Red Deer just had one of its best months for residential real estate in recent memory! Inventory is low and sales are flying, as we posted 214 sales in February with just 425 active listings on the market. Average prices in Red Deer are up 10.5% year over year from 2019 to 2021, and still climbing hard after the first 2 months of 2022. The market is being pushed by detached homes under $600,000 currently, with the $200k to $500k market selling up to 70% of the available listed homes in February, where sales over $500k dropped off substantially, largely due to a lack of good homes on the market.
Inventory shortages seem to be the running topic of this market, and a problem that we haven’t had in Alberta since 2014. When the economy was slow and the market was soft, people were leaving Alberta for greener pastures in BC, Ontario, and the East Coast, leaving lots of vacant homes with nobody to move into them. Over time, the increased supply and lower demand pushed prices down as motivated seller’s looked to incentivize buyers to their listed properties over the other available homes for sale. Now, buyers are cashing out of hot markets in BC and Ontario to take advantage of affordable homes and low cost of living in Alberta. Many owners who have held properties long term in those markets have doubled or even tripled their initial investments, offering a great opportunity to come to Alberta and live in comparable homes completely mortgage free. This influx of new buyers is the primary driver of our current market situation.
The bank of Canada recently raised interest rates by .25%, something that we’ve anticipated for a while, and it’s likely that we’ll see further increases as the year continues as they look to slow down rising inflation. Mortgage rates are still available between roughly 1.8% to 3% right now (variable rates can still be found at prime minus 1%), which are still great rates. Since buyers need to qualify for their mortgages at 5.2% due to the Stress Test rules, these incremental increases aren’t likely to have much of an impact in the short term.
Surrounding Community Snapshot:
Current Active Listings – 54
Sales in February – 24
Likelihood to Sell – 41.4% (seller’s market)
Current Active Listings – 84
Sales in February – 41
Likelihood to Sell – 43.6% (seller’s market)
Current Active Listings – 22
Sales in February – 7
Likelihood to Sell – 34.1% (balanced market)