Written by Alan Kelly, Bōde’s Chief Economist
To understand what’s happening in the real estate market you have to look at supply and demand.
Supply
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- New supply: New Listings (i.e. the number of homes recently listed for sale)
- Total supply: Inventory (i.e. the total number of homes listed for sale)
Demand
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- Sales (i.e. the number of homes recently sold)
Supply & Demand
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- Months of Supply (i.e. the number of months it would take to sell all current inventory at the current rate of sale)
- Months of Supply (i.e. the number of months it would take to sell all current inventory at the current rate of sale)
These metrics are the best indicators of the health of the real estate market. Let’s look at what they show us.
Calgary continues to see less supply and more demand in the aftermath of wave 1 of COVID-19.
New listings in November were down 8% while sales were up 24% vs. the previous 2 years. Sales have been significantly stronger than usual from July to November this year, and have almost closed the gap that opened up from March to May. Despite COVID, sales are only 3% down on 2019 levels in total – with the remaining gap likely to narrow further in December.
As a result of less new supply, and strong sales, the total number of homes for sale is down 20% compared to the average of the previous 2 years.
The combination of less supply and more demand has kept ‘months of supply’ lower than usual at 3.5 months which is down 36% vs the previous 2 years.
Fewer months of supply generally makes conditions more favourable for sellers, while higher months of supply is more favourable for buyers.
The overall picture is very similar in Edmonton, where total supply is down 19% while sales continue to be strong, up 27% from previous years.
This is the 6th consecutive month of very strong demand in Edmonton. There have been more sales in 2020 (year to date) than in 2019 even with the significant drop in March to March due to COVID.
What does this mean for sellers?
Right now supply is low relative to previous years, and demand is high which means it could be a good time to sell your home. Many people assume November to January is a difficult time to sell a home. However right now there is less competition and but higher demand than typical, so sellers who price their home well have a good chance of selling quickly. However, your specific property value will be determined by market forces both within your community and against similar active listings. To find out what supply and demand look like for your community, click here.
What does this mean for buyers?
In Calgary and Edmonton, there are currently fewer options than there have been in previous years. This means active buyers need to move faster to beat other buyers to the available listings. One way you can move faster is by booking viewings directly through Bōde, so you don’t have to wait for a realtor to schedule your viewings.
Market conditions vary substantially by property type, community and price range
Above, we’ve looked at the overall markets for Calgary, but different segments are performing very differently. Let’s look at a few examples.
In November, 12% fewer detached homes were listed, while sales were up 28% vs the previous years. As a result, overall supply of detached homes is down 31% compared to previous years.
This means months of supply is down 46% to 2.5 months, which eases price pressure on detached homes.
On the other end of the spectrum, supply of apartments in Calgary are up 10% compared to previous years while sales are down 1%.
New listings of apartments were up 4% in November, which helped overall supply go higher. There is now 7.2 months supply of apartments in Calgary, which gives buyers a lot of options and makes it more difficult for sellers to achieve the price they might have wanted.
Attached homes (i.e. semi-detached or row homes) saw 10% fewer new listings in November vs previous years. Sales remained strong at +35% compared to the last 2 years.
This caused total inventory to fall further (-22% vs previous 2 years) and months of supply to stay relatively low at 3.7.
In general, you’re in a much better position if you’re selling a detached or attached home right now compared to an apartment, due to less supply and greater demand.
However, even this analysis is still too high level to understand what’s happening in your specific local property market. There are some communities of the city and some price bands where detached homes are performing better/worse, and the same goes for apartments.
It’s critical to understand the dynamics in your local property market
To understand your local property market you need to look at your local data. Head over to Bōde’s Market Data dashboard, the only place where you can see all the data yourself, including being able to filter on community, property type, and price range to see exactly what’s happening where you live.
Appendix: Edmonton performance by property type
