This month, the Calgary Real Estate Board announced home sales in March were 11-per-cent down on the same time last year, and 28 per cent lower than long-term averages for the month. Inventory levels rose by 7 per cent and provincial unemployment rates are currently at the highest level recorded since the early nineties.
And yet house prices themselves declined just 0.49 per cent in March compared to February, and 3.5 per cent compared to March last year, leading many buyers to believe that the market is still a long way from bottoming out.
“I’ve been watching the market for two and a half years now and I’m still waiting for it to make more sense,” says Dale Mackie, a small-business adviser who returned to Calgary in the summer of 2013 with a wife and two young children after 15 years in Taiwan.
“We’ve seen it change from a sellers’ market to a buyers’ market. Inventory levels have gone up; time on the market has increased. Alberta had a negative population growth last quarter. Building stats are down. But none of that’s been accurately reflected in house prices yet.”
Mr. Mackie and his family are currently living in a townhouse in the northeast neighbourhood of Temple that he’s owned since before he left to live overseas. The townhouse was supposed to be a “stepping stone” for the Mackies until they bought a larger, detached home in the suburbs.
“The family’s been very patient,” he laughs. “The townhouse isn’t ideal for four of us. We only planned to live there for a year.”
Mr. Mackie believes the market has another 10 per cent to 20 per cent still to drop and has set a target of September, 2017, to make his purchase.
“The market’s overpriced. It hasn’t had a correction since 2008 and it’s long over-due. This is a big purchase and I’m willing to wait.”
Mr. Mackie plans to sell his townhouse and buy outright when he finds the right house at a price he feels reflects of the current value of the home.
“If we buy a home at a lower market and sell the townhouse at a lower market, we’re still ahead of the game. I’m okay with that.”
Mr. Mackie has been working with local agent Glen Godlonton as he waits out the market. He’s “one of many” prospective buyers Mr. Godlonton says are “eyeing the market with interest, patience and caution.”
“Right now, I have around 60 buyers looking. Some are tire kickers, some are looking to make a steal, others are serious about getting the right home for the right price,” says Mr. Godlonton, who’s been a licensed real estate agent in Calgary for more than 10 years.
“I’m also seeing first-time buyers taking advantage of low interest rates and a lot of parents who aren’t making money on savings in the bank helping their kids out with healthy deposits.”
Mr. Godlonton says that while the market is still in decline, that doesn’t necessarily mean it’s too early to buy.
“When things were booming, there was no selection. People were writing offers on pieces of paper and leaving them on the hoods of cars; it was crazy. Now it’s a buyers’ market. There’s a lot of options and room for negotiation. That’s a good thing for buyers.”
He warns that those playing the waiting game could wait themselves out of a good buy.
“Building has slowed down and it will eventually impact on inventory. When the market rises again, it’ll rise fast. It’s better to get a great house now than a mediocre house later. If things drop a few more per cent, it’s no big deal. This is Calgary. It’ll come back up.”
Mr. Godlonton believes the resale market potentially offers buyers a better deal than new builds.
“Builders are incentivizing buyers with added extras to avoid dropping their baseline price. They won’t budge on price too much. Builders in the suburbs tend to have pretty deep pockets; they can hold their prices longer.
“But if you get a seller who’s motivated and has some equity in their home, they’ll be able to price it to sell it. Those are the sellers I’m looking for when I’m out with buyers right now; that’s where there’s good deals.”
And good deals are enticing some buyers to make a move, such as 25-year-old Jon Sotto, another of Mr. Godlonton’s buyers, who recently seized the opportunity to leave his renting days behind him and is currently waiting to take ownership of a 850-square-foot condo near Macleod Trail and Heritage Drive Southeast.
“The property had been on the market for 90 days,” says Mr. Sotto, an engineer who only started looking for his first home in January. “It had been relisted with a price drop and I negotiated a further saving. I knew it was a great deal and I took it before someone else snatched it.”
Mr. Sotto secured the one-bedroom unit for $263,000 – $32,000 less than the original asking price of $295,000.
“It’s a little more expensive than renting for me, because I have a roommate, but I don’t mind paying more when it’s a mortgage.”
He admits that his first foray into real estate came sooner than planned and he’s surprised his first home has come in under budget.
“I never would have anticipated buying a property at this age a couple of years ago. I thought it’d be at least another year or two before I could afford to buy, so I’m pretty happy right now. I’m viewing it as an investment for the future, when property prices – and oil – bounce back.”
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