Written by Alan Kelly, Bōde’s Chief Economist
Supply and demand are the key drivers of the real estate market… no surprise there.
The best leading indicators for supply and demand are:
- Supply: New Listings (i.e. the number of homes recently listed for sale)
- Demand: Sales (i.e. the number of homes recently sold)
These two metrics are the best indicators of the health of the real estate market.
COVID-19 has had a big impact on both supply and demand in Calgary and Edmonton in 2020
At the height of Coronavirus, new listings dropped by roughly 57% and 47% in Calgary and Edmonton respectively compared to their normal levels. Since then new listings have recovered closer to their levels from previous years. However they are still down vs the previous 2 years.
Meanwhile, sales dropped by 63% and 55% in Calgary and Edmonton respectively. However sales have recovered quickly and have been stronger in July, August and September than in previous years. In fact, sales in September are the strongest they have been since 2014.
What does this mean?
When fewer new listings are coming to the market, overall supply — inventory — drops. There are less available homes for prospective buyers to purchase.
Meanwhile, demand is stronger than usual for this time of year, and buyers are scooping up the available inventory.
What does this mean for sellers?
Right now in the big cities in Alberta- supply is low relative to previous years, and demand is high which means it’s a good time to sell your home . In general, there is less competition and hence 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 others. To find out what supply and demand look like for your community, click here.
What does this mean for buyers?
In Calgary and Edmonton at the moment, there are fewer options than in previous years. This means active buyers need to move quickly 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.
How is buyer behaviour changing?
With more people working from home than ever before, buyers are looking at their living space with new eyes. Living in an apartment downtown to be close to your work is no longer as attractive when daily commuting is happening less often for most Albertans, so many buyers are looking to move out of the city centre towards the suburbs and bedroom communities.
Market conditions vary substantially by property type, price range and community
Let’s look at a few examples.
Apartments: New listings for apartments are higher than previous years, while sales are considerably lower than previous years which means inventory levels continue to rise.
Detached: Sales in this segment were the highest they have been since 2014, particularly in the $400,000 – $600,000 range. Improving sales and fewer new listings resulted in lower inventory levels and caused the months of supply to ease to balanced territory. Given the supply/demand balance in this part of the market, there have even been some upward price movements.
Communities like Airdrie, Cochrane and Okotoks are some of the strongest performing areas at the moment. They are all seeing low levels of inventory and strong sales – which is causing months of sales to fall to the lowest levels they’ve seen since 2014/2015.
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 property type, price range and community to see exactly what’s happening where you live.