Losses-Disaster-Lower-Declining-Falling but Wait!

Blog Post Image
Real Estate

Losses - Disaster - Lower - Declining - Falling but Wait!

These words all sound like doom and gloom. This is an unprecedented time in Calgary's history, Covid-19, job losses, oil prices, fear, yes but what if you still want to sell your home or buy one? The housing market has, over the last few weeks, adjusted to the pandemic.

The Facts - Should You Buy Now?

According to the Calgary Real Estate Board, April sales hit 573 units, a decline of 63 % over last year. CREB® chief economist Ann-Marie Lurie, said, "The combined impact of COVID-19 and the situation in the energy sector is causing housing demand to fall." But she also stated, "Demand is also falling faster than supply. This is keeping the market in buyers' territory and weighing on prices."

Buyers have Power

A greater share of home/condo sales has occurred in the lower price ranges. A homebuyer household earning $99,000, which is the median Metro Calgary household before-tax income, could get a mortgage that would be enough to buy for example a small condo. Maybe a $475,000 house is now achievable. Many sellers are uncertain about the state of the economy and more nervous about selling their home, which gives buyers increased power they normally don't have.

When will it End? Who Knows?

When the news of the world turns negative, you may be tempted to stop. During a shattered market economy it seems like the world is ending when you are in the middle of it. Time and again, when terrible events occurred, the same thing always happened, they ended. Throughout history when people seem to think the situation is hopeless, we always pulled through. This time should not be different.

Two examples of market extreme, is the internet bubble of the late 1990s and the stock market crash of 2008. In those moments, we saw the same headlines of doom and gloom. The trends kept going in the downward direction—until, that is, they didn't.

After the storm you may be happy you invested in something stable like a home. 

Several Incentives Help Cushion the Blow

There are many risk factors with Covid-19. Risks are events that may or may not happen. People need to live someplace. Why pay rent? A home is something many first-time buyers can now be hopeful for. The Federal Government, the Bank of Canada and the country’s biggest commercial banks are pulling out all the stops to try and head off a serious recession.

The central bank has cut interest rates spurring mortgage rates lower.  Banking regulators have loosened bank capital requirements to free up C$300 billion of lending capacity. Robert Hogue, senior economist at RBC Royal Bank says, "In all likelihood, this will be a temporary hit with a rebound taking place later this year once the COVID-19 situation settles down."

The Facts - Should You Sell Now?

Given the current recession combined with the pandemic, sellers may want to push ahead and sell. Home prices may not regain the current low levels because a Coronavirus-induced recession may inflict long-term economic damage.

If you're selling a home during the pandemic, you can expect technology to play a big role.  

For details on restrictions and challenges see my blog on What I Am Doing - Virtual Touring. https://yourhomeinalberta.blogspot.com/2020/03/what-i-am-doing-during-covid-19-pandemic.html

Carry on and Keep Calm and…

If you have questions give me a call, Chris at 403-680-4479