A Look at my Predictions from 2016 and a March/April Market Update

 

The month of March saw the Calgary and surrounding area begin to move back into balanced territory but only in specific product types.  For the most part the news is good and the trend is up unless you are trying to sell an apartment style condo.

 

The number of sales in March city wide was down 10% over long term trends but is up compared to the last couple of years at this time.  I think two things are coming together to support this.

 

1) A decrease in listings. Over the last couple of years fear and loss of jobs have been the strongest drivers in the listings I have been seeing. Either someone was let go from their work and they were selling their home because they couldn't make the payments or they were moving home (mostly ON,Sask, Maritimes and BC) or they were simply fearful of what was going to happen with the market. The second increase in listings was from individual investors who had a bought a home or condo to rent out and now due to the loss of jobs couldn't keep the place rented. 

 

I saw a lot of non-primary residences listed, whether that was one that was being rented long term or purchased under the assumption that the market was going up and being held as a speculative investment.  Many of these condos still remain on the market and there is a lot of competition to rent them out.  There are good deals in the condo market in Calgary compared to prices over the last couple of years, this goes for purchases and also for rentals. 

 

Some of the buyers I am working with have similar purchase points and search criteria to clients that I worked with over the last couple of years and the amount of 'home/condo' you get now for the same price compared to a couple of years ago is significantly more. Yes, the condo might be the same price but now you can get a unit in a more desirable building, upgrades, corner units and higher floors for the same price as you could a few years ago.  Now you can purchase one of the more desirable units in a building for the same price as the least desirable units only a couple years ago.

 

2) A boost in confidence in Calgary. We have seen a couple things take place recently that seems to be increasing the confidence of buyers in Calgary. People that were trying to time the bottom of the market are starting to think that they have missed the bottom and are beginning to invest, feeling that the market is starting to improve again.

 

The media is starting to make people have a renewed confidence in the Calgary Real Estate Market.

 

26 January CMHC came out reducing the risk rating in Calgary from strong to moderate

 

8 February we saw an article by the CBC about how Calgary was still the fastest growing metropolitan area in Canada despite the down turn.

 

7 April  CBC ran a feature on 20,000 Albertans going back to work

11 April CBC had a report stating that the market in Calgary is changing.  Whether or not it is true or optimistic doesn't really matter, the report is on TV so people will immediately think it is true and think that they might be missing out.

 

18 April there was also an article by the Calgary Herald talking about an increase in the Calgary housing market.  Even if the article only talks about a .6% increase in the price of a home in Calgary most people will only read the headline anyway "House prices in Calgary experienced a small increase in the first quarter of the year."

 

In summary, the detached housing market in Calgary is improving, inventory is down and there are buyers searching for homes.  The condo market continues to slide but could be approaching the bottom too. Condo sales are definitely still legging behind the improvements we are seeing in Calgary's detached home market.

 

Predicting the future

 

In December of last year a friend of mine who is a real estate investor was looking for feedback from real estate professionals on what their thoughts were on the Calgary housing market for 2017 and onwards.

 

My friend's post:

 

Calgary area real estate investors, what are your predictions for 2017? 2020? 2030?

 

There were 17 comments on that post, not one of them looked like this. Many were just plain wrong.

 

What I predicted

 

Here's what I went on the record stating and how it stacks up to what is happening currently.

 

Calgary area real estate investors, what are your predictions for 2017? 2020? 2030?

 

Tim Banfield I think you'd get better stats from asking the oil traders since it is so closely related (instead of asking real estate investors).

2017, pipelines approved (keystone with Trump?) oil prices rise (mostly cause Saudis want an IPO for their state run oil company) and investors/buyers sitting on the sidelines purchase. Maybe if this does not happen naturally we see some type of a mini-war instigated by a big player to inflate prices. USA or Russia increase Middle East operations? Sales go up 20ish % but prices stabilize. We are at the bottom/close to the bottom of this cycle. Once TV starts talking about increasing real estate in YYC which will only happen after the increased sales it will take off again...but the TV won't start talking about it until fall so I say spring 2018 it picks up.

 

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What is Happening:

 

Trump approved Keystone

Oil prices are up marginally

Mini-war instigated in Syria by the USA and possibly Korea soon?

The media is talking a lot lately about the Calgary housing market, therefore it might get hot earlier then I predicted.  See the articles listed above for context.

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My prediction continued

As far as 2020 and 2030 again ask oil traders. Eventually demand will outpace supply barring changes in science. Developing countries and the middle class there want cars and the freedom they provide. Demand will continue to rise therefore oil should remain at profit making levels, thus sustaining our real estate market. 

My Thoughts?

Invest in r2 or multi zoned locations within walking distance of the new green line stops and a Starbucks :)
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I just pulled the stats on R2 zoned properties in the inner city over the last 90 days.  The average Days on Market is 26 vs the Calgary average of 55.

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What else I stated

 

Also, look at what communities have benefited the most from foreign buyers in Vancouver and TO. Extrapolate that to Calgary, with a direct flight now and pain in the ass regulations in YVR that will eventually migrate here. I have seen an increase in that buyer over the last year for these reasons.

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Here's a recent article from CBC discussing Chinese buyers and their decreased interest in Vancouver and a huge surge in Calgary. The inquiries by Chinese buyers in Vancouver fell by 81% in 2016 and increased in Calgary by 1050% and 420% in the months mentioned in the article.  At the same time Toronto only saw an uptick of 62% in Chinese buyer inquires.  I continue to believe that we will see an increase in foriegn buyers to Calgary.

 

Chinese buyer inquiries spike after changes in Vancouver.

 

And a few comments from that friend's post above.  We know what happened and what seems to be in the works.

 

Tim Banfield Trump wants to name the CEO of Exxon Mobile as the Secretary of State. Prices are going up :/

 

Lyen  He might not get confirmed, Senate republicans aren't happy he's super cozy with Putin

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Well, Rex Tillerson got approved as the Secretary of State and we have seen increased military action in Syria and lots of posturing surrounding Korea pushing oil prices up slightly so far.

 

What do I think will happen now.

 

I believe we are starting to see a turn around in the Calgary real estate market.  The TV and media in general is much more influential then people give it credit for.  I think the positive news about the Calgary housing market will only continue to speed up the turn around.  The more positive news about Calgary, the more buyers feel reassured and invest.  Then as more people enter the market and purchase homes, the more we will see the media talk about the positive sales numbers and the circle will continue.