WINTER REAL ESTATE
Ooh baby it’s cold outside! There is a very good reason bears hibernate! Have you noticed how many people are doing their own hibernating?
As we look at some of the local stats today, we are reminded of the real estate cycle AND the calendar seasons. Every landlord will tell you, people really don’t move in December and January, unless they have to. And in this province, we often add November and February.
Add to that the unpredictable influencers in today’s economy, and it’s no surprise that people are seeking certainty. We don’t mind when the real estate market cools a bit. We catch our breath, update our bookkeeping, complete all the fall inspections/repairs, and prepare some little gifts of gratitude for our tenants. Oh yes, and we’re always looking for great deals!
In the meantime, we’re also watching the big picture. What is happening in Calgary real estate as of November, 2022? https://www.creb.com/News/CREBNow/2022/December/2022_on_track_to_be_a_record_year_for_sales/
Sales are down 21.8% year over year, but remain 12% above the 10 year average. And sales are definitely down from the early spring peak. My big question: will the Alberta registry be able to catch up a little on registering titles and RPR’s? I notice that land titles from Aug 2 are just being registered – as of today!!
Benchmark price for Calgary overall is up 8.6% year over year, but there is some wild and crazy variation depending on property type and location. Apartment condo’s and row houses are the current darlings in our local market. Real estate investors have shunned these products for quite a few years, but they’re back baby!
New listings are down 19.4% year over year. Ya, if I had a 1.9% interest rate, I wouldn’t move either. Inventory is down 20.9% overall, and this is the lowest since 2005! Months of supply went up 1.1% year over year – I translate that as “ditto” to last year—still under 2 months.
The trend is exactly what we would expect. Higher interest rates and inflation have decreased people’s purchasing power and consumer confidence. So buyers who were looking for an average detached around $600,000 in Calgary, might now be looking at a nice semi-detached in the $400,000’s.
Real estate investors need both pieces of the puzzle though. We need to understand the real estate market, and the rental housing market. Rentals.ca releases a monthly report (October’s data was released November 16 https://rentals.ca/blog/rentals-ca-october-2022-rent-report). Calgary saw strong year over year rental price increases: an average one bedroom increased 29%!! An average 2 bedroom increased by 22% to $1895. Not good for affordability, but better for property cashflow. Make sure you update your numbers when evaluating properties. Interestingly, Edmonton seems to have more supply of rental housing, so they have seen more modest rental increases of 5%-10%. Historically, prices tend to rise in Calgary 12-18 months before they do in Edmonton, so it will be interesting to see what happens next spring and summer.
This isn’t time to panic. This isn’t armageddon. It’s just winter. Happens every year. Wise real estate investors are on the lookout for problems to solve and opportunities to invest. Other investors are planning their 2023 strategies already: it’s a great time to get an appointment with an accountant, a mortgage broker, financial planner, or even a banker! What’s next on your financial freedom agenda?
Follow us @mtnedgedevelops for Calgary and area updates.
