The Sky is Falling…………..or is it?

The drop in oil prices has the media doing what the media tends to do…..overreact.  I remember in 2007 when Calgary was booming (not for the first time) and there was a shortage of listing, I read and heard reports that prices were rising by $10,000 a month.  This sent homebuyers out in droves and with a shortage of listings there was very, very little to buy.  People were taking risks, making offers on homes without any conditions and sometimes even buying sight unseen!



 

Well, here we go again, only this time it is the opposite.  A day doesn’t go by without some economist saying that Alberta and Calgary are really in the glue, so to speak.  Oil prices are down…way down, and real estate is following.  Layoffs are happening and the worlds as we know it has come to an end.

 

While much of that is true, oil prices have fallen and may drop even lower, and unemployment has risen to, wait for it, 5.3% (that means 94.7% are employed), this is not our first rodeo.  In 2009 unemployment rose to 7.3% and in 1984 it was 12.4%  (http://economicdashboard.albertacanada.com/Unemployment).  Guess what?  We survived.  And so did the real estate market.  In fact it recovered quite nicely every single time.  And it will again.

 

I am not trying to make light of the situation or say that the people recently laid off aren’t having a bad time.  They are.  But they will find a way.  That is what Albertans do.  We find a way.

 

According to the Calgary Real Estate Board median home prices in Calgary are down a whopping(??) 1.63% from last year.  Average price by only 1.08%.  I don’t know about you, but I don’t think that warrants the hysteria being played out in the media these days.  Are real estate prices going to fall some more?  Probably.  Will they recover again when oil prices rise again (which they will eventually)?  I’m not much a betting man but……….

 

So, what is the bottom line here?  Is it a good time to wait it out and see where prices go?  Or, is now a good time to jump in and buy a house?  Well, prices are down a bit.  Inventory is up so there is plenty of choice.  And, interest rates are very, very attractive (they too will go up at some point).  I am told there is even a 5 year, 2.59% rate available.  That is unbelievable!

 

So, the choice is, wait until prices bottom out, and hope the interest rates haven’t risen in the meantime and the house you want is still available.  Or, buy now, get the house you want at a good price with a great interest rate.  Yes you might pay a little more today than 6 months from now.  But the price will recover and you will have the right house at the right rate and at a good price.  That’s a win, win.

 

Monthly

     

Month to Date

Month to Date

 

City of Calgary

Feb-14

Feb-15

% change

Mar-14

Mar-15

% change

Total Sales

1,850

1,218

-34.16%

1,342

984

-26.68%

New Listings

2,711

2,950

8.82%

1,925

1,781

-7.48%

Active Listings

2,641

5,474

107.27%

N/A

5,688

N/A

Median

424,900

420,000

-1.15%

430,000

423,000

-1.63%

Average Price

482,783

462,108

-4.28%

483,763

478,562

-1.08%

Days on Market

30

35

16.67%

28

38

35.71%

Benchmark Price

431,400

456,300

5.77%

N/A

N/A

N/A

 

Source:  Calgary Real Estate Board

Note: Only includes properties within Calgary city limits.



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Data supplied by CREB®’s MLS® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.
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