Market Starts to Shift as Sales Slow

City of Calgary, July 2022

Sales activity in June eased relative to the past several months and with 2,842 sales, levels declined by two percent over last year’s record high. While sales activity has remained relatively strong for June levels, the decline was driven by a pullback in detached and semi-detached home sales.

“As expected, higher interest rates are starting to have an impact on home sales. This is helping shift the market toward more balanced conditions and taking some of the pressure off prices,” said CREB® Chief Economist Ann-Marie Lurie.

“While we are starting to see some transition, it is important to note that in Calgary year-to-date sales are still at record levels and prices are still far above expectations for the year.” This pullback in sales was not met with the same level of pullback in new listings. This caused inventories to trend up over previous months. These shifts are supporting some easing from the exceptionally tight conditions as the months of supply remained just shy of two months. While two months is still considered low for our market, it is a significant change over the one month of supply recorded earlier in the year.

After three months of gradual gains in the months of supply, prices eased slightly relative to last month. However, with a city-wide benchmark price of $543,900, levels are still over 13 per cent higher than last year. With further rate gains expected, we could continue to see slower sales activity and some monthly price growth slippage in the Calgary market in the coming months. However, thanks to renewed migration and job growth in a wide range of sectors, it is unlikely that we will see a full reversal of the price gains made so far this year.

View the full report here: June 2022 Statistics

Market Continues to Favour the Seller Despite Slowing Sales

City of Calgary, June 2022

For the second month in a row, sales activity trended down after all-time record high sales in March. While activity in the market slowed down in May with 3,071 sales, levels are still slightly higher than last year’s record high and are far stronger than typical levels of activity recorded in May.

“It’s not a surprise to see sales ease from the exceptionally strong levels seen earlier in the year. Many buyers were eager to get into the market ahead of the rate gains that we are now seeing,” said CREB® Chief Economist Ann-Marie Lurie.

“While higher lending rates are weighing on sales activity, the market is still struggling with supply levels and rising prices which could also be contributing to slower sales, especially in the detached market. Nonetheless, if this shift continues, we could begin to see more balanced conditions in the market over the next several months, slowing the pace of price growth in the market.”

Slower sales were met with a decline in new listings, but a strong pullback in sales was enough to cause inventories to trend up relative to levels seen over the past few months. While inventory remains well below historical norms, the monthly gains did take off some of the pressure in the market. However, with just under two months of supply, the market continues to favour the seller.

Tight market conditions continue to contribute to further price gains in the market, but the pace of growth has eased relative to what occurred over the previous four months. Overall, the benchmark price reached $546,000 in May, over 14 per cent higher than last year’s levels.

View the full report here: May 2022 Statistics

Sellers Market Conditions Continue in April

City of Calgary, May 2022

Following an all-time record high month of sales in March, activity slowed down in April. However, with 3,401 sales this month, it was still a gain of six per cent over last year and a record high for the month of April.

“Despite some of the monthly pullback, it is important to note that sales remain exceptionally strong and are likely being limited due to supply choice in the market,” said CREB® Chief Economist Ann- Marie Lurie. “While further rate increases will likely start to dampen demand later this year, more pullbacks in new listings this month are ensuring the market continues to favour the seller, resulting in further price gains.

New listings trended down relative to last month and levels recorded last year. With the sales-to-new listings ratio remaining above 74 per cent, there was not much of a shift in overall inventory levels. With 4,850 units in inventory, we are no where near record low inventory levels, however, levels are far lower than what was recorded in April since 2014. What has changed in the market is the composition of the inventory levels.

When comparing inventories today to what was available in 2014, we can see that detached homes comprise of a smaller share of the inventory levels especially for properties priced below $500,000. Overall, the Calgary market has seen the months of supply remain below two months since November of last year, placing significant upward pressure on prices. The benchmark price in April reached $526,700, which is nearly two per cent higher than last month and 17 per cent higher than last year.

