Understanding Calgary Housing Market Conditions
It’s no secret that the Calgary housing market has reached a fever state in the past year. But what’s the reason for this and how can you prepare for such a dramatic shift? It all comes down to understanding the different kinds of markets and how they end up where they are. Two of the main markets are a buyer’s market and a seller’s market, and each of these are influenced by several factors. Here is a quick look at the different markets to help you understand the real estate market a little better.
Calgary Housing Market: Supply and Demand
Supply and demand is a simple concept. When there are more homes for sale than there are potential buyers, house prices drop. When there are fewer homes for sale than potential buyers, house prices rise. Supply and demand can differ across the nation, within provinces, and even within Calgary own neighbourhoods. This is where a buyer’s and seller’s market come from. A good rule of thumb is to keep an eye on current market trends to understand if you’re heading into a buyer’s market, seller’s market or a balanced market.
A Home Buyer’s Market
When homes stay on the Calgary housing market for longer and competition increases, conditions become ideal for buyers. As a buyer, you’ll have more leverage when it comes to deals and you can expect to pay less for more. In a buyer’s market, you won’t have to worry about making an immediate decision. The ball is in your court!
A Home Seller’s Market
Fewer homes means less choice. Less choice results in higher prices and less room for the buyer to negotiate. The seller will have control over bids and will expect to see fierce bidding wars take place. As a seller, you have the luxury to choose who to sell to and have more control over the timeframe a deal takes place in.
A Balanced Calgary Housing Market
When the amount of homes for sale and the amount of buyers are equal, a balanced market is achieved. Home prices stabilize and transactions are relaxed. This results in a much more predictable Calgary housing market for both seller and buyer.
Factors that Drive the Calgary Real Estate Market
Beyond supply and demand, there are a few additional factors that can impact the real-estate market. Keeping an eye on the below factors can help you determine market trends and the best time to buy or sell.
The economy and real-estate go hand-in-hand together. When the economy is booming, real-estate flourishes, but when the economy gets sluggish, so does the Calgary housing market. However, the cyclicality of the economy can affect different areas of real estate such as short-term and long-term leases. For example, short-term leases (such as renting a hotel room) can be avoided by customers when the economy is doing poorly. Long-term leases (such as office rentals) cannot change midway through an economic downturn. Job opportunities also influence real-estate market. As Calgary diversifies its industries and offers more high-paying jobs, the city will attract more skilled workers and propel the economy.
Tax credits, deductions, and subsidies are all examples of government legislation that can have an impact on the real-estate market. These forms of legislation can help boost demand for real-estate by providing incentives for a home-buyer making a purchase even more attractive.
Statistics such as age, gender, migration, population growth, and more are an often-overlooked factor when considering real-estate market trends. Major shifts in demographics have been a major source of seismic shifts in market trends for decades. For example, the baby boomer generation is a demographic that shifted the real-estate market and continued to do so after retirement. In fact, the effects of their demographic can still be felt in today’s market trends. Another example is a drop in birth rates. What will happen to the demand of larger homes when there aren’t large families to house? Different kinds of families require different community amenities. New infrastructure in a neighbourhood like schools and transit lines can increase a community’s desirability and increase the demand for homes in the area.
Calgary Housing Interest Rates
When purchasing a home with a mortgage, consider the interest rates and how they will affect your payments. Changing interest rates can influence a person’s interest in purchasing a home. This is a double-edged sword, because if interest rates go down, demand spikes, which then in turn causes prices to increase as well. So, keep an eye on market interest rates to find the best moment to strike.
Understanding these key factors can help you prepare for major shifts and changes to the market. Even though the above shows clear-cut relationships between these factors and the real-estate market, there are many scenarios that can create different results. Your realtor and mortgage broker will be able to provide detailed insights and help you determine the best home buying or selling strategy.