Calgary’s ever-evolving market changed in August, easing from the extreme-sellers market we experienced throughout the spring. What does this really mean and how does it impact you as a buyer or seller? Reach out and we’d love to discuss your specific situation. Overall, though, here’s the scoop:
Sales slowed as listing inventory increased. So far, prices haven’t dropped, but the days on market have increased. Months of supply is over 2.0 for the first time since the end of 2022 (reminder: three months supply is a balanced market, so we are still very much in a seller’s market). In plain language: in the spring we saw a really wild market and now, things have ever so slightly shifted back towards normalcy. Our opinion is that this shift is largely driven by a seasonal fall slowdown as well as some buyers sitting on the sideline in anticipation of rates dropping further.
According to CREB® Chief Economist Ann-Marie Lurie, “As expected, rising new home construction and gains in new listings are starting to support a better-supplied housing market. This trend is expected to continue throughout the remainder of the year, but it’s important to note that supply levels remain low, especially for lower-priced properties. It will take time for supply levels to return to those that support more balanced conditions.”
Now, in addition to supply levels, we factor in an interest rate drop. On Wednesday the Bank of Canada dropped its key interest rate by another .25 to 4.25%. While not huge, it will soften the blow slightly for buyers looking to upsize or get into their first place. Something to discuss with a qualified mortgage broker but for a quick example, on a $500,000 house with 20% down, (5 year fixed amortized over 25 years) monthly payments previously were $2,500 compared to $2,442 after the drop.
The Bank of Canada has two more scheduled rate announcements in 2024, slotted for October 23 and December 11. If you’ve been waiting for rates to drop to get in the market, chances are you’re not the only one. We can’t predict the future but as we’ve seen population surges in Calgary, and Alberta more generally, over the last few years we may start to see more renters turning into first time buyers. And getting in the market becomes more attractive (and more of a possibility) as rates decrease. As demand grows, typically home prices follow.
Waiting for rates to drop may not actually accomplish what you are hoping – as demonstrated above, the different in monthly payment isn’t huge and house prices may start to rise again in the new year.
“With the recent Bank of Canada rate drop we are seeing that many homebuyers are now in their Real Estate “sweet spot” – the home they want is affordable and attainable,” adds Illuminate Mortgage Group’s Brie Robertson. “If you want to jump into the market but want to take advantage of the additional 1.75% rate drops that are predicted by the end of 2025 then chat with your mortgage broker about how a variable rate might be right for you!”
Okay RiverLife team, you’re asking, but is now the time or buy or sell? There’s no secret sauce. As with anything in real estate, one size fits all does not apply. If you’re waiting for the perfect time to buy, now could be a great time based on the above. Your home, your lifestyle, an ever-evolving market, are all on the line and important to consider.
For a lot of buyers, finding the right home at the right time is more important than a 0.25% change in interest rates. We have been in a low inventory market in Calgary for a few years now, so if you’ve been watching a specific neighbourhood, you may not have had many options pop up that work for you and you’ll jump on the right one regardless of what interest rates are doing. Or if you are renting and your lease is coming due, you are looking to line up those dates – again, regardless of interest rates.
Strategies that take the best approach for you, your situation, and your comfort level are what we’re known for. This includes connecting you with the best in the business as a support team. Maybe the strategy is assuming a variable rate now to get in the market, and then lock in if rates drop further down the road? Maybe it’s paying down debts or building up your downpayment now so you set yourself up for the best possible rate in the future? Maybe it’s beginning to make small improvements to your property ahead of listing in the spring? Maybe it’s selling your home as soon as possible, buying a van, and travelling the world for a year?! Everyone’s goals are unique.
We’re here to support you through decisions like these, engaging only the best in expertise and experience to help along the way.