View the full report here: April 2022 Statistics

Record high sales seen again in March

City of Calgary, April 202

For the second month in a row, sales activity not only reached a monthly high but also hit new record highs for any given month. Gains occurred across every property type as they all hit new record highs.

An increase in new listings this month helped support the growth in sales activity. However, inventories have remained relatively low, ensuring the market continues to favour the seller.

“While supply levels have improved from levels seen over the past four months, inventory levels are still well below what we traditionally see in March, thanks to stronger than expected sales activity,” said CREB® Chief Economist Ann-Marie Lurie. “With just over one month of supply in the market, the persistently tight market conditions continue to place significant upward pressure on prices.”

With an unadjusted benchmark price of $518,600 this month, the monthly gain increased by another four percent. After three consecutive gains, prices have risen by nearly $55,000 since December and currently sit nearly 18 per cent higher than last year’s levels.

Despite the strong start to the year, price gains and rising lending rates are expected to weigh on demand in the second half of this year. Nonetheless, persistently tight conditions will likely continue to impact the market over the next several months.

View the full report here: March 2022 Statistics

Sales Continue to Surge as Listings Rise

City of Calgary, March 2022

Thanks to a surge in new listings, sales activity reached a record high for the month of February with 3,305 sales. The rise in new listings caused adjusted inventories to rise above last months levels. However, with only one month of supply, the market continues to favour the seller.

“Sales have been somewhat restricted by the lack of supply choice in the market. While sellers did respond with a record level of new listings this month, the demand has been so strong that the housing market continues to remain undersupplied causing further price gains,” said CREB® Chief Economist Ann-Marie Lurie.

The total residential benchmark price for the city rose by nearly six per cent over January levels and was over 16 per cent higher than levels recorded last February. Much of the growth has been driven by the detached segment of the market which has not seen conditions this tight in over 15 years.

This is the fourth consecutive month that the market has dealt with conditions that are far tighter than what the city experienced last spring. While the gains in new listings will help provide choice to purchasers and eventually support more balanced conditions, it will take some time to work through the demand in the market.

View the full report here: February 2022 Statistics Report

A Real Property Report (RPR) is a legal document an Alberta Land Surveyor prepares. It’s basically a high-level drawing of the property, the boundaries, and the buildings and structures on it including homes, garages, large sheds, decks, pools, fences, etc. An RPR will also show relevant land facts such as utility rights of way, easements, and overland water drainage restrictions, so buyers know exactly what they’re buying.

The Compliance Stamp is issued once the RPR has been reviewed by the municipality or the city confirms that all structures and buildings on the lot meet the regulatory standards set by the zoning Bylaws of the municipality or city.

Why is an RPR required when a property is sold?

In the real estate purchase contract term 6. REPRESENTATIONS AND WARRANTIES

6.1 The seller represents and warrants to the buyer that:

(e) the location of the buildings and land improvements:

(i) is on the land and not on any easement, right-of-way or neighbouring lands unless there is a registered agreement on title or, in the case of an encroachment into municipal lands or a municipal easement or right of way, the municipality has approved the encroachment in writing; and

(ii) complies with any restrictive covenant on title and municipal bylaws, regulations and relaxations, or the buildings and improvements are “non-conforming buildings” as defined in the Municipal Government Act (Alberta)

This means that the seller is promising that the property complies and the document used to prove that the property complies is the Real Property Report with the Compliance Stamp.

Pro Tip for Sellers – order or update the Real Property Report and ensure it has a Compliance Stamp well in advance of listing your property.

It can take several weeks for the surveyor to prepare the report and if there is an issue with compliance it can take several weeks to remedy the issue.

If you purchased your home from a builder, you may have received an RPR from the builder without a Compliance Stamp so you will need to get the Compliance Stamp. If you have constructed a fence or a deck or installed a concrete pad or patio or a retaining wall or a garage you will need to update the RPR.

What could go wrong if you don’t have the RPR when you list your property or when you accept an offer?

