Heading into spring, it appears likely we will be seeing substantial activity in the market. The stats below highlight the exorbitant amount of listings already on the market this year. In Central Alberta, the market continues to be heavily weighed in favour of buyers and will remain this way for the foreseeable future. This does not mean houses are not selling! We are seeing increased activity in the marketplace, we just have more inventory to work with; it is what I refer to as our “New Normal”.
Less than 15% of the houses listed are selling, which is an excellent example of why you need a Realtor® with an aggressive marketing plan and a strong team to showcase your property at every opportunity.
Why so many excess homes on the market? There are various reasons; the downturn in the Economy has had a major impact on the housing market over the past few years. There was a great exodus from Central Alberta due to job losses and uncertainty in the Oil and Gas industry. This, along with the debt load of many homeowners plus the inability to manage their mortgage payments without a reliable income, resulted in forced home sales - creating an unprecedented number of homes to hit the market at once. These difficulties were compounded by the new mortgage 'stress test', requiring buyers to qualify for loans at a rate of 2% more than the current interest rates. Implemented in 2016, it has limited many first time home buyers from getting into the market. Increased interest rates and the fallout from economic conditions have forced homeowners to sell, just to stay afloat. Our inflated housing market has been influenced by all of the above factors.
It’s not all doom and gloom, however! There is lots of hope around the upcoming elections and the potential for change in both our Provincial and Federal Governments. Indicators are showing things are improving slightly; unemployment rates in Central Alberta are better than many Canadian cities and people are returning to Alberta. This has created a decline in vacancy rates and created a greater demand for rental properties as people re-position and stabilize themselves, in order to buy properties in the future.
This housing market is full of opportunity. The number of new homes and subsequent developer discounts has made buying a new home more affordable. The extent of the recession caught us somewhat off guard, especially our city/town planners, builders and developers. Infrastructure commitments and development plans were in progress, and therefore new homes continued to be built. This resulted in a substantial number of new homes becoming available, while our population was declining, resulting in reasonable pricing on new builds.
If you are looking to make a move upwards in the market, take advantage and do so now! There are great opportunities and value deals to be had!
For example - if you have a house to sell for $300,000 and need to adjust your price by 10% to get it sold, you could see a $30,000 reduction. However, you will see a similar adjustment on the $500,000 home you are purchasing and a 10% correction on this property results in a $50,000 savings! There is definitely potential for long term gains in this market.
Real Estate Investment opportunities are abundant with so many properties on the market. On February 13th we hosted an event, “Investing in Real Estate”. We discussed the advantages of Real Estate as an investment, and opportunities for individuals to build their Real Estate investment portfolios. From an investors perspective, Art Anastasi from Abbey Platinum Master Built walked us through the benefits of investing in Real Estate compared to other investments. We looked at costs, borrowing opportunities, interest rates and the value of long term commitments and compound interest. Art shared his experiences and discussed property management, the perks of having someone pay your mortgage, leveraging, financing and overall advantages of owning multiple properties. We also discussed planning for investment properties and looked at some of the tax implications, lending options, and holdings companies. Overall the conversation was both positive and informative, demonstrating the advantages of this market and the possibilities at our doorstep.
This is a great time to be investing in Real Estate in Central Alberta!