Step 1 - REALTOR® Interviews and the Comparative Market Analysis (CMA)There are hundreds of critical mistakes you can make when selling your home, however there is a universal cure for all of
Sellers Ask: How long can this market last?
Dated: May 28 2021
As I write this blog post, I am reminded of the volatility that we have seen in the Real Estate Market in Alberta over the last 15 months. From a reasonable start to 2020, to a grinding halt in March, to a meteoric rise in the number of Real Estate transactions so far in 2021. This dramatic shift in housing had so many unique factors that created an unpredictable market, and people thinking about sell constantly ask..."How long can it last?"
Wouldn't it be great if a guy like me knew those answers? But as I mentioned before, all the writing that was on the wall showed the signs for a potential economic crash and housing prices to drop dramatically, but the inverse occurred. We saw inventory levels on the market get snapped up all summer long in 2020, as people were looking to get bigger spaces to allow for their remote work, or new home buyers were pulled in by the attractiveness of a sub 2% interest rate on mortgages. The reduced spending on travel, fuel, insurance, and other extravagant purchases gave everyone just that much more buying power, so queue the Seller's Market.
Now for those that aren't up on the terminology of the Real Estate world, a Seller's Market, in its simplest form, is when there are more buyers than there are sellers. Now in Calgary, we had a dramatic drop in home sales due to the pandemic in Q2 of 2020. This didn't mean those homes for sale disappeared, but rather stayed on the market for a longer duration. As the restrictions eased slightly and aided by the increased buying power for the consumer, many went out and purchased homes in a compressed time frame than normally occurs in the market. For example, in Q2 and Q3 of 2020, we saw 11.8% and 27.9% increases in transactions compared to the same period in 2019, but the total volume of sales in 2020 was actually down compared to 2019. However, as 2020 came to a close that buying force in the market continued to carry on, which is uncommon in the winter months. Normally we see a drop off of transactions between late November and Mid-February, but we have seen the largest Q1 transaction volume in Alberta ever (the second closest being 2014, a period of massive economic strength in Alberta). 2021 is poised to be the strongest year in real estate on record, with March and April alone generating a sales volume close to the same sales volume as the last 6 months of 2020.
So what is causing the shortage? Well, there has been quite a large migration away from the downtown core. People have been tasked to work remotely, so the commute no longer becomes a main determining factor in where people live. So with fewer apartment dwellers and more detached home purchases, we are seeing a massive draw on the homes being listed. This means more competition from buyers, and a trend that home prices are climbing as sellers can get more for their home as it is harder to find alternatives. Just look at the price of lumber today, and you can see the effects of supply and demand in full effect.
So let's circle back to the questions at hand..."How long will it last?" Is that really the question we want to ask, or should we be asking the question "how is this market going to affect me today?" If you are on the fence and waiting to see how much money your home could be worth if you wait, then you will likely react too late once the market starts to balance out. There is an adage of "Making hay when the sun is shining". This means don't plan and hope for good weather, but rather take advantage of it when it's here.
As a born and raised, multi-generational Albertan, my roots run deep in making the Calgary area home. Although my path was through the corporate world, I understand that a home is a person's most impo....