• It could delay the removal of conditions. Many buyers request a review of the RPR during the conditional period.
• It could impede the buyer from getting financing. If a company or bank is lending money secured against the title to a property, then they must ensure that their investment is safe and will often ask to review the Real Property Report to confirm compliance.
• It could delay the closing or create the need for a holdback. If there is not sufficient time for the seller to ensure compliance the closing could be delayed or the buyer may ask for an amount of money to be held back from the proceeds of sale until compliance is confirmed.
• It could be costly to the seller. If there is a serious issue where the only remedy is removal of a structure the buyer may require a reduction of the purchase price or the rebuilding of the structure in a different location on the property where it would comply.

Pro Tip for Buyers – Make sure that you review the Real Property Report during the conditional period.

If the seller or the listing REALTOR® has not provided a current RPR with the listing make sure that your offer has a condition to review the RPR.

What could go wrong if you don’t review the RPR during the conditional period?

• The property may have an issue which requires a remedy which may affect your use and enjoyment of the property. The seller has committed in the purchase contract to ensure that the property complies but what if that means that garage needs to be removed? Or the beautiful wrap around deck that you love needs to be taken down?
• There may be a restriction on the lot right in the location you wanted to build a garage or a patio which will not allow you to do so.
• There might be the need for an encroachment agreement with your neighbour and the neighbour may not agree.

Pro Tip About Title Insurance – Title insurance will not cover all problems with a property.

Some sellers will offer title insurance instead of a compliant property. If there is a known defect, a buyer is better off having the seller fix it. Title insurance will not insure a known defect. Also, the insurance is not transferrable to the next owner so you would have to either buy new title insurance when you sell or if the buyer refuses to accept title insurance you will need to ensure that the property complies.

If you have any questions about the importance of Real Property Reports, ask your trusted real estate professional or a trusted real estate lawyer.

Send us your questions here: https://www.cbcompleterealestate.com/contact

Thanks for reading!

Susanita

Sellers’ market conditions continue to impact prices

City of Calgary, February 2022

 
Thanks to persistently strong sales, inventory levels in the city eased to 2,620 units, the lowest levels seen since 2006. This caused the months of supply to remain exceptionally low for this time of year at 1.3 months.
 
The tight market conditions contributed to further upward pressure on prices. The unadjusted benchmark price in January reached $472,300, a monthly gain of nearly two percent and a year over-year gain of 12 percent.
 
“Expected gains in lending rates are contributing to persistently strong demand in the housing market, as purchasers are eager to get ahead of any increases,” said CREB® Chief Economist Ann- Marie Lurie.
 
“We did see more listings this month, but it did little to change the market balance or take any pressure off prices. This was expected, as these conditions should persist for several more months.”
 
There were 2,009 sales in January, well below record levels, but over 98 per cent higher than long-term trends. At the same time, 2,476 new listings came onto the market, resulting in a sales-to- new listings ratio of 81 percent. This is far higher than levels traditionally recorded in January.
 
View the full report here: January 2022 Statistics Report
 

The answer is – it depends on why you are making the move, it depends on the market, and it depends on your financial position.

Remember when you bought your first home? Maybe you were renting or maybe even still living in your family home… either way you did not have to consider the risks – how do you buy when you need the equity you have in the house you currently own? How do you reliably know how much equity you have when you haven’t yet sold the house you currently own?

This is where being prepared and knowing market conditions can help you save money and make the most of your equity.

When it comes to buying and selling when you are relying on the equity from your current home to buy your next home, generally speaking, you should always do the most difficult part first. If the market favours the seller – buy first. If the market favours the buyer – sell first. But it still depends on your financial position and your tolerance for risk.

• The first step is to know your market. Engage a trusted real estate professional to provide you with a thorough market review which includes not only the current market value of your home but all of the costs involved in selling your home, the typical number of days or months it should take to sell and whether the market favours sellers or buyers. They will also be able to let you know what to do to prepare your home for sale so that it will sell for the highest possible price.

Pro Tip: Focus on the data – what have buyers paid for similar homes? How do those homes compare to yours in size, location and finish?

