The real estate market is a hot topic in 2022. Everyone has an opinion about it, and there is a lot of noise out there. Sometimes it's hard to filter out the facts and have a clear picture of the state of things.
Here are some things that in my professional opinion, are important to know about the current market and Airdrie specifically:
Sales prices have fallen
Prices are down by four-to-five per cent on average in Airdrie since the heat we experienced in February, March, and April.
It's not a very dramatic drop, considering that prices jumped over 20 per cent in most cases from early 2021 to early 2022.
In February and March, multiple offers per listing were the norm. After listing a home, typically, a date was set when offers were presented and the winning bid was chosen. On average, I received between seven and 11 offers on my listings during that period. Normally, the highest offer was the winner (but not always, and that's an article for another day).
The sale price was what one buyer out of those 11 prospects was willing to pay. So even in those heydays, the highest bidder did not necessarily reflect the "market value" of the home. It was the motivation of the buyer that pushed the price up to beat out all others.
Understanding competitive pricing is important
The speculators have gone home
Early in the year, investors from across Canada were zeroing in on Calgary (and Airdrie) as the place to buy. As many as 50 per cent of the bidders on detached homes, in many instances, were out-of-province buyers. This significantly impacted the sale prices and it was extremely discouraging for local families that were looking for a home to be often outbid.
In the next point, I'll explain why the speculators have left, but it's important to note that when you see that your neighbour's home is sold, it likely means the buyers will be living in the home, not renting it out. This was not the case six months ago.
Interest rates have risen
Last year, it was not unusual to lock in an interest rate under two per cent. So, it is completely understandable that many people are experiencing some shock (and fear) over the fact that posted rates for mortgages are now higher than five per cent.
The shock of this is what slowed the market down. With margins for profit narrowed, investors decided to tuck their tails in and head back east or west.
Next, homeowners decided to either hold tight or downsize, as additional mortgage expenses impacted not only their purchasing power, but also their debt ratio.
Inventory has shifted
Now, as homeowners and investors alike have recalibrated, we are experiencing some new market trends. For one, the detached-home inventory is extremely low. Because of this, homes in Airdrie that are priced well are selling quickly. The reason the inventory is so low is that a lot of people are staying put.
The move-up homes are a larger stretch for people financially. Unless they can port their mortgage, buying a larger home and getting a new mortgage is a double punch to the gut, payment-wise. People who want to downsize often want to move to a bungalow. Bungalows are rare; there are far more two-storey homes in Airdrie. So a lot of people are ready to move but don't have a bungalow to go to.
*ahem builders, are you listening?*
Market will stay relatively hot
What I see happening for early 2023 is that a lot of people will get over the shock of higher interest rates and accept them as an unfortunate reality for the foreseeable future. They will start to budget around this and the buyer market will pick up.
If inventory does not increase, then we may see another hot market (honestly, I'd argue the market is still hot right now). Get ready for Realtors to start knocking on your door and leaving notes letting you know they have a buyer looking in your community.
Alberta is attracting a lot of interest from Canadians in other provinces due to the fact that our homes are still affordable (relatively speaking), and employment opportunities are rising.