Did the Calgary Real Estate Market go Up or Down?

Are Values Increasing or Decreasing in Calgary?

I was reading through the Calgary Real Estate Boards stats and reports from September 2010 and noticed something very interesting…

The report said the following:

The average price of a single family home in the city of Calgary in September 2010 was $460,278, showing a 3 per cent increase from August 2010, when the average price was $445,617 all the while, the median price of a single family home in the city of Calgary for September 2010 was $390,000, showing a 1 per cent decrease from August 2010 when the median price was 395,000.

How is it possible that the market can go up and down at the same time… Let’s dig into this and understand why it’s important to go look at the median prices versus the average prices.

In the month of August there were a total of 25 properties that sold over the $1 Million mark.  Considering August was a slow month, this is great… Out of those 25 homes there were only 2 properties that were above the $2 Million price point, $2.3 Mill and $2.6 Mill.

In the month of September 2010 there were a total of 34 properties over the $1 Million mark.  This is a big jump from August.  Along with the increased number of transactions, the price point was also much higher… There were 4 transactions that were in the $2 Million price point along with one that sold for $3.5 Million.

So, when the report said that the prices in Calgary went up and the media reported the same,  Calgarians were lead to believe that the real estate market in Calgary was on the upswing.  When in reality and when you pull back the curtain, you will see that the prices in Calgary actually declined from the month before.  The median of a range of numbers is determined by ordering all numbers from beginning to end and picking the middle one, or in the case of real estate, the sale prices for that month.  On the other hand, the average sale price, where you’d add all the numbers up (or sale prices) and divide by number of sales, gives us the average price.

When you use the median to look at the real estate market values in Calgary, this will take out the super high values and the low values and give us a true indication of what has happened.

So, in saying all this… Did the market go up or down?  What do you think?

Jared & Rebecca

About The Chamberlain Group:
Jared and Rebecca Chamberlain are Calgary REALTORS® who are changing how real estate is done in Calgary by utilizing online marketing and advanced tools to sell your house in Calgary faster and for far more money. They would be honored to have the chance to work with you and earn your business. ____________________________________________________

Not Everyone’s Home Value is Increasing

I wanted to shed some light on what is happening in the market place. Some of you may have seen this Calgary Herald article today about the number of listings in Calgary are higher by 43.3% than last year. Now granted last year Calgary was in a strong recovery mode with the rest of the world. After what happened in fall of 2008, and the US banking and mortgage system imploding, we were all in recovery mode. So with this stat of the number of listings increased by 43% shouldn’t mean much right?

Let’s look at it this way. Last year over Christmas there was nearly 12 months worth of inventory on the market and in March, Calgary was down to just under 6 months. As of March this year, we are under 4 months. In Calgary, a balanced market is between 2.5 months and 4 months worth of inventory. This is called the absorption rate. Anything above 4 months is a buyers market and anything below 2.5 months is a sellers market. So currently we are in a balanced market in Calgary, however if your looking to buy a home in Calgary, then there is plenty to pick from.

So we have a lower absorption rate than last year in March, however we now have an increase of 43.3% of listings than this time last year. Reason that the absorption rate is still low and hovering around the top of a balanced market and what makes the big difference is that there are sales happening. Compared to March last year there is an increase of 27.3% in the number of completed sales.

So why would I say that not everyone’s home value is increasing?

With the increase in the new listings over the past month or so, this has created some crazy competition for certain price points in Calgary. These price points typically sold very quickly and for good value in the past. However with the flood of properties in these ranges, if your wanting or needing to sell your home in Calgary, you are needing to stand out from the crowded dance floor.

Thus, not everyone’s home value is increasing.

As well, this isn’t just happening in Calgary either…

Calmer Housing Market Brings Opportunities for First-Time Buyers

The numbers are in, and they bring good news for Canadian homebuyers. Price growth is beginning to ease up across the nation, according to Genworth Financial Canada’s Metropolitan Housing Outlook  report. For new and resale homes, price growth has quadrupled since 2001, but is expected to slow over the next five years, allowing potential homebuyers to feel a little breathing room.

If you are in the market for a new home you may want to check this out…

Calmer market ahead

In 2008, the rate of price growth should drop about 50% from last year for both new and resale homes across Canada. The return to historically normal levels will give consumer incomes a chance to catch up and buyers should feel less pressure and more opportunity to explore all the choices and financing options available to them.

“Now we’re seeing a calmer market,” said Peter Vukanovich, president of Genworth Financial Canada. “That translates into better opportunities for first-time homebuyers to make an informed decision.”

For homebuyers, this more stable growth is a welcome change from the increases in recent years. Both 2006 and 2007 saw an 8.7% increase in the price of new homes, and there has been a 10.2% average jump in the price of resale homes each year since 2002.

“Rapid price increases, which were virtually unsustainable in regions like Alberta, had begun to erode affordability and put a lot of pressure on first-time homebuyers in terms of their decision-making process,” said Vukanovich.

