Calgary is going through some challenges these days and one of the most frequent and popular questions I’m confronted with is how this affects our real estate market? Real estate is always a hot topic, and on a daily basis I am asked how home pricing and sales are affected by our current economy. Of course, it is difficult to say where we are headed in the short term, but Calgary certainly has a particular way of getting through tougher times in the long term.
There’s no doubt that our number of sales are down from just over a year ago; in 2014 there were 25,543 sales, compared to 2015 where sales dropped 26.26% to 18,836. However, the number of listings was also down year over year, with 2014 registering 36,168 listings, compared to 2015 with 33,874 listings, a 6.34% reduction. Of course it makes sense that less listings does generally means fewer sales.
Overall, prices have reduced only 2.64% year over year, so it’s not nearly as bad as the media outlets like to report. There may be some additional volatility to come from 2016, but it’s not all bad news.
There is some good news that comes from all of this! If you are looking to upgrade your home or simply take advantage of some potential “good deals”, now is the perfect opportunity for a few reasons:
- Interest rates are still at an all-time low. The Bank of Canada has kept the cost of borrowing money down so the lenders and banks are able to pass on the savings to you! In fact, prime rate sits at an affordable 2.70%.
- Your next home might be on sale right now! The luxury market has taken a larger price correction than other Calgary markets, so you can benefit from some great prices on your dream home.
- Buying in a down-market can be scary, but it does make financial sense if you can stomach it. I can guarantee you that if you buy in the near future, you will not be paying top dollar on your home compared to more recent boom-years. It’s true, there is potential that the real estate market could see further price correction, however there is comfort in knowing that you didn’t pay a premium price for your home to start with.
- The general trend for home pricing is always up, regardless of any economic downturns. Buying real estate for the long haul will always net you a positive return over time. Real Property can’t disappear like a stock or company, regardless of the state of economy. Buying an investment with tangible land is the safest investment you can make.
- A 2016 International Housing Affordability Survey conducted by Demographia, recently ranked Calgary as 239/367 international cities on the affordability index (367 being unaffordable, Hong Kong). This study compares price of real estate to median household income. On a global scale, Calgary is considered a relative bargain compared to other metropolitans. This might not always be the case, so Calgary will likely be a better investment for long-term gain than other municipalities.