By this point you will likely have already been dreaming online so you will know how much you will need to pay for your next perfect home.

• The second step is to know your financial position. This step is crucial to allow you to know your negotiating position. Check with your lender to see if you would qualify to keep and rent your current home and how you would structure the financing of your new home. For this part of the process, you will need to know how much rent homes like yours are achieving in the rental market. This doesn’t mean you are obligated to keep your current home. If you are pre-approved to carry both properties you will be able to make a more competitive offer on your next home without a “subject to the sale” condition. More on this later.

Pro Tip: If you want to be sure that you find and purchase the perfect next home first do whatever you need to do to get pre-qualified to carry both homes including having a co-signer.

• The third step is to decide what to do first – buy or sell. For this step you need to know yourself and the market. If you want to find the perfect home first and the market favours the seller you could take the chance that if you buy first, your home will likely sell easily.

If you have been pre-approved to carry both properties – but don’t really want to – the worst possible scenario is that the market shifts before you sell your current home and you will need to sell your current home for less or keep and rent it.

If you have not been pre-approved to carry both, and you need to write your offer subject to the sale of your current home, and the market favours the seller – prepare yourself for disappointment. You could lose the perfect home if your offer is competing with other offers if those buyers do not have a “subject to the sale” condition either because they don’t have a home to sell or they are pre-approved to carry both homes.

If you are not in competition the seller will almost always add a “sellers condition” which allows the seller to accept another offer and require you to remove all of your condition within 24 or 48 hours. In a market which favours the seller this will be a likely occurrence.

If the market favours the buyer both of the above scenarios could still occur but you may have a little more time.

If you just want to be absolutely sure of the sale of your home and your equity position before you buy it is still important to check with your lender about the financing terms of your purchase. Has anything changed since you purchased your current home? Has your income or the terms of your employment changed? Have you increased your debt by purchasing a vehicle? It is not a given that you will qualify for the same or an increased or decreased mortgage amount.

In this scenario you would ideally negotiate a long closing date to allow you enough time to find your next perfect home. The risks in selling first are that you run out of time and have not found a home within the time allotted and you have to rent while you continue your search or that the market shifts and you have to pay more than you anticipated for your next perfect home.

During the time your home is listed for sale your trusted real estate advisor will likely have created a customized online search so that you see how often homes with your specific criteria are listed and sold so that you have a good idea of the likelihood of finding that perfect home. Just don’t fall in love until you have received an offer on your current home.

Pro Tip: Beware of guaranteed sale offerings. The terms can sometimes be expensive and eat into your equity.

A trusted real estate professional will help you choose the best path based on your financial position and level of risk tolerance.

We would love to work with you to achieve the best outcome for you!

Please call us at 403-686-1455 or book an online appointment – we look forward to speaking with you!

2021 Record Year for Home Sales

City of Calgary, January 2022

Thanks to exceptionally high sales in December, 2021 was a record year for home sales. Calgary sales reached 27,686 units this year, nearly 72 per cent higher than last year and over 44 percent higher than the 10-year average.
 

“Concerns over inflation and rising lending rates likely created more urgency with buyers over the past few months. However, as is the case in many other cities, the supply has not kept pace with the demand, causing strong price growth,” said CREB® Chief Economist Ann-Marie Lurie.

As of December, the unadjusted benchmark price rose by nearly one per cent over last month and was sitting over 10 per cent higher than last year’s figures. Overall, the 2021 benchmark price rose by more than eight per cent compared to last year for a total of $451,567, just shy of the annual record high set back in 2015.

We are entering 2022 with some of the tightest conditions seen in over a decade. As of December, inventory levels are nearly 25 per cent lower than long-term averages for the month. This will have an impact on our housing market as we move through 2022. More details on the housing market forecast for 2022 will be released on Jan. 25.

View the full report here: December 2021 Statistics Report
 

Persistent sellers’ market conditions drive up prices

City of Calgary, December 2021