Positive headlines...that's what drives residential real estate. This month, we saw a 23% gain in home sales when we compare February 2020 to February 2019. That is great news! But there is an asterisk to that...February 2019 was one of the worst months for total home sales in this city in the past 25 years. The bump up in sales in February is nice, but it doesn't mean we are out of the woods just yet, nor does it tell the whole story.
From the Calgary Real Estate Board:
"With the extra day this February, monthly sales totaled 1,197 units. A combination of these two factors resulted in a 23 per cent improvement over last year, but sales remain well below longer-term trends and consistent with the lower levels reported over the past five years.“However, this should not diminish the fact that conditions are still improving,” said CREB® chief economist Ann-Marie Lurie. The benchmark price was $416,900 in February. This is similar to last month, but nearly one per cent below last year’s levels. Overall, prices remain nearly 11 per cent below the monthly high recorded in 2014
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Year Over Year Sales Volume Comparison 2019 - 2020 (YTD)
Coronavirus, Rate Drops, and the Stress Test
So we have had a really positive start to the year, which is what this city needed. But will it last?
The coronavirus scare has given us a wild ride on the stock market, and this will have an impact on the real estate market as well. Fear drives the market up and down, so expect some fall out from what is going on globally, but it might not be that bad. There has been some good news out of this on the real estate front, as well as an announcement from the federal government that could diminish the overall effect of the economic slow down.
2 weeks ago the best you could do on a 5 year fixed mortgage was about 2.7%. Last week, to keep the economy moving, the feds announced a .5% prime rate cut. This has started to trickle down to mortgages. We had our broker advertising 2.3% 5 year mortgages last week. Pretty cheap money.
Also, the stress test that came into effect for uninsured mortgages in 2018 is being retooled come April 1st. This will make it easier for buyers in all price points to get a mortgage, and to be able to purchase more home than they could under the original rules (for more details on the stress test changes, check out our blog from last week. Click here).
It's a crazy world of unknowns right now, but as time goes on this year, I feel that the market will stay fairly stable. There will always be news stories that put bumps into the road every month, but there are some positives that have been injected into this market over the past month that should help. Just don't forget to stock up on toilet paper if you can find it.
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Calgary and Area Median Home Price
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Scroll down for market quick facts, and to see the full breakdown of the market stats from the Calgary Real Estate Board, click here.
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HOUSING MARKET FACTS
- After the first two months of the year, detached sales improved by nearly 12 per cent. Improvement did not occur across all districts, as sales continued to ease in the City Centre, North East and North West districts.
- Driven by pullbacks mostly in the south and west districts, new listings declined by one per cent in the city so far this year.
- Improving sales and easing new listings helped reduce inventory levels and reduced months of supply to just below four months in February. This is a significant improvement over the more than five months recorded last February.
- The benchmark price continued to trend down this month for detached homes, but the pace of decline is easing. Citywide detached prices remain less than one per cent lower than last year’s levels, but price movements vary significantly by district, ranging from a three per cent decline in the City Centre to a two per cent increase in the South district.
- For the second month in a row, improving sales were met with gains in new listings. This is causing inventory gains.
- Sales levels were high enough to cause the months of supply to ease, but the persistent oversupply in the market continues to weigh on prices.
- February benchmark prices eased compared to the previous month and is over two per cent lower than last year’s levels. The overall benchmark apartment price of $244,700 in February is nearly 19 per cent lower than 2014 monthly highs.
- After the first two months of the year, rising attached sales and easing new listings caused inventories to decline.
- February months of supply is now below five months, an improvement compared to the past two years.
- Conditions continue to favour the buyer, but improvements have helped reduce the downward pressure on prices. However, divergent activity continues based on location, as prices declined across most districts, but improved in the West, South East and East districts of the city.
REGIONAL MARKET FACTS
- After the first two months of the year rising sales were met with gains in new listings. However, the improvements in sales outpaced the new listings gain resulting in further inventory declines. Months of supply have still eased over last year’s levels, but not enough to cause a significant change in price movements.
- After the first two months of the year, the benchmark price has remained relatively stable compared to last year.
- Trends in the town remain generally consistent with regional trends. Improving sales were met with some reductions in listings, inventory and the amount of oversupply in the market.
- The market is showing signs of improvement, but prices continue to remain over two per cent lower than last year.
- Improving sales in the town were strong enough to offset recent gains in new listings, causing further reductions in inventories and the months of supply.
- The elevated levels of supply compared to sales continue to cause prices to trend down. However, at a benchmark price of $409,150 so far this year, prices are just above levels recorded over the first two months of 2019.