migration to Canada etc. I could go on.
With all of this, the data continues to signal prices are set to climb. Why? One thought is inflation. Not consumer inflation. Asset inflation.
I think many of today’s buyers might have delayed their purchase in 2020 to ensure the world was not collapsing. These same buyers are still working, spending less, saving more and Calgary’s market is way off historical peak levels. Oh, ultra low, government stimulated interest rates make borrowing money very cheap.
Our blog post today …data mixed with a bit of opinion. Know the difference :-).
If you’re planning to purchase, call me directly to get started: 403-809-5447
Talk soon,
Chad Moore
