Calgary Real Estate Market: August 2018
Quick Guide to The Calgary Real Estate Market
By REALTORS® at Renzo Real Estate
How can you walk away a winner in the Calgary real estate market? In this update, you will quickly learn how you can succeed as a buyer or a seller in the housing market.
And it works!
The Calgary real estate market has seen some changes over the last few months and there are a number of moving parts to the market to consider. As with previous months, sales continued to slow and listings continued to climb. There is a difference depending on the market you are in so let's have a closer look at the numbers.
Let's look at a few of the big changes this month. The Calgary Real Estate Board reported that prices have eased by 0.8% this month. This may seem like a low amount but let's look at what it means.
Let's say in July you have a home worth $500,000. You decide to list for $525,000 and do not receive any offers. In August, this home would be worth $496,000 (based on the average 0.8% decrease - the actual number could be more or less). Not great for sellers but probably not a huge cause for concern. Now let's pretend that this trend continues over the course of 12 months. That would be a decrease of around 9% putting your $500,000 investment now at $454,000. If you wanted to "wait for the market to improve" and this trend continued, then you would be looking at listing in the mid $400Ks to have a shot at selling.
Of course, this is a hypothetical situation, but you can see the impact on prices over a period of time. This is why looking at statistical trends is so important.
How do we look into the future?
Well, sad news, we can't. But we do have a real estate market trend that we watch closely in Calgary. This trend is months of supply. Looking at this market trend is one of the leading indicators for future market outlook.
Here is a video to help better explain months of inventory.
Quickly, it is the number of months it will take to sell the current month's worth of inventory on the market. A rising number indicates low sales and/or high inventory. If there is a lot of inventory on the market, then even an uptick in sales is unlikely to cause any noticeable price growth. If there is less than 4 months of inventory then you are in seller's market territory. If you have more than 6 months of inventory, you are firmly in buyer's market territory.
Let's jump into the numbers!
Detached Properties: 4.78 months of inventory
Apartment Properties: 6.86 months of inventory
Semi-Detached Properties: 6.45 months of inventory
Row Properties: 6.22 months of inventory
You can quickly see that the detached sector is in a better position than the others. The news will often times report on the state of the apartment sector, so this doesn't come as much of a surprise, however, look at the comparison between apartment, semi-detached, and row: these properties types are all very close.
What does this mean?
If you are selling an apartment, semi-detached, or row property, you need comprehensive marketing and your price needs to be aggressive. Pricing above your market value range will just help sell the other properties on the market.
If you have been on the market for a while and have been unable to sell, adjusting your price into more of an aggressive range is required. Without this, selling is unlikely.
Let's chat about areas that are in balanced territory.
If you have a detached property in the NW (red), SE (yellow), or E (green) you are in a balanced market on paper. Also, if you have a semi-detached property in the SE (yellow), you are in a stronger range. In these areas, there is 3-4 months of inventory. This doesn't mean you can price above the market range, because you will likely just sit on the market, but it does mean you have a better shot at selling within the market range.
Let's chat about areas that are in a strong buyer's market.
If you have a semi-detached property in the City Centre (purple) or a row property in W (orange) you have around 10 months of inventory. This indicates there is a lot of inventory for buyers to choose from, so you need to be very competitive on price. In most cases, this means pricing in the lower end of the market range. With declining prices and increasing inventory, pricing on the high end is unlikely to produce a successful sale in Calgary.
How can you walk away a winner in this market?
If you are buying, be very clear on the property type and area you are buying in. Expecting to get a property for 90% of list price in a stronger area is probably not going to happen. So set your expectations properly and understand that the steep discounts you are seeing are often times reflected in the asking price already. As in, if you are looking at a $500,000 property, it could have been worth $550,000+ in 2014.
If you are selling (and need/want to sell), keep very competitive. Don't let one of the active comparables undercut you on price and make sure your REALTOR®'s marketing is stellar. If you are priced on the higher end, you need to be prepared to not sell in this market, so stay aggressive if you do wish to sell - it is just the reality of the market we are in.
Please reach out to us if you would like like further information: