Calgary real estate has had its fair share of challenges during the coronavirus pandemic. Due to the affects to the economy and fears surrounding the virus, there’s been a slowdown of activity in certain segments of the real estate market. Although, these unprecedented circumstances have led to buyers’ markets in certain areas across the city. Depending on your situation, this could be the perfect time to scoop up a home in Stampede City!
Here are the main factors affecting housing prices in the Calgary real estate market:
Alberta continues to experience record unemployment rates at 16 per cent, along with a significant amount of uncertainty in the business community. The energy sector – Alberta’s most prominent industry, is facing a crisis with tanking oil prices contributing to bleak unemployment.
Across all industries, residents are experiencing job loss, affecting real estate market segments differently. Industries such as professional and technical services which drive expensive real estate markets, were also struck with unemployment. As of June, more than 120,000 jobs in Calgary were lost, a figure which has the potential to increase household debt in the province.
Despite this bleak picture, for those who have job security and are in industries that have not been affected by COVID-19, there is a silver lining to the pandemic-induced uncertainty. This segment of the population can take advantage of a buyers’ market with ample supply and limited competition. To provide aid to the hurting labor market, government subsidies and mortgage deferrals are helping some people remain active in the market.
Home Prices During the Pandemic
According to the Calgary Real Estate Board (CREB), home sales in Calgary’s real estate market took a tough hit in April, declining 63 per cent year over year. In May this improved to 43 per cent, and by June the market showed steady signs of recovering.
Home sales for July were 15 per cent lower than year over year averages for detached and semidetached properties. With lower home sales, this can affect pricing due to lack of demand. The average home price is expected to continue its downward trends for the rest of 2020 dropping by 2.5 per cent to 12 per cent.
In July, home prices in Calgary dipped 1.2 per cent year over year, sitting at $418,000. Meanwhile, detached home prices remained stable year over year due to tighter market conditions. The slight increase may be the result of people wanting to have more space after months of social distancing. In contrast to the detached home market in Calgary, townhome prices dropped by 8.7 per cent year over year.
Many Calgarians opted to take their listings down across all home categories during the earlier months of the pandemic. This was evident since, compared to the first six months of 2019, inventory for detached homes dropped 20 per cent.
Spring homebuying (typically the busiest time for real estate activity) drastically slowed down due to fears of the coronavirus. Yet, buyers and sellers seem to be dipping their feet back into the market which has resulted in a lot of supply available for the summer.
Real estate has always been considered an essential service, with moving companies, lawyers, and real estate agents available for home buyers and sellers, even at the height of the pandemic As the government re-opens businesses across the province, it has eased the fears of people hoping to purchase or sell a home in this city. This has caused an influx of supply and shifted the market advantage to buyers.
A notable trend, supply increased significantly for homes at higher price points with demand failing to match. Considering job loss, the luxury market may be suffering as a result.
For some people, Calgary continues to be an enticing market for hopeful homebuyers, particularly those who are confident in their ability to sustain their finances over the coming year. While coronavirus has ignited some cause for concern, there are also glimpses of the market rebounding in certain segments, shifting it to a buyers’ market.