What’s happening in Calgary’s Real Estate market?
A lot.
Let’s look backward at some key data points from March as a reasonable platform to anticipate what the future holds.
Here’s my BOLD prediction …the future will be about like it’s always been. Opportunity mixed with difficulty ;-).
Key Real Estate data points for examination for detached and apartments:
1. Sales to new listing ratio.
2. Absorption ratio.
3. Average/median price.
Detached Housing:
Sales To New Listings Ratio:
I find this data point useful as it combines homes leaving the market (sold/expired listings) with new homes entering the market.
I was waiving the “supply shortage” red flag last September and October anticipating we were headed for a crazy Spring market. Look at the upward sales to new listings trend at the end of 2021. See it?
Today, the detached sales to new listings ratio is very similar year-over-year but trending higher compared to years past.
With the sales to new listings data indicating a listing shortage, that’s not exactly the case though.
Calgary saw an enormous volume of new listings in March 2022. Let’s look back at the past 6 years of new inventory in March for some context:
New listings March 2017: 1,796
New listings March 2018: 1,870
New listings March 2019: 1,702
New listings March 2020: 1,343
New listings March 2021: 2,611
New listings March 2022: 3,152
Calgary home sellers are answering the call – list your home for sale in this hot market!
Calgary continues to see insatiable housing demand that is keeping listing inventories from rising.
Where is this demand coming from?
I’m seeing buyers enter the market who are a) first time home buyers, b) investors (in and out of province), c) out of province buyers moving into Calgary.
I think there are many reasons for these buyers to continue investing in Calgary’s Real Estate market. Like you, I think our City is a great place to live and invest!
Let’s also be realistic. I think there are growing Real Estate demand headwinds, in the form of higher interest rates that can take some of the wind out of our Real Estate sail.
We have fixed interest rates up and the Bank of Canada doing their best to threaten higher and higher interest rates.
Opportunity mixed with difficulty.
Absorption Rate:
Absorption rate tells us in months how long it would take to liquidate all of Calgary’s detached housing inventory, at the pace of this months sale volume.
This data point gives us an indication of housing demand and overall inventory level.
Year-over-year this data point is down, which is interesting to think. There is a slight upward trend month-over-month though. Overall the absorption rate is at the extreme end of this graph.
I think many home buyers are hoping for demand to slow just enough to allow inventories to build which would slow bidding wars and over list offers.
Check out these stats!
Days on market March 2021: 29
Days on market March 2022: 14
Sale to list price ratio March 2021: 98.78%
Sale to list price ratio March 2022: 102.39%
Average Price:
Not surprising, detached average home prices are elevated relevant the past 5 years. Prices are about flat month over month.
FYI – I’m hearing the two primary Real Estate markets in Canada (Vancouver & Toronto) are displaying early indications of peak pricing. Haven’t people been calling for peak pricing for years, haha!
In Calgary, I think continued strong demand, low home builder inventory – in the face of higher interest rates – is helpful for our elevated price flooring to remain consistent this year.
Apartment Housing:
Sales To New Listings:
This ratio has turned a HUGE corner relative to the recent past. For years, condo apartments were dogged high inventory levels. The sales to new listing ratio is showing how much has changed.
Look at these numbers:
Sales March 2021: 385
Sales March 2022: 771
Inventory March 2021: 1,683
Inventory March 2022: 1,165
Absorption Rate:
This might be the most contrasting data point, relative to year past, in my entire email!
With stronger sales, less overall inventory and marginally higher new inventory coming up for sale – apartment absorption rates are way down.
This continues to slant the negotiation table toward condo apartment sellers. I’m hearing Calgary condo’s are on the radar of many investment networks throughout Canada. The prospect of positive rental cash flow, with price appreciation are juicy.
Median Price:
There continues to be upward pressure on apartment pricing for any number of reasons.
Conclusion:
The fundamentals of price appreciation in Calgary’s Real Estate market continue: demand outstripping supply.
Higher interest rates will push back on some of this demand, and undoubtedly put the question to some buyers …”should we wait and see“?
Higher interest rates are not going to snap buyer demand like a twig over my knee. Higher rates, and the extent they remain elevated, slowly squeeze buyer demand.
Let’s say there is a slow squeeze of home buyer demand …I find home prices are “sticky down” (if at all). Prices have proven to be very quick to rush higher. Could you imagine bids below list price, with the same aggression as we have seen bids over list price? Not happening. I’ve found home prices are sticky coming down in the face of Real Estate headwind.
In other news, the Bank of Canada is set to make an interest rate announcement Wednesday April 13th. I anticipate a 0.25% rate increase.
I hope you find this helpful! Let me know if you want to early renew your Mortgage, refinance, purchase a second home, purchase a rental, are separating, want to remove someone from Mortgage or title, or are co-signing.
Thank you for reading :-)
Talk soon,
Chad Moore
P.S.
I’m selling my truck. 2011 Nissan Frontier. Any takers? Call me!
