Calgary Real Estate Newsletters - January 2008 

How is Calgary Real Estate going to perform in 2008?

by Joe Samson, Calgary REALTOR ®

No one is really arguing the fact that the boom in Calgary has tapered off in 2007. Okay, the medium price of a single family house has actually dropped about $32,523 from the peak in June. But why did it happen and what can we expect to see in 2008.

The best way to predict the future is by examining what happened in 2007. A lot of self declared real estate experts are now crying wolf that real estate in Calgary is done and finished. Two main reasons why they are saying this is due to the famous Royalty review of the Stelmach government and a more factual reason would be the 7.3% drop of real estate prices in the second half of 2007.

Let's look at the situation from an optimistic point of view as well. Calgary's real estate prices have increased by 10.54% since the end of 2006. If you were to invest in an average house about a year ago with a 25% down payment, this investment would have netted you a 42% return on investment even after the moderation in real estate prices. Compare this 42% ROI to the stock market in 2007 and then we'll realize that if we would have invested in the Dow Jones Industrial Average we could have expected an average of less than 9% return. If you minus inflation and taxes you'll be lucky to cash in a 3-5% return from the average stock.

What really happened in 2007, and why did the prices in Calgary's real estate market retreat? The number one reason for the softening of prices is due to the supply and demand market. Towards the end of the year, Calgary's real estate inventory has exceeded 5.5 months of supply. Meaning that if we have the same amount of buyers on the market as in the past month, it would take 5.5 months to sell what's available for sale right now. In a balanced market it usually takes 2-3.5 months to sell an average home. This oversupply in inventory has created a strong buyer's market in the second half of the year.

Many people have planned to cash in on Calgary's real estate boom by purchasing new construction condos and houses. However as more inventory flooded the market, buyers have become more selective when it came to making a buying decision and this hesitation  coupled with the increased inventory has slowed down the resale market. Some builders have also dropped their prices to lower levels than what they have sold their units for earlier in the year. This has created a chain reaction and forced some speculative investors to make harsh decisions to drop their prices to salvage the salvageable. Currently 43% of the properties for sale on CREB are either vacant or occupied by tenants. This percentage is a really good indicator of people who don't want to be investors anymore.

Fore sure it's going to take some time for the inventory to be bought up again, perhaps more than a few months. However, it will only happen after the market shakes out those who looked at real estate as a short term, get rich possibility. In 2008 we should expect an above average growth again due to the ever lasting economical advantages in Alberta.

Thank you for your continuous support, feel free to call me anytime with your questions or real estate needs. 

Your Best Friend in Real Estate,   

Joe Samson
Real Estate Professional 

P.S. – If you had found the above information useful and believe that someone else might find it beneficial, the greatest compliment I can receive from you is to send this link to them and to keep me in your thoughts when someone mentions real estate to you. Thank you.  

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Last updated on: 2012-02-10 00:18:44

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• As first-time home buyers, we were pretty much overwhelmed by the whole process. Joe walked us through everything step by step and made the whole experience very positive and smooth. He was always available at our convenience, there was no time of the day he wouldn't meet with us. Joe was very attentive to our needs, very patient and helped us choose the right house we are so pleased with now. His professionalism and knowledge of the market are very impressive and make him the best agent out there. We would recommend Joe to anyone, and we will definitely use his services in the future when we are ready to upgrade. Thank you Joe for all the hard work.
• Anna and Lukasz Wrzosok