Back in late 2008 I also wrote an article with the same name. With the recent economic news in Alberta I felt the time was now to write a similar article. In the first few months of 2015, if you picked up a newspaper or listened to the radio, it was all doom and gloom.
As written in 2008, keep in mind that the media makes money by selling newspapers and not by educating you. As a result, the headlines are written to grab your attention and have a tendency to over exaggerate the situation. I am not saying there isn’t a downturn. Today, the world is facing an economic downturn as a result of an oversupply of oil and the effects of oil selling below $50.00 a barrel. In 2009, the world was facing a major worldwide recession with far greater impact.
In addition, as a recent article in the Calgary Herald (Saturday March 7 2015) points out, the effect on housing in Calgary isn’t as bad as in 2009.
Housing data for January and February of 2009 show a larger drop in year over year MLS transactions than during the same period in 2015. The annual sales drop in January 2009 was 50 percent and 35 percent the following month. Compare this to January 2015 – year over year sales drop of 39 percent and 34 percent for February.
House prices also dropped further in 2009. In 2009 the average house price fell by 10 percent in January and 12 percent in February. Similar data for January 2015 shows a drop of only 0.5 percent and 4 percent in February.
The difference today is that there are a lot more buyers available than in 2009. House prices in Calgary had been on the rise from 2012 to 2014. Inventory levels during the same time period were also low. This lead to a shortage of reasonable priced available housing. As a result a number of people held off buying and continued to rent. I saw this in my own business where I had clients pre-approved and never bought. When I called them to see why they hadn’t used their pre-approval, they told me “prices are too high and
we couldn’t find a suitable house”.
These same people are now out buying houses. Prices have come down and there is a lot more inventory available. In February 2009 the month end inventory of homes available for sale was 5,959 as compared to 5,474 in 2015.
Real estate experts feel that Calgary is now entering a more balanced market and moving away from the earlier seller’s one. A balanced market is better for all of us and should further motivate those buyers who waited to buy now!