Right now in Calgary there are a lot of people scared about what the market has done and what it might do over the next 12 months. There are a lot of investors out there waiting to be able to capitalize on what generally seems like a downward trend in prices, renovation projects will be cheaper, buy and hold more attractive with higher cash flows – but how far will the prices drop and how fast? Nobody can know for sure, but with oil prices where they currently sit and new oilfield projects being put on hold, if history has anything to say about it the prices should slowly decline as inventory goes up and the influx of new people and jobs in Calgary and area goes down. This is the natural order of prices in a commodity backed economy, however the DNA of the job market in Alberta is not the same as it was in the 80’s and the impact will be different this time but what that means for investors will remain to be seen. Those that are considering selling their homes at this time might want to re-consider that option unless they are certain that they could reduce their list price to get the sale as the buyers in the market are doing a lot of “wait and see” right now to see where the market goes. If you need to sell for whatever reason then the best thing to do is price the property competitively based on comparable SALES not what other properties are listed for – listen to your realtor’s advice on this one they see the sales and know what your house should sell for in a short period of time. I do feel that prices are going to drop, and we have seen the beginnings of this in the market but they have not come back to earth compared to the sky-rocketing prices we saw over the last two years leaving a lot of sellers hopeful that they can still get a high price for their home in the current market place. Unfortunately many of those sellers will see longer waits for the offer as buyers are able to take back the advantage due to the uncertainty in the economy. The big banks have also just lowered their interest rates-which is typical for spring time to encourage people to sell their homes and initiate new mortgages which could buoy prices for a few months leading into summer. This will put a lot of pressure on those that have not reached the end of their term on their current mortgages to hold onto their homes to avoid the dreaded IRD or interest rate differential. The rates have dropped a few times over the last two years and everyone with a newer closed term mortgage could be in for some serious sticker shock if they pay out early. Make sure you check with your mortgage lender if you plan to/have to sell over the next few months to make sure you do not incur some costly fees. Those that have seen great appreciation in their longer term investments in Calgary and area might have longer waits to sell like the rest but won’t have to worry about penalties being at the end of their current terms. Those who hold rental properties in Calgary will still enjoy higher rents and low vacancies and I would say the best move is to hold on tho those cash flowing properties until the next uptick in the market after all the oil panic subsides.
To your success!
Tim R