"Priced-Out Toronto and Vancouver Buyers Bring New Heat to Calgary Real Estate" - storeys.com
That is an interesting headline from a week ago. When they mention new heat, they aren't wrong. But what has developed is ever so slightly cooling of one segment of the market and a rise in another.
We look at what has changed this past month in our market and where the next set of sellers need to be to take advantage of this next wave of increased demand.
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Now let's dive in.
The month of March is generally when we see new listings come onto the market. As new listings come online, we see a significant jump in both sales and listings as more and more people are looking to get into their homes before the summertime.
This is not new news. We generally refer to this as the seasonality of the market.
And this is what we have seen this past month. In March, we saw active listings increase 20% month over month, while sales did the same with an increase of 24%.
The issue is that when these two move together, the needle of the market doesn't change.
At the end of March, our absorption rate increased to 90%, from 87% the previous month. In January we were at 72% as a market. So this increase of 3% isn't really newsworthy.
But what is newsworthy is what we have seen in our other segments. Particularly apartments.
Here we have seen a surge of sales predominately due to the oversupply we have had in this segment as well as changes to the affordability of buyers with rate changes and new taxes imposed in other areas.
For the apartment segment, we have seen active listings increase by only 8% month over month, while sales surged, increasing by 36% from the previous month.
Remember those sellers I mentioned above that need to take notice, this is you, folks.
The absorption rate increased from 51% in February to 64% in March.
Personally, I've shifted where I list many homes to the apartment segment to make the biggest returns for my sellers. Especially considering that this segment has been the one that has been waiting for a boom like this to happen.
We will dive into the cause of this change below.
If we dissect the above two charts, we see that as an aggregate view, our absorption is moving towards a flattening of the curve, while apartments are surging.
What is driving this change? Our single-family home median price for the city is still just under $612,000, which considering other major markets, is relatively low.
To answer this question, we need to look at the profile of the buyer we have in our market. Lately, there has been a lot of out-of-province purchasing happening in our market.
When someone out of market purchases a property, they don't contribute to the inventory positively by having to sell something to buy, they just buy, therefore decreasing the inventory.
Doing this drives prices up significantly. Which is what we have seen. But the pricing comes to a point where it's no longer producing a return for the investor or it's just no longer affordable. Therefore levelling off interest and keeping the price steady.
Add in the changes to the borrowing rates (click HERE to see our current rates) and you see how the added cost of ownership will lead investors to start looking at different types of property to invest in.
This now makes the lower-cost townhomes and apartments all the more enticing for these out-of-province investors. And as they have shifted their focus, so has the surge in our market.
If you are a seller that owns one or a few investment properties over the years, you've been waiting for an increase in this segment's pricing, now is your time to take a look at selling.
Personally, I have sold 4 apartments this past month, all off-market to investors at or above asking.
Your market has come to make a change to your portfolio, let's chat and see what kind of return you might get for your apartment or townhome.
If you are interested in learning more about selling your apartment or townhome, or your property in general, feel free to reach out to me. My information is below or you can reach me through any of my channels by clicking HERE
If you are currently considering a purchase, reach out and we can get started with getting you pre-approved with a full review so that you are confident in your ability to purchase your next home. Feel free to visit the link above and get started.
Thank you for the time. I hope this had added value for you. Take care,