THE SALES SUMMARY
Sales as a whole in June have made a significant comeback from the snail’s pace that occurred early in the pandemic. For months now I’ve been speaking about the recovery in great detail. As of June, I’m very proud to say, we are there. The month of June saw us achieve sales numbers within just 1.5% of June 2019! Back in May we were still 44% off of last year’s pace. So, all things considered… Wow!! What a wake up!
Now, let’s break down the differences between the market segments:
“Sales as a whole in June have made a significant come back!”
Surrounding 11.85 (Our Star!)
That comes out to a total across the CREB region of -1.58%.
Here is a graph – displaying the period from May through the end of June – that shows the rebound trajectory we’ve been experiencing and further highlights the fast paced recovery we’ve been having.
Will this continue? I think so. There continues to be signs that this wave of pent-up demand has some legs to provide us a few months of energy (similar to a typical spring & summer selling season).
To help legitimize that claim, I look ahead at the leading indicators – the showings happening in the market and the number of deals currently under contract.
Last month I reported that we had achieved a showing pace had come within about 15% of the prior year’s numbers. That was already an incredible achievement for our city. Now, as we complete June, things have continued to get better and better, showing strong signs of life in our housing market.
We started 15% behind last year’s numbers of showings and we have now finished June 25% ahead of the same time last year!
Here is the graph to show the trajectory we’ve taken! Pretty darn incredible! The resilience and perseverance of greater Calgarians as they fight through these hard times continues to show its strength.
Next we need to talk about pending deals – the number of deals under contract.
As we finished May, we had made up a lot of ground. We went from -45% all the way back to -7%. We continued that momentum into June, and these were the results. As you can see by the following graphs, we continued to push upwards.
There were times in June where we were 20% ahead of last year’s pace, and then some days we fell a little behind. But as we completed the month we sat 4% ahead of where we ended June of last year.
Again, strong numbers of new sales contracts being written are early indicators of published sales.
So, as long as we see this trend maintain its momentum and showings continue to remain strong, we can expect sales figures to maintain their current “busy pace”.
Last month I said if we could get within 10-15% of last year’s sales, we’d be laughing and could feel pretty confident. Well, you now have my blessing – feel confident right now! The wave is here, so ride it while it lasts.
THE INVENTORY PICTURE
In my May update I discussed that we were starting the month of June with a new trend that had emerged – a significant rise in new inventory was coming to the market. The “Covid Pause” was certainly over and properties were flooding back onto the market.
In June we saw this trend continue for most of the month, resulting in us listing about 6% more properties this June than in the same month last year. So, a bump – but not a significant one.
As you can see by daily tracking graph I use, the pace continued to climb through the 1st half of June and then the trend has adjusted to something a bit more modest. We started the month having about 22% less total active inventory and we ended with just under 17% less compared to 2019.
The gap between last year and this year is as close as it’s been since March, but I still like where our total levels are relative to sales.This means we still have about 1,300 fewer homes on the market than we did heading into July of 2019.
The peak number of new listings flooding to market may have happened now (as it normally would have) and may settle into a mid-summer pace – less than the spring “ramp up” pace that was missed during Covid and has now just caught back up as the economy has re-opened.
Not all markets are operating in the same way, though. Here is the breakdown:
Total of 6.48%
The Inventory vs. Sales relationship for each market provides insight into their levels of market and the concern of price declines.
THE PRICING PICTURE
I leave the pricing picture to last because the results we have in our pricing situation are almost entirely as a result of the dynamics from our inventory and the number of sales happening. The big concern has been about housing prices falling due to the pandemic and the resulting economic shut down.
Right now, I can tell you this… With our sales now pushing up over 20% in comparison to last year, and our inventory remaining well below last year by 17%, this equates to our housing prices staying pretty darn steady.
This isn’t to say we won’t see some small adjustments due to the overall pessimism caused by the many stresses on our economy, but for right now all things point to a near hold in house prices. But I do want to re-iterate my words “for now”.
