Calgary’s real estate market is an interesting and always hot topic. The 2020 market was mostly unkind, thanks to a faltering economy and a pandemic, which shut down the city for many months. But despite the record-breaking unemployment rates that resulted in significant job loss, the housing market last year did have some surprising outcomes.
The recently published 2021 CREB® Forecast Summary revealed that the second half of the year experienced a “stronger-than-expected” rebound. And though the third and fourth quarters did not hit record-high sales or prices, they did post some of the strongest sales relative to the most recent five years. The report confirms these results were “nearly enough to offset the initial losses recorded during the first shutdown caused by the pandemic.”
CIR realtor Sarah Scott says, “The good news is that business really picked up in the month of June when the city started to re-open for business. Even with the current restrictions in place, I personally have seen a ramp-up of single-family home sales. Given the circumstances, we had an extremely strong 2020 year.”
The Forecast Summary also pointed out that “reduction in supply relative to sales is the primary reason the Calgary housing market returned to more balanced conditions by the end of 2020. The pullback in new listings relative to sales activity resulted in inventory levels falling to the lowest levels seen in the past several years.”
Brokerage owner and realtor Dennis Plintz agrees and says, “The pandemic consequently inspired a shortage of listings, which caused real estate to move at a high-level. Higher than we’ve seen in a long time. For us in Alberta, this is directly related to the fact that we were already under five years of economic pressure. COVID wasn’t the nail in the coffin but rather an added layer of complexity and a springboard to clarity.”
He acknowledges that the first half of 2020 was paralyzing and brought a tremendous amount of fear and uncertainty. “Nobody was buying much of anything except toilet paper, never mind real estate.” He is optimistic about 2021 and says, “The spring will bring a tremendous amount of inventory. Listings will climb substantially as people gain confidence in the processes and protocols of real estate and develop an overall desire to move.”
“Interestingly,” says Plintz, “we’re now seeing COVID babies, COVID divorces, COVID investors, COVID-related bankruptcies, COVID mergers of families and COVID clarity. The latter meaning people are becoming clearer on what matters and what feels safe, when it comes to where they live. And as we navigated through the pandemic, like many other challenges, we emerged with a clearer perspective on real estate and its importance and ultimately the real value it holds for all of us,” he says.
CREB® Chief Economist Ann-Marie Lurie says, “It is expected some of the momentum recorded at the end of 2020 will continue into 2021, fueled by exceptionally low lending rates and pent-up demand.”
Scott concurs and emphasizes that low mortgage rates continue to attract both buyers and sellers. “Sellers want to sell as the market is on the move and current mortgage rates will allow them to join the buying market. The strength in the mortgage rates have also brought people out of the rental market and into the housing market. First-time buyers are also taking advantage of the low rates.”
She adds, “People are recognizing the value in home purchases because they are seeing the added need of space in their personal life situation. More room for kids and offices, living closer to parks and all around more space. This is giving way to transition in terms of deciding whether or not it is the right time to buy.”
One area Scott is seeing real growth in is investment real estate. According to her, these opportunities have spiked in the last few months. “I really first noticed it in October (2020), but it ramped up in my own business by the end of November and is still moving. These types of buyers are out looking to supplement income and they are taking advantage of the low mortgage rates.”
The Forecast Summary predicts sales are expected to rise by nearly five per cent on an annual basis in 2021, however, persistent economic challenges may prevent stronger growth in the housing market. “Growth in supply is expected to offset some of the gains in sales, pushing our market to the upper bounds of balanced conditions and slowing price recovery. However, the price gains that occurred at the end of 2020 are not expected to be eroded and 2021 annual prices are forecasted to improve by over one per cent,” says Lurie.
Lurie mentions a few top considerations for 2021, which include, lending, inventory, economy and industry. “The low interest rate environment is expected to continue to support sales activity this year, but the pace of improvement is expected to slow by the end of 2021. Supply levels are expected to rise, keeping the market relatively balanced. However, the supply gains are expected to slow the pace of price growth in the market. There is considerable risk regarding the pace of recovery and the longer-term impacts of the economic fallout from the pandemic. And finally, consolidation in the energy sector is expected to continue, which could impact employment and housing activity, especially in the higher price ranges.”
Real estate professionals expect 2021 to feature new listings, as many homeowners deferred selling their home due to the pandemic. It is, however, anticipated that a lack of job growth for higher-paid professional positions could result in persistent imbalances in the higher price ranges, impacting price recovery in the upper end of the market. In her summary, Lurie says, “Conditions are expected to remain relatively tight for lower-priced and mid-range homes in the market, likely resulting in stronger price gains.”
While the pandemic has certainly changed the landscape of real estate, it, like so many other sectors, has pivoted to accommodate a post-pandemic world. For example, if work-from-home policies continue to remain in place, which they very well may, people may consider moving to a new home in order to have a more suitable and adequately sized home work space.
“This year has been filled with twists and turns all over the world. The Calgary housing market was no exception,” says Alan Tennant, CREB® president and CEO.