How could COVID-19 Impact Real Estate Prices in Calgary in 2021?
According to recent 2021 predictions for the Calgary real estate market, there will be a moderate increase in property sales, prices, and new listings. However, there are still pending uncertainties tied to COVID-19 and the rollout of its vaccine. Right from the start of the pandemic, there have been many twists and turns in real estate market trends, and it is more likely to continue this year. If you are looking to make property investments in Calgary, you should be aware of how real estate prices have been affected by COVID-19. This write-up will outline COVID-19 pandemic has affected real estate prices in Calgary.
As many more people resort to remote work, the demand for comfortable living spaces is on the rise. This demand has a ripple effect on the prices of houses as well as rent prices. According to the Calgary Real Estate Board (CREB), there is an expected 5% increase in sales annually in its yearly forecast event. This proves the said increase in the demand for properties as buyers are looking to make remote work as comfortable as possible. This same scenario applies to rent prices.
However, there has been a fall in demand for office spaces. As was the case with rental and property prices, there has been a decrease in office space prices. This is because most companies have resorted to remote work, and most employees work from home. As a result of this remote work, most office spaces are unoccupied, and companies don’t see the need to pay for office spaces they don’t use. Prices of office spaces in Calgary’s will also be affected as the COVID-19 pandemic rages on.
According to the CREB, price gains recorded at the end of 2020 will follow through in 2021. Annual prices for this year are forecasted to head up by 1%. While the RE/MAX Outlook for Calgary real estate in 2021 goes as far as predicting an increase of 3% in average price.
Compared to a 0.03 increase in 2020. It should, however, be noted that price recovery will be slowing down. The increase in housing supply is expected to put off some of the sales gains, driving the market towards more balanced conditions.
How then did these price fluctuations affect Calgary’s real estate market?
Increase in New Listings
Due to fear of the spread of COVID-19 and numerous lockdowns, the number of listings in 2020 drastically dropped, causing an increase in demand. But with the announcement of the rollout of Covid vaccines, an increase in supply is highly anticipated as pressures from unemployment may push more buyers to sell their properties.
Slouch in Market Growth
While everything is seemingly on the increase, the same cannot be said for the growth of the market. Calgary’s current economic conjecture is highly punctuated with a drop in the demand for oil and an all-time high unemployment rate that is expected to stay that way until well into next year, with a full job recovery forecasted for 2022.
With government support packages equally coming to an end, homeowners may be forced to re-evaluate their housing conditions to match their employment statuses. This will result in a drop in demand on the Calgary housing market as buyers will look to settle in more affordable neighborhoods. Also, this might cause a fall in property prices as more people who are unable to cope with the financial stress brought about by the COVID-19 pandemic will have to seek affordable housing. Some people may even resort to selling their homes at lower prices in order to downsize.
The CREB reports that this is already a major problem with neighboring cities like Alberta. For the first time since 1990, the area witnessed its highest record of people leaving in 2020. This could rapidly spread to the whole housing market.
Who Are Those Buying in Calgary?
Since the start of the pandemic, demand is driven by mover-up and first-time buyers. This trend is expected to continue throughout 2021.
First-time buyers, typically single buyers or young couples, principally go for single-detached homes priced between $350,000 to $475,000.
The condominium market in Calgary is populated with single homebuyers and retirees/downsizers. Average prices turn around $226,220 with a current seven-month supply. This isn’t expected to change in the next couple of years due to a large number of used properties and a rise in new construction.
As for the luxury market, move-up buyers will infest this market with an average starting price of $750,000. Move-up buyers are mostly families whose jobs haven’t been affected by COVID-19 or the economy.
Although the general outlook paints a positive picture, there are still calls for caution. Variables like the pace at which the COVID-19 vaccine will be made available or the implication of new fast-developing variants of the virus could have drastic effects on real estate market prices. In the advent of a new lockdown, the situation could worsen as several businesses nation-wide are yet to recover from the 2020 lockdowns.
Overall, with more people relocating to more affordable areas this year, Calgary’s real estate market will be more of a seller’s market. This makes the market profitable for property owners in well-priced areas. Calgary’s top-selling neighbourhoods in 2021 remain North Central, South Central, and North West/Central West.
When it comes to your next Realtor, make the right choice. With Jesse Davies Team on your side, you’ll be worry and hassle-free. Contact us today and see how we can make your dream home a reality!
