This past week we saw the benchmark price increase from the same time last year by 0.6%. This is a net increase when looking at the three different segments of the market we have in Calgary. What that means is that we had seen significant gains in the detached market of 1.8% from the same time last year.
If you are keeping up with my breakdowns you now know that the increase in this price is a residual value of the lower inventory we are seeing and the higher number of sales in our market. You also know that the lower mortgage rates are playing a strong role in this change in addition to less inventory due to the pandemic.
But in this breakdown, rather than speaking about the same fact that has been continuing to show itself each month, I thought I’d provide a bit of a forecast of where things are heading here in Calgary, in my opinion.
There is plenty of data in the Economic Dashboard from the province that shows that our unemployment rates are down from May 2020, our population is growing at a rate faster than the country and the number of housing starts (new construction) is down from September 2019.
These are all important factors to continue to look at as a homeowner because any one of these can swing your home’s value. More new construction means more competition for your home, which could lower the price. More population means more buyers, which could increase your price. More job security (lower unemployment rates) means an increase in consumer confidence to purchase a home in today’s market. So it is very important to keep an eye on these and many of the performance indicators we chat about each week here.
But going into 2021, what can we expect? Mortgage delinquencies to increase?
The big banks are not only fiscally sound but are very strict on who they lend funds to. They employ stress tests and want your complete history when approving your application for lending.
Mortgage defaults are what could contribute to our price collapse?
I don’t think so.
The projections are that less than 0.5% of all mortgages in Canada could go into collections and ultimately into foreclosure and judicial sales. This number is not significant enough to collapse the Canadian pricing let alone our soft pricing here in Alberta.
One might argue that mortgage deferrals have been a tool for consumers to defer mortgage payments to consolidate and manage other debt. Makes sense if your home is only around 2.0% and your VISA is at 19.99% interest.
And with the talk of vaccines from not one but two pharmaceutical companies, we can see rebounds already in the works. All you need to do see the market surges and the banks talking about increasing the interest rates to have evidence of this.
So should we expect 2021 to be softer than 2020? I don’t think so. I think our inventory levels have corrected themselves due to the pandemic, our pricing is incrementally increasing, and all signs show that unless a severe lockdown were to happen, we should continue to expect this same trend into 2021.
It will be better.
I truly believe and hope this to be true because I think we all deserve a good year after this one.
Thanks as always for your time. I truly appreciate it and I hope this adds value for you. If you have questions, I’m more than happy to chat. Shoot me a DM on Facebook or Instagram, send a text or email or as always, you’re more than welcome to call and we can chat.
Thank you once again, have a wonderful day. Remember, it’s not just a house, it’s home. Let’s chat about how I can assist you with your real estate goals.