Interest rates will impact our market this year but how?
Blake King – broker/owner with Big Earth Realty
Inventory levels remain low in Red Deer even though sales have been slower in the new year. Inventory was low through 2022 because sales were high, but why are they still low? The high-interest rates have everyone expecting home prices to decrease but that’s because most people don’t take into consideration, inventory levels.
Inventory
The inventory of homes for sale in Red Deer has remained low through 2022 and it’s continuing in 2023. I thought we’d see inventory levels begin to increase with sales slower this year but there’s more to consider.
The high-interest rates that are keeping some buyers out of the market is also keeping some sellers sitting tight. Homeowners know that if they sell they also have to buy. And we might not see higher inventory numbers until a percentage of currently low-interest mortgages mature. As this happens we will also see more buyers and sellers get used to the higher interest rates and buy and sell more normally.
We will see more homes hit the market starting right away.
Average price
Home prices increase in 2022 but they’ve since dipped a little. The Red Deer monthly price average hovered around the 400k mark in mid-2022 but with some lower averages at the end of the year the 12-month running average is lower
We likely won’t see the monthly average close to 400k in 2023 so we should expect the running average to decrease a little too.
Keep an eye on Red Deer home prices by checking in at iOnRealEstate each month.
Home sales
One thing we are definitely noticing in the Red Deer real estate market is slower sales.
Home sales in 2021 and 2022 were high because buyers knew interest rates were increasing. And sales stayed high through 2022 because nobody knew where the rate increase would stop. Get in before they’re higher.
Now in 2023, we’re seeing home sales slow for a few reasons. For some buyers, the interest rates have priced them out of the market. With recent info indicating rate increases may be stopped, some buyers will hold off to see what happens. And, with inventory very low right now sales are forced to slow down. We’d likely see marginally higher sales if there were more homes for sale.
Days on market
The lower home-for-sale inventory is decreasing the number of days-on-market it’s taking for homes to sell.
Summary
Almost all of the information above points toward it being a good time to sell your home if you’re considering that. Personally, I also think it’s a good time to buy if you’re considering that. Once buyers realize that the current interest rates are actually close to “normal” than they were in 2021 we’ll see buying increase. And I think here in Central Alberta we might notice it more than in other parts of Canada. There’s been a lot of migration into Alberta and especially in Central Alberta, home prices are affordable.
Check in each month at www.iOnRealEstate.ca for Red Deer and Central Alberta real estate news, stats, and information.
Download a copy of the Red Deer real estate infographic – https://www.ionrealestate.ca/wp-content/uploads/2023/03/Feb-infographic.pdf