Housing market still strong

Overall, Canada’s housing market is expected to remain strong, supported by steady demand and modest price increases across the country. This year’s national average new home price is forecast at $397,789 (a 3.8% increase) with the 2008 average resale home price expected to reach $322,424 (a 5.1% increase). Regionally, the strongest housing demand can be found in B.C., Manitoba, Alberta, and Saskatchewan, as a result of the commodity-fuelled economic growth in the West.

National housing starts, however, are expected to ease to just below 215,000 units this year and 194,000 units in 2009. This represents a 15% drop, after eight years of steady increases. The drop in single-unit starts is expected to be greater than for multiples, reflecting the number of empty nesters looking to downsize and the affordability of these properties for first-time buyers.
Mortgage rates to drop

Mortgage rates will also see a drop this year as the lowered Bank of Canada interest rate flows through to the mortgage market. The average five-year conventional mortgage rate is expected to be 7.0% in 2008, dropping slightly to 6.7% in 2009.

For further report details, including regional numbers, download the full report.

More modest increases ahead

Canadians can look forward to more moderate price increases for new and existing homes across the country in the years ahead.

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Calgary Prices Past vs. Present

We have had some incredible growth in our prices in Calgary, and Alberta in general.  At some points we were making money without even doing anything to our houses, and some months we were getting upwards of $5,000 per month “in our pocket equity”.  Times have changed… we are now seeing prices relax, and decline.  Now, don’t take me wrong, I’m not saying that the increase in Calgary and area is over, by no means, but the market is resting right now… Below is a great graph that puts it all into perspective of how well we have done with the prices in Calgary.

Would love to hear your feedback!

20% Further Price Reduction?

In a recent Calgary Herald Article that was published this past weekend (Saturday September 13th) stated that a couple realtors in Calgary said that the home prices would be decreasing another 20% over the coming year.  One agent stated…

“Prices went up nearly 100 per cent in 2-1/2 years,” he says. “Let’s just say the ‘why’ for the decline can be found in the words, ‘Too far, too fast’.”

I do agree that there was a huge increase, but I do disagree that it was too far, too fast.  If we had increases like this over 5+ years, than yes, but in this case, the market is adjusting and finding it’s new bottom.  Every booming economy has it’s moments of breathing.  The market is alive and therefore needs to breathe.  As a seller in this market you really need to be on your game and know your ’stuff’.

Seller’s also really need to think like a buyer in this market.  By this I’m saying that you need to put your feet in the shoes of a buyer, and clearly understand what they think, so you are able to market to them properly.

The market is changing, and will do so for a while. Prices will most likely decline, to what extent and for how long?  Great question… don’t know…  When the market finds it’s new bottom, then we will be able to for sure say… “The Sellers Market is Back”.

On the flip side, it is truly a great time to purchase a home.  If you are planning on living in the home for 2+ years, there are some great deals out there.  If you are looking to do investments… again, great time!  If the investment will be a flip of a home, you might want to stear away from that right now, but for long term rentals… that’s the place to be!

Cheers!

The Sky Is (Always) Falling!

As you may have seen in papers or media… they are saying that the Canadian housing market is falling.  First off, if you are basing your idea of real estate purchasing or investing on the country wide stats, you are most likely not going to do well…  Every province, city and town is different, and needs to be studied on its own.

I really want to urge you to take a long term approach to what is happening.  The Alberta, and more specifically the Calgary and area market is taking a breath.  If the market continued to climb with 30%-40% increases year over year, I would be very nervous.  But with the market taking a breath, finding a new bottom, this says to me that there will be some continued growth in the future (there are many other reasons for this as well).  Personally, I am OK with the market the way it is.  The media and paper articles talk about how the market is not doing good and Alberta “in general” is having much greater decreases in year over year prices than the rest of the country.

All in all, if you are investing in real estate, or looking to buy a home, now is a great time to find some great deals out there for purchase.  There are motivated vendors (sellers), and some great cash flowing property.  Don’t get caught up in the media hype, and get overwhelmed… STAY FOCUSED!

Calgary Home Prices Drop, but Market Still Strong

A survey by a national real estate firm shows average house prices in Calgary in the second quarter of this year declined in three categories – detached bungalow, standard two-storey and standard condominium – compared with a year ago, while national averages all increased.

According to the House Price Survey and Market Survey Forecast report released today by Royal LePage Real Estate Services, the average price drops in the Calgary market were 4.7 per cent for a detached bungalow (to $438,122), 6.0 per cent for a standard two-storey home (to $437,744) and 5.0 per cent for a standard condominium (to $285,033).

The Edmonton market saw bigger price plunges by 14.5 per cent for a detached bungalow ($320,000), 12.4 per cent for a standard two-storey home ($348,571) and 14.2 per cent for a standard Condominium ($226,000).

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