A deeper look at Calgary’s October real estate market: rate cuts & renewed buyer activity
The story continues with our most recent themes:
1) The Bank of Canada lowered rates again this month (as did the Fed in the US), in response to weakening economic news. Rates have therefore dipped below the dividing line between "neutral" and "expansionary."
2) Overall sales increased significantly in October versus September. This only happens every one in three years:
One month is not a trend, but it's something to take note of. It's likely a response to falling borrowing rates and improved prices (from a buyer's perspective) in some market segments. It's a reminder that unconfident buyers with real underlying motivations (e.g., upsizing or downsizing) can only hold off for a finite period of time. This is how pent-up demand forms.Interestingly, the increase in sales was entirely due to detached home and semi-detached home purchases.
Other Updates
There was a sharp decrease in inventory from September to October, partly due to these sales, but also due to expiring/terminated listings. We would describe this as a healthy sign of a balanced market, doing what healthy, balanced markets do in the fall. It's a reminder to potential sellers to hear great advice both before and during a listing to make the most effective use of your real estate assets and personal assets (time & energy). The rate of new listings entering the market is high and steady (no longer increasing YoY)As a result of these changes, the market as a whole has stepped back from the brink of a buyer's market and is now balanced. Inventory dropped from ~6,900 to ~6,400 units (-7%), bringing months of supply back to 3.5 months (balanced).
Anecdotally, my buyer business is steadily growing - with people I know returning to the market and offering/securing select properties. The flow of calls from people looking to sell appears to have dropped off slightly more than seasonally this year - possibly a leading indicator for next year.
Bigger Picture
Apartments & areas of new construction continue to experience buyer's market conditions with falling home values. Apartments now average -7 % YoY, row homes about -6 % YoY. Detached homes and semi-detached homes outside of new construction areas continue to display balanced conditions.
Regionally, nearby markets are echoing Calgary’s pattern: Airdrie remains buyer-leaning, Cochrane has stabilized near long-term norms, and Okotoks continues to show tight, balanced conditions around 2½ months of supply.
We attended a seminar from the Canadian Real Estate Association's Chief Economist, Shaun Cathcart, this week in which he spoke about the housing shortage in Canada and the federal government's approach to housing over the last twenty years.
The division between apartments, missing middle (townhomes), and detached/semi-detached homes is a Canada-wide phenomenon. The former are being built, but the latter are in demand. Shaun's presentation reinforced the personal philosophies that we hold true at our team, around what we tend to advise our clients and other loved ones to own and when. Interestingly, of all Canadian cities, the only one that is really building a meaningful number of detached homes is Calgary. That being said, it's unlikely to be enough to prevent values from running up, particularly away from those new construction areas.