What a difference a few months can make. Last year we were experiencing a strong seller’s market through economic confidence and low interest rates. However, in the last few months of 2014 we saw the price of oil drop. Currently, with the price of oil hovering between $45 and $55, the Calgary economy is showing signs of a change in direction. For many of us, we have seen this story play out a number of times in Calgary. These resets seem to be inevitable for the Calgary economy. Nevertheless, each time our city bounces back with a confidence that truly makes me proud to be a Calgarian.
Over 25 years of observing the rhythm of our market, a few consistencies have become apparent. Property prices do not decline as quickly as you would expect in a softening market. There are a couple of reasons for this. One is that most people buying or selling real estate are not investors, they are making moves for personal reasons and continue to need a good home for their family’s future. Secondly, many sellers are reluctant to move on price, feeling that they will get their price eventually. This slows the market price changes, even when we start to see more inventory and lower sales.
This market change can offer a big advantage for buyers; it will offer a larger inventory of quality homes up for sale. We are moving from a very tight supply of homes where buyers had difficulty finding the right home, to a market where buyers will be impressed by the selection of homes that are available. In these market conditions sellers know they must be reasonable on price to obtain the sale. Buyers can benefit from this increased competition.
These economic changes have not gone unnoticed. The Central Bank has recently lowered interest rates it charges to the banks, to encourage consumer confidence. They have also hinted that more reductions may be coming. Market conditions can change quickly as the price of oil is a commodity that is often very volatile and, as the market adjusts to the new conditions prices can recover quickly.
Yes there is a rhythm to all markets including the Calgary real estate market and with this change we will see both opportunities and challenges. The long term future remains bright for our energetic city.
If you would like to discuss the market or get more details on how you can be successful with your real estate in these market conditions please feel free to contact myself, Sabrina, Gary or Shayne. We can work with you through these changing times.
The Calgary Connection