As anticipated from past historical data of the typical winter months in real estate, it has been slow for the month of December. The real estate market in the city of Calgary has been slower for the entire city in general, but houses priced right, and in the right location will still fly off the shelf like hot cakes.
Overall, the Calgary Real Estate average prices has been dropping month over month since the beginning of 2018 because of a few economic factors.
Here are some reasons why the Real Estate Inventory has been slowing:
1. The consumer confidence seems to be at an all-time low.
2. The challenges in the Alberta Energy sector and record low Gas prices
3. Rising Bank of Canada interest rates appear to be hampering new buyers entering the market place.
4. New Mortgage Rules: Stress Test
5. Less demand for luxury real estate in Calgary
Optimistically, if we look at the facts, and the compare to the previous years, it's not as bad as it seems and here's why:
- Rental market is steady
- Business incorporation's were up 21.5% year over year as of October
- Net Migration to the Province is up 101% year over year (10,378) as of the end of the 2nd Quarter. This is the third largest growth in the Provinces.
- Manufacturing Sales is up 15.1% year over year as of September
- Wholesale trade is up 5.2% year over year as of September
- Employment was up 1.8% and unemployment was down .3% at the end of October
- At the end of August there were 40,100 jobs available in Alberta
- The average weekly earnings for an Albertan is over 14% higher than the average Canadian
- Cattle prices are up 6.9% and grain deliveries are up 13.8%
- Bank of Canada's interest rate is at 1.75% when it was only ten years ago that it was over 4%
Without a doubt, there are many families and people that are struggling in Calgary and it is a tough time for our Province. We are not quite out of the woods yet, however Albertan's are resilient, strong and innovative that we will not just sit back and do nothing.
Like many other years, we've been through this slump of the real estate cycle, these tough times will end, and we will rebound, and it is up to all of us as Albertan's to help one another out of the pessimism and focus on the optimism. We must work together to find creative solutions and innovative ways to move forward.
While economic indicators all continue to improve, and our GDP continues to rise, it has not yet translated over into the Real Estate market. We have seen year over year sales volumes consistently lower through out 2018, and September was no exception to this. The good news is that listing inventory has continued to drop, partly due to sales and partly due to properties being taken off the market. There were approximately 567 listings taken off of the market in September due to being terminated, conditionally terminated or expiring. With inventories totaling 7,941 in October 2018, that means that ~7% of the listings are not selling. The higher inventory does continue to have modest pressure downward on pricing, and we are continuing to see days on market creep up.
We expect to see this trend continue as the markets slow coming into the Winter months. Ideally the inventory lowers through the months that are historically low, to help balance out the market come the busier selling seasons. It remains imperative that sellers are educated on property values, and have realistic expectations of the markets. That said, the buyers also need to have realistic expectations with in the markets they are shopping.
We look forward to all that the future holds and will face it head on! It's just part of the real estate cycle.