No, the Airdrie housing market is not crashing. For those of you questioning what’s happening in the market, this blog might shed some light on things! But before we get into it, Take a deep breath and repeat after me: the real estate market is not crashing.
There seems to be murmurs of fear, disquiet, and even panic around the fact that the market we saw in February is no longer the market we are seeing today. Here is what you need to know:
In February and March, the real estate market went nuts. In Airdrie it was typical to see 10+ offers on a detached home within 2 days of hitting the market. Some homes were selling $80,000+ over the list price with no conditions. Speculators from out of province were writing offers sight unseen with no intention of ever living in the home. The result of this was that the benchmark sale price rose to nearly 22% over last year’s numbers in the first quarter of the year.
In the first 2-3 months of 2022, if you wanted to list your home, your Realtor® would suggest a list price based on sale prices from the last 3-6 months. After March of this year, the strategy evolved to list homes closer to what comparable properties had sold for in the last 30 days or so (20% higher on average). In plain English, the listing price of homes when up significantly in April. When that happened, guess what? The number of multiple offers slowed. Some homes started to take longer to sell. People started to say the market is cooling, the panic started to ensue. But does that really make sense? What do you think would happen if a home was listed 20% lower than other comparables? We would see multiple offers. In fact, even at higher prices, we are still seeing them. Is it as crazy as February? No. Is the market crashing? No.
But what about interest rates, you ask. Interest rates are rising. We know this and I think most of us understand that an interest rate of 1.5% is not sustainable as an economic model. It’s inevitable that rates need to rise again (even though no one likes it). A lot of people are worried about rates rising really quickly and ultimately being stretched too thin. This is a fair concern.
A few years back, the government decided to institute a policy that all high-ratio mortgage recipients that qualify at the minimum Bank of Canada rate (it’s currently at 5.25% and it’s subject to change every year). This policy is called a Mortgage Stress test and it means that a person’s income needs to be high enough, and their existing debt low enough, to be able to pay their mortgage at that higher rte. Theoretically, it means that most people with high-ratio mortgages since 2018 have been vetted for a scenario such as one people currently fear and thus, are somewhat insulated from rising rates.
The kind of growth we Albertans saw in 2022 does not compare to the craziness in Ontario and British Columbia. Let me tell you a story. In Burlington, Ontario, I had a friend looking to purchase a bungalow. Many times her and her husband saw homes they loved sell for $400,000 over asking. The first home they wrote on, they offered over $200,000 above the asking price, which the seller declined. They eventually succeeded in securing their next home with an offer again $200,000 over the list price. The scale is different here. We didn’t experience that kind of insanity and it makes me believe that although our highs were not like other provinces, nor will be our lows.
Home prices in Airdrie are still extremely affordable in comparison to commuter cities in other provinces. We have access to great schools and pathways. We are also made up of strong and resilient people. We have diverse local businesses and a supportive community. To top it off, it’s a short commute to Calgary. If prices were to decline in Airdrie, people would flock here… and push the prices back up. It’s affordable and beautiful. It’s why we’re attracting so many newcomers and it’s why people stay.
Did you know? I publish a monthly article in House & Homes feature in the Airdrie City View (also available online at AirdrieToday.com). Every month, I delve into considerations that Airdrie home buyers and sellers should know about the local real estate market. This is an ever-changing and fast-paced landscape and I’m sharing a front-row seat with you!