Let’s discuss the numbers from June:
Year-to-date we’ve dropped -1.6.
Month-over-month numbers range from -0.7 for Apartments, -0.46 for Semis, to +0.04 for Attached and +0.11 for Detached. So, it’s fair to say there is still continued downward pressure on our pricing. The increased number of sales are providing us with incredible protection against major corrections, as is our still-low inventory, but this can and will continue to change very quickly.
With all that’s happened to Alberta in recent years, it wouldn’t take much to shake the optimism and open the door to declines. For now we are holding steady, and I’m watching this like a hawk to provide you as much early market info as possible.
ADVISE FOR BUYERS
My advice for buyers right now is similar to last month. If you are entering the market right now you will likely be surprised by the pace of sales. As discussed earlier, June basically matched the sales pace of June 2019.
But the last 2 weeks we’ve seen 20-25% increases over the 2019 figures. So, the market is acting faster than the macro June stats show.
If you are purchasing apartment-style condos, this is the market segment that is lagging the most, and you won’t feel the same pressure as the detached and attached markets. If a place seems well priced and fair, don’t be surprised if it doesn’t last long. If it’s not the right fit for you, though, don’t feel the pressure because inventory has risen a great deal and more will be on its way for you to look at.
All that said – happy searching!
But be sure you have an industry expert on your side so you get the proper advice. For Sellers
ADVISE FOR SELLERS
This remains a very exciting time for sellers – a very welcome surprise for many home owners who need to make a move, or simply want to. Sales have rebounded considerably and inventory at the end of June is still a long way from last year’s numbers.
Based on my prediction and daily review of our market data, there is another strong month ahead for sellers.
I mentioned in my last update that inventory was ramping up and it certainly did. We were coming from a very low inventory position amid the Covid pandemic, so we could absorb it for the short term. And this we have.
The gap between our active inventory versus last year’s numbers is as close as it’s been since the pandemic started in March. Which simply means the tables are turning – where we were have gone from highly undersupplied to a fair supply, I believe that August and onward will see us back into an over-supply position.
So, if 2020 is a sales year for you, take advantage of the wave of demand. We really have no idea what the fall may look like. Could there be a second wave? And if so, what effect would it have on us? Will sales continue at their current pace, and for how long? How long will the government programs support our economy while people are getting back on their feet? Lots to be determined still and I’d take certainty over uncertainty any day.
Again, each market and price range is acting very differently so ensure that you get advice from somebody who is well informed on the true dynamics of your given market.
ADVISE FOR INVESTORS
“With so much changing, how can I make a sound investment decision?” Honestly, that’s a great question. As an investor, buying for appreciation is often times very dangerous.
Here are a couple of things we do know… ATB released a report in its OWL publication discussing how Alberta’s population continues to grow. On our YouTube channel we have this video – could use it as a visual as I describe this part. Here is the link…https://youtu.be/fHudqLoDz08
And not only growing, but leading the country in net migration! In fact, for 7 straight quarters we’ve seen positive net migration to our economically beat up province. This is tried and true economics. When a population is growing it drives the economy forward!
Secondly, Premier Jason Kenney released our relaunch & recovery strategy this past week. Another video we made can be referenced here, too… https://youtu.be/ts9soe6ouCk This is a bold, detailed & long-term plan to reignite
the Alberta Advantage. The months and years to come will tell the story of its effectiveness, but I’m optimistic as a proud and resilient Albertan that we will see benefit from it.
So, as an investor these items should provide you with confidence to look beyond the short term and make sound decisions. So keep your eyes keen and run your cashflow math – there are lots of opportunities out there. And if you ever need a portfolio or singular consult, we are experts in that field and would love to help.
Good luck, and happy investing. Well, that’s it. Thank you for your attention and I hope this provided you with value and a different perspective from what you may have read in the headlines. I would love to hear your thoughts and questions. I answer every single one.