Multiple Offers and Short Supply - Real Estate Home Sales take off in Jan 2021!!

In the past 10 days, the real estate market has suddenly heated up in the Foothills region. Multiple offers are becoming common to the point where some sellers of hot properties are holding off for a couple days before responding to buyers offers which is allowed by the rules of engagement we are governed by. We are in a market situation we have not seen for many years. It is reminiscent of 2005/06/07. I believe we have a number of factors at play which have created the perfect storm; super low interest rates, the need for people to change up their space to accommodate home office(s) or home schooling, a certain percentage of people on the lower leg of the economic K curve that need to liquidate, and finally, investment organizations may be targeting our region due to our depressed market pricing which is the type of match that lights the fire and creates the type of market conditions we see ourselves in. How long this market will last is a very good question and requires some serious crystal ball gazing.

If you are thinking of selling, now is a great time to take advantage of the extremely limited supply of homes and acreages for sale. There are only 51 detached homes for sale right now in Okotoks and normally for this time of year we would have 125+. It looks like we should sell about 40 this month. That is double Jan 2020. Calgary only has 1,500 detached homes for sale. In the past 2 weeks, 572 have sold. That is more than double Jan 2020. We are tracking at 1.25 months of inventory to sales. A balanced market is 3-3.5 months of inventory to sales. Pricing hit a 7 year low in June 2020. Price gains have been made in the past 6 months. How high home prices will go will depends on supply and demand.

Population Growth and Housing Market Growth 2021+

Interesting chart on population growth rates for Alberta. As you can see, net migration is basically nil. We are the fasting growing province however based on natural growth (babies!). Not sure what to say about Albertans in that regard... Take this info and the fact that it has been determined through covid that approximately 60% of those that make over $100,000 in North America can work from home. This is going to drastically change the landscape of home ownership and the type of homes people are looking for which is the main driver of why our real estate market is doing what it is currently doing. I predict that 2021 and going forward will see continued interest and housing market movement servicing this demographic.

Medium Term Housing Market - Possible Trend

Based on low interest rate policies of the Covid-19 pandemic, it appears from the following excerpt out of a recent Economist article that high asset prices are all but guaranteed. This is predicted to last for many years to come. Alberta, given its current economic situation, may not experience the same level of house market value growth as the rest of Canada but fortunately we will be somewhat safeguarded from a housing downturn because of the fed’s interest rate policies. There are some bright spots!

“…Low interest rates also mean that high asset prices are all but guaranteed. This will reinforce complaints about wealth inequality and intergenerational unfairness—complaints that carry more bite given the unequal distribution of job losses this year. Homeowners, mostly drawn from the professional classes, will benefit as they can take advantage of cheaper mortgages. So will homebuyers. One reason why housing markets are holding up is that the downturn has not hit the typical house-hunter. Those without wealth or access to finance will feel understandably aggrieved.” The Economist, Nov1st, 2020

Q3 2020 market Update

In the early spring of 2020, not one would have predicted the Q3 (July/August/September) sales of real estate in the Foothills Region would grow in sales volumes over the previous year. And grow it did! There has been a significant trend of people moving out of the city and into a more rural setting. Acreage sales are up 43% !!! The outlying communities have seen significant sales growth of 40+ %! The main drivers appear to be the need for space that embraces the needs of working from home or home schooling. Also, there is a strong desire to get away from densely populated areas and into a more relaxed setting. This is a trend happening across the country.

Inventory levels of homes for sale are extremely low right now which means if you are thinking of selling in the near future, now is the time.

Click through the various graphs below to view the stats.