If there were doubters out there about whether or not the Calgary & area real estate market would have the ability to keep up its feverish pace, I think this month may have crushed them all.
The Sales Summary
As you see on this graph, this March surpassed the production we had during our last peak of 2013 & 2014. Truly an incredible pace that continues to have many shaking their heads.
The second part that makes the sales story so impressive is the change from February to March.
In February we sold 1,855 homes (which was very strong), but now we’ve increased this month-over-month by about 1,000 homes, bringing our sales total in March to a whopping 2,903.
This is a 56% increase month-over-month! Historically we would see this trend up by 20-30%, not above 50!
So, what’s next for us? Is this the peak of the year, or are we going higher?
Here is one thing to note... the only time in our selling history we recorded 2 months in a row of sales over 2,800 was in 2006/2007. We didn’t do it in our last great run in 2012, 2013 or 2014.
I tell you all this to put what is happening right now in real context so you can wrap your head around the real pace. This is near uncharted waters, especially with the state of our economy, the pandemic, unemployment and more.
On top of this – this happened in a month where oil & gas prices didn’t increase!
The last 20 days of March showed an average sales per day over 90, and the last week of the month was at 105.
Time will tell how long this demand continues.
Okay, the stage is set now with our impressive sales results...but let’s shift gears now and talk about our inventory situation.
The Inventory Story
As you’ll see by this inventory graph, we started the month with 4,563 homes on the market. At the end of March it was 5,418 – an increase of about 850.
What is this telling us? Despite the incredible continued sales momentum, we are still building inventory. We are adding to the overall active inventory available for purchase.
We have seen a listings-per-day total of 126 at the beginning of the month climb up to as high as 147 on a weekly average, and as we finished the month we were sitting 139.
At the end of March we found ourselves with 445 fewer homes on the market than we did at the same time last year. And if you remember, this is when we started to see the pullback in our market due to the start of the state of emergency.
As this graph shows when comparing to the last 15 years, we are sitting near the middle side of inventory - not on the extreme low side. This will help keep the market in check and if continues we won’t flip fully into red hot territory.
The Pricing Picture
The recent surge in sales volume has put upwards pressure on the market at a level we haven’t experienced since 2013/2014.
Last month we discussed that year-over-year we were seeing between 1-5% in positive appreciation across the various property types in our benchmark sales price. This past month we continued that upward trend.
Comparing March 2021 to March 2020, we are seeing a benchmark price increase of 7%.
This is the single biggest year-over-year bump in values we’ve had since that 2013-2014 run.
This, as shown by the following graphic, is different across districts, and it's different across property types.
The Detached market saw a year-over-year price increase of 8%.
The Row home market saw 3%.
The Semi-detached market had 6% growth.
And the Apartment market finished the month with an improvement of 3%.
All systems are a go right now! It's a welcome benefit for all homeowners who have seen nothing but a decline values for several years.
With this gain we’ve erased all the price declines going back to 2.5 years and now find ourselves at an overall price equal to 2018.
This is a positive market recovery news story.
What Does All This Mean?
Okay, now that you’ve heard the high-level information on the Sales Summary, the Inventory Story and the Pricing Picture, let’s switch gears to tell you what all this really means. In this section I’ll pull up some additional graphs and analysis that I conduct on my own to present what I feel is the full story.
It’s one thing to talk about sales, inventory and prices independently to provide some colour to our story, but let’s talk about how they all end up working together.
That requires talking about 2 major things:
Sales to New Listing Ratio
Months of Supply.
These tell us if the market is tightening up and starting to push further into “Sellers’ Market” territory, or if things are loosening up and getting more towards a balanced market.
First, let’s look at the Sales-to-New-Listing Ratio graph for March.
What do you see? We started the month at about a 60% number. This was a very healthy market, but I wouldn’t consider it “red hot” like the newspapers were saying.
That number crept up throughout the month, hit a peak at nearly 80%, and currently sits at 75%!
This means 3 out of every 4 new listings are getting sold. This is no longer “balanced”. This has us fully in a “Sellers’ Market”.
I always say “but this isn’t the same for all market types”... but this month it’s pretty darn close.
Detached - 82%
Row Houses - 78%
Semi Detached - 83%
And the sole point of difference, the Apartments - 50%
The second item to look at is Months of Supply. When you look at the following graph you’ll see this number has trended slightly lower. We started the month of March at 2.03 and ended it at 1.8.
This means that it will take slightly less time to fully sell through all our active inventory now than it would have 1 month ago.
The property type breakdown is as follows:
Detached: 1.17 months of supply – the fastest moving market
Row Homes - 2.2
Semi-Detached - 1.6
Apartments - 4.02
The pace increased for all those market segments throughout the month. This is showing us that we are still in a tightening market! And a tighter market means a few things:
Sales-to-List-Price Ratio will get closer and closer to the list price
Days on Market will continue to get lower. March, for instance, was down to 35 from 52 last year
Prices will continue to push higher.
Now, as mentioned in the earlier section on pricing, it is not likely we will see more than a couple months of sales at this high of a level – it's only been done once in our entire history.
The new listing-per-day easing that has happened recently and the fact that the last week of March was the highest sales week of the year will likely play into our market getting tighter before it loosens.
I mentioned earlier that we will eclipse the total active inventory we had last year in the coming week, and our seasonal peak inventory levels should be ahead of us still in the next 3 months.
So, in summary: We know it's hot right now. It's because demand is pushing the number of sales quite close to the level of new inventory that’s hitting the market. That makes it hot!
It’s very likely we are near peak sales figures... but “who really knows?”. We are just coming up on the season when we would typically expect the highest number of sales and the most properties to hit the market.
Will this happen? Are there really that many more home owners able to sell, wanting to sell, and providing more supply for this demand?
I don’t believe anybody really knows how this presumed busy season will turn out.
As always, we’ll be watching things by the day and reporting to you each month with the most accurate picture of our market to help you make your buying & selling decisions, or to simply provide some peace of mind in understanding of what all this is doing for our home values.
If you have any specific questions, please don’t hesitate to reach out.