Nearly 40% of the available homes in Calgary sold in September. Here is what you need to know to get ahead of the market in October so you aren't left behind.
Hi, I'm Aly, a Calgary real estate agent. I work with predominately first-time buyers to help educate and achieve their goals with their property sales and purchases. I've been in the industry for just over 6 years and have a background in finance.
In the month of September, we had a whole lot going on in our city to not only affect the real estate market but our city as a whole.
We entered a fourth wave of the pandemic, which has led our health system to the brink of collapse and we had a federal election to deal with that left us with much of the same outcome (with a big price tag 🤦♂️).
With all of this going on, would you believe that the housing market became stronger in September than in the last two months?
In September, we have seen our aggregated absorption rate increase to 36%. This is a 3% increase from last month and a 10% increase from 2020. Compared to the last normal market we have seen back in 2019, this is an 18% increase.
Aggregated Absorption Rate
Apartment Absorption Rate
Growth by Decline
That is a bit of a counterintuitive statement, growth by decline. But we see it all the time in economics when we are discussing supply and demand.
And this month, this is exactly what happened.
The increase of 3% month over month is predominately due to a decrease of 7% of active listings in the market month over month.
That is a drop of 448 units in a single month.
This means that for every home that was sold there was no addition of inventory to the market to replenish it.
Sales for the month of September compared to August did not change. We had 2,164 sales in September compared to 2,157 in August.
What Spooked The Sellers?
There are a few things that work that sellers are having to contemplate when thinking about entering the market.
The first, and most concerning is where will they go if they sell. With rent prices increasing, does it make sense to go that route now? It all depends on where they are in their lives and what they can do or find.
The Pandemic. It feels like we are the only province really behind the curve when it comes to getting out of this pandemic and coming back to some kind of normal. But rising case counts, more infections, and the vulnerability of kids to the virus are very concerning for sellers.
Although there haven't really been any new restrictions in real estate since the fourth wave started, selling a home is still an individual action. These individuals are simply deciding to not sell their homes until things get better.
Finally, the election. Most homeowners can attest that this past election sounded like each political party saw their homes as a cash cow for recovering from the pandemic. From rumors of a capital gain tax on primary residences to higher taxes levies for investors, owners have become hesitant to sell with all these question marks in the air.
So What Comes Next?
Buyers are going to have some real problems heading into next year if some of the incentive programs tabled by the government are passed through. I'll discuss these in a later blog as we know more, but the main point to consider is competition.
Month over month we didn't see a decline in the number of buyers. We did see rates increase, we saw inventory levels decline, but the number of buyers remained consistent. The more incentives brought forward for new buyers to buy a home will only increase the ability of new buyers to enter the market. A market, that doesn't have the supply to sustain them.
We seem to be following the trend we saw in 2020 around this time of the year where we have seen a slight uptick in September. If history repeats itself, we will see another uptick in October before leveling off for the year.
However, the increase last year was a result of a higher number of sales and a decline in inventory. This time we are only seeing the latter. If this continues you can expect the increase in absorption to be much steeper.
In closing, if you are considering a sale this year, I'd strongly recommend you look at selling now while the demand is there, the weather is good, and you can find your next home before the holidays.
If you are buying a home right now. Make sure your ducks are in a row. Get the appropriate approvals for your financing in order so you can be at the top of the other 2,000 or so buyers that are going to buy a home in October. Remember, if you like the home and the price, you probably aren't alone with that mindset.
Thank you for taking the time to check out this update. I hope it helps to inform, educate and provide you the value you need to make sound decisions with your real estate needs. I'd love to help you along the way. Feel free to book a call with me below and let's connect.
Take care, be well, and I hope we can connect soon.