Slowing in real estate market; industry remains optimistic
Although there’s been a definite bounceback in home sales since the pandemic, 2023 has proven to be somewhat sluggish if you compare it to years past.
“We were expecting, in 2020, a huge reduction and the exact opposite happened. I would actually call it a real estate boom,” explains executive director Cathy Maxwell, CEO of the Lethbridge and District Association of Realtors, which covers the Pincher Creek region and communities in Crowsnest Pass.
“In ’21 we had some very big numbers. In ’22 and ’23, particularly in 2023, we have seen a little bit of decrease.”
It’s not all doom and gloom, though.
For the month of August, there were 278 home transactions overall in the board’s coverage area, with Pincher Creek logging six sales, doubled in the Pass with 12, and resulting in a regionwide rise of 13 per cent year over year.
The number of new listings in August also showed promise, climbing 10 per cent and bringing with it some optimism, but it’s tempered.
“Year over year, we’re up 9.7 per cent and that’s a good thing because we need to improve our inventory, but year-to-date, it’s down 17 per cent,” Maxwell said.
“Basically, the easiest way to break it down is we have 2.8 months of (available homes) supply. That’s very low. So, if you were to talk to me at the beginning of 2020 or even 2019, we probably had about eight months of supply.”
Sales of single-family detached houses continue to lead the charge, accounting for 270 of the 278 sales in August. However, prices remain high, with a dramatic shift in some cases.
“If you look at the detached home, I can tell you that the average house price has gone up about 0.5 percent. So, not a ton … that number is now $358,000,” Maxwell said.
However, it’s a sharp rise if you were looking at a duplex or townhouse last month compared to August 2022, she added.
“This one I find very interesting. That average house price has gone up 30 per cent year over year. That is amazing. So, that average house price is 347 (thousand). That’s nearing the detached price.”
Row housing, where you might have multiple units side by side, has also gone up, by 25 per cent, Maxwell said, with an average price in August of $293,000.
And, apartment building sales also rose by 20 per cent (to $181,000) when compared to August of last year, she concluded.
To put it into perspective, the average overall sale price of a home in Pincher Creek in August was just shy of $301,000, while prices in the Crowsnest Pass corridor ranged from $240,500 in Bellevue to well over $402,000 in Blairmore.
In Lundbreck, it was $384,500, and while last month’s benchmark for Cowley was unavailable, its year-to-date figure to Aug. 31 was pegged at $80,000.
“If you look at residential sales by price range, homes between $350,000 and $400,000 had the most turnover,” the association’s CEO pointed out.
Last month, there were 81 homes purchased, 16 more than 2022.
Since Jan. 1 of this year, there were 581, but a downturn from last year’s first eight-month total of 675.
Besides the jump in housing prices, Maxwell also credits a large part of the slowdown to what happens with the Bank of Canada’s interest rate.
Currently being held at 5 per cent (at press time), its fluctuation has a direct bearing on the real estate market, as well.
“Of course, when the rate goes up, it’s harder for people to buy homes,” Maxwell says.
And with the interest rates where they are now, she believes many are hesitant to lock into a mortgage, unsure if the index will go up or come down, or worse, face high prime rates if they have to renew.
“It’s going to be tough on some people,” Maxwell says. “I know some people personally, who back in 2021, early in ’21, locked in at a very low rate. By the end of the year, it was probably four points higher.”
Asked to look into her crystal ball, she is confident the market will show signs of growth, pointing to not only a diverse economy in the region, but also a burgeoning shift in population into Alberta.
Figures released by the province at its fiscal update in August showed a potential four per cent-plus migration.
“You know, I believe that,” Maxwell says. “At our AGM in March, our economist, who prepares these stats, had a slide of these arrows pointing towards Alberta showing the amount of migration. It was staggering to see.”
And, that sentiment is being echoed in the real estate industry.
“I’m hearing from my colleagues all over the province about people moving from Ontario and B.C., buying a very, very nice house in Alberta and still having a nice nest egg,” Maxwell concluded.
There was also mixed optimism around the rest of the province with a bump in both sales and new listings in August, according to the Alberta Real Estate Association.
In all, there were 7,527 sales province-wide and 9,825 new listings.
“August sales reached record high levels thanks mostly to the gains in Calgary and Edmonton,” it said in its monthly update.
“Higher lending rates have driven many purchasers to seek out the relatively affordable semi-detached, row and apartment sectors, which reported the largest year-over-year sales growth this month.”
The association also singled out a strong migration and continued job growth as reasons for the monthly climb, but like the Lethbridge region, indicated that inventory levels have not been this low in August since 2006.
The average price for a home in Alberta in August was $485,000, a four-percent gain if you compare it to 2022.
To see the full Alberta Real Estate Association report for August online, visit bit.ly/48j7iGy or scan this code with your phone camera.