The spring market is off to an early start in our region as our market has shifted towards a seller’s market in most property types.
In 2022, Alberta broke two net migration records. The first record was broken in the second quarter of 2022 with 34,883 net new Albertans. The previous record was in the second quarter of 2013, with 28,747 new Albertans.
We broke the record again in the third quarter with 52,582 net new Albertans. As these new Albertans prefer to live in a home and not in a van by the river, our rental rates are increasing. In Calgary and Red Deer, new rental leases are increasing by as much as 20 per cent for new tenancies.
Edmonton will lag behind a bit as we have around 100,000 rental units, whereas Calgary has about 77,000.
In the fourth quarter of 2022, our market softened due to rapidly and significantly increasing mortgage rates and talks of a Canadian recession.
Most of the price gains we realized in early 2022 have been clawed back, and we ended the year almost right where we started.
In December 2022, single-family homes were in a balanced market with about 5.5 months of supply. In January of this year, the market started to shift back towards a seller’s market. Today we are at about 3.8 months of supply.
Around four to six months of supply is thought to be a balanced market with little price pressure up or down.
For single-family homes under $500,000 in our region, we are sitting at about 2.5 months of supply. At 2.5 months of supply and less, we see more multiple offers for the available well-priced properties seen as the best value.
In March of 2022, single-family homes under $500,000 only had 0.6 months of supply. That is a severe seller’s market where we often see 20 offers or more on homes and homes selling for $20,000 or more above the list price.
When a buyer has lost two or three multiple offers, and they have a sale contract on their existing home that they cannot get out of, they can become desperate and offer significantly above list. Those that work with a skilled realtor would likely not be in this position.
In fact, as a realtor, this is one of my greatest fears. If we are in a strong seller’s market with prices rapidly appreciating, there is the risk that a buyer may get priced out of the market. A seller could be in a contract to sell their home that they cannot get out of and then have to compete in multiple offers with other buyers while prices are appreciating and end up regretting selling their home.
There are several strategies to prevent this situation. Knowing when and how to use them is the most important thing. As our market is shifting, finding a skilled realtor to help you navigate it becomes more important, especially if you are buying and selling. You don’t want to be stuck with two homes or be homeless.
Half-duplexes, townhomes and row homes are also in a seller’s market with mild price appreciation.
We are seeing the rise of a newer property type in our region — the row home. Row homes are not condos, and some also allow for basement suites. My favourite property type this year is an end unit row home with a side entrance for future suite potential.
I like them because of their affordability and potential for increased cash flow.
Apartment condos are still in a mild buyer’s market with 5.34 months of supply. In December, they had almost seven months of supply. I suspect we will not see much price appreciation for condos this year.
With many Canadians looking for housing and living affordability, we will likely continue to see interprovincial immigration in Alberta remain strong. Investors locally and nationally are also buying property in Alberta for positive cash flow and future equity upside.
National immigration nearly doubled from our normal level in recent years. This immigration creates even more demand for housing in our province. And, of course, Alberta’s own organic growth and demand are strong as we have a young demographic.
We will likely see our real estate market continue to be strong for the balance of the year with mild to moderate price appreciation. I suspect history will demonstrate that buying in Alberta sooner rather than later is better.
Dennis Faulkner works as a realtor at Re/Max River City and holds a bachelor of arts degree with a major in macroeconomics. He can be contacted to answer your real estate questions at [email protected].2023-03-17T21:32:08Z dg43tfdfdgfd