Hey Guys!
Record setting number below!
This email is a monthly summary of high-level Calgary Real Estate data to help you understand market trajectory based on supply and demand fundamentals.
We know Real Estate is hyper local, but I think having general market trends is helpful in future planning. Plus, this is Canada …Real Estate is basically a national past time ;-).
Let’s look at a) detached home data, and b) apartment data together.
Detached Homes
Sales To New Listings Ratio:
To make sense of this graph quickly understand that higher data points indicate fewer homes for sale in the near future.
Remember how nuts Calgary’s Real Estate market was in Feb/March of 2022? Well, leading up to that (Oct, Nov, Dec ’21) you can see the sales to new listing ratio start to climb parabolically. That created a serious supply shortage in the early parts of ’22. This is an extreme, but very illustrative, example of how to quickly interpret data from this graph.
Relativley lower data points indicate a more normal surplus of homes for sale.
We can still read this graph to indicate a rather under supplied market as the sales to new listings ratio is at the upper limit relative to the previous 4 years.
Absorption Rate:
Lower than a 2-month absorption rate is a result of 1) low supply, and or 2) high demand. Like many things in life, the result is a combination of factors. This combination is supportive, if not provides upward pressure, on pricing.
Here’s a summary of sales data in March over the past 6 years:
March 2023: 1,145
March 2022: 2,267
March 2021: 1,866
March 2020: 689
March 2019: 818
March 2018: 844
Here’s a summary of listing inventory in March over the past 6 years:
March 2023: 1,612
March 2022: 2,205
March 2021: 2,409
March 2020: 2,890
March 2019: 3,393
March 2018: 3,079
I think the primary driver of our low absorption rate is buyer demand. I think Calgary is seeing less new inventory coming up for sale, relative to pre-pandemic years, so that is a factor.
I think post-pandemic “work remote”/”work from home”, combined with capable technology and employment culture around that, is pulling high quality buyers from other parts of Canada.
I think Calgary has experienced ebbs and flows of high quality home buyers before—but possibly more correlated to the oil and gas sector of our economy.
This new breed of high quality buyers are location independent and seeking all the benefits of Calgary we know and love (life style, affordable housing, etc etc).
There is still a reasonable benefit of housing arbitrage available to people who own in other parts of Canada (sell high, retain income, and buy low). This will is likely to remain attractive, until there is a balance of affordable housing (I.E., values lower elsewhere, and or values increase here, or a combo of both).
Also, welcome all new Calgaryians!
Month over month we are seeing a sharp increase, but I don’t think this is the start of a new paradigm of value appreciation like we saw in ’21-’22 (record setting average price though!).
This has been an interesting market of price discovery …I have buyers in competitive bids—and losing multiple homes. I also have buyers who offer below list, and are able to negotiate lower prices due to home inspection.
To me, this is a function of a normalizing market. Top quality properties (price, location, desirability) will be coveted by many. Delusional sellers wanting February 2022 pricing might find today’s buyers are unwilling to bid at those levels.
I find these types of markets is where top quality Realtors shine. I find they are able to advise, and manage client emotions/expectations well during the offer period.
Apartment Homes:
Sales To New Listings Ratio:
The sales to new listing ratio is still very high for Calgary apartments. Demand is from buyer affordability eroded due to higher interest rates, desirability for lower cost of living, and investors (inside and out of Calgary).
Absorption Rate:
This is still crazy for me to see …for so many years Calgary apartments had such high absorption rates …around 6-7 months absorption! Having sustained absorption rates between 1-3 months is still shocking for me.
What might be shocking to out of town buyers is the median price of Calgary apartments …the first number is a two!
Other cities in Canada have median apartment values that start with a seven. Think about that.
Median Price:
If you’ve been following along my market updates recently, not-surprisingly, apartment median price continues to trend higher. From this months’ data, I am not seeing a reversal of this trend anytime soon.
Conclusion:
Buyers are confident entering Calgary’s Real Estate market. We are not experiencing the piranha feeding frenzy of last year (thankfully) …and I’m not really hearing much “wait and see” from buyers who are ready and willing to purchase.
I think more sellers are “waiting to see” before listing their home. Why? They might not be seeing anything worth purchasing. I would be hesitant to conditionally sell my home, and then hope a workable listing comes up for sale before my sale possession date. If this is true, then sellers are becoming buyers before listing their property—only adding to the buyer demand.
Sellers might also be holding off on listing their home until interest rates come down. Borrowing money is much more expensive today, relative to pandemic era rates.
There you have it …a high level supply and demand update for Calgary Real Estate. Pass this email on to those who might like it. Thank you in advance.
Talk soon,
Chad Moore
P.S.
New boot groovin! I bought new gym shoes that are much more stable underfoot for some of my lifts.
P.P.S.
I’ve put together a video for home owners who are 6+ months out from listing their home for sale. My content for sellers is focused on three areas, 1) financial strengths, 2) mechanics of home transitioning and 3) how to mitigate your risk during the process. Check this out!
Thank you again for reading!
