Updated: Jul 8, 2021
The market is cooling, deflating, suppressing, whichever way you'd like to describe it. But is it deflating to where you want it to be as a buyer? Has the hot seller's market passed?
We will dig into how the market is changing this summer below! Check it out.
And for those of you who don't know, I'm Aly. I'm a real estate agent here in Calgary and have been full-time for the last 6 years. I help predominately first-time buyers with their first home and complete 20-30 transactions each year. If you'd like to learn more about me, feel free to learn more about me here.
Now let's dig into this month's stats and how we can get ahead of the market changes this summer.
Aggregate Real Estate Absorption Rates
Apartment Real Estate Absorption Rates
Yes, buyers, you are reading that aggregate number right, we have seen a drop from the previous month to now of 2% to bring us to a current rate of 37%. But you need to keep an eye on how that changed to really understand if our market is shifting.
And not to burst your bubble, but we all expected this decline in the summer months, especially around the month that will have the anticipated reopening follow it.
In June we saw a decline in sales of 3% and an increase in listings by 4%. When listings increase but sales decline, we have a declining absorption rate due to fewer homes selling. But let's look at the apartment rates, which have increased month over month by 2%. This change is significant because that is an indication of inventory becoming taken away from the market faster than it is replenished. This is the same issue we had with single-family homes that led to higher prices. However, we are still in a balanced market in this segment, but it is something to keep an eye on.
So what caused this change in activity?
If you have been keeping up with my posts (check them out here) you will know there are two main drivers of the market becoming as hot as it has been.
The lack of inventory
The low-interest rates
The reopening announcements in June have sparked sellers that were hesitant to put their home for sale on the market due to the pandemic to start the process of doing so. Now with more vaccinations, lower cases, and things reopen, sellers are more confident to have buyers through their homes.
In addition to the higher inventory, stress tests are now showing their ugly head with qualifying rates higher, squeezing buyers to afford less, while prices continue to rise. This is why we are seeing lower-priced homes, townhomes, and apartments starting to rise in rates. A buyer that is only qualified for so much can only afford it in certain segments.
But these buyers cannot wait.
Reopening doesn't only mean you can now shop freely. It also means the economy is in recovery mode. And one of the tools that will be used for the recovery will be an increase in interest rates. To pay more interest will hurt a buyer more than a higher price for the home (to learn more, check out my post entitled, "Everyone Hates The Sticker Price")
If you are currently in the market, either buying or selling, I would recommend you consider acting now before rate increases come from the Bank of Canada. Once the rate increases, purchasing power for the buyers will decrease, and for sellers, this will affect what you can ask for your property.
As we reopen, there will be a considerable change in our market. Here are some sure-fire ways you can stay ahead of it in the summer months.
Keep up to date with the inventory levels in your area. You will notice either more and more homes selling in your area or that some homes are just sitting waiting for a buyer. Each community is working differently right now.
Stay in tune with the interest rates and how they are changing. I work with my mortgage brokers to get the latest updates on rates so that I can provide you the most up-to-date information.
The summer months are generally when we see declines in inventory as people travel and enjoy the summer. However, with the summer months already here, and fewer people traveling this year, expect this to shift to the holiday months when people will travel to visit family for the holidays.
The economic factors of our city. For example, job creation is at a high right now with more and more companies and industries coming online and ready to serve. This will affect our market as more and more people will take advantage and purchase a home once their jobs are more secure and probationary periods are lifted.
As always, I hope you have found great value in my post. If you have any friends or family that would appreciate this information, please feel free to share with them this page.
If you are looking to understand more about the market and how it pertains to your specific needs, send me an email at firstname.lastname@example.org and I would be more than happy to answer your questions.
It's not just a house, it's home. Let's chat about how I can assist you with your goals.