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Use medium or benchmark prices to establish market values

Sold house sign
Sold house sign

It is unlikely the average home price will fall up to 18 percent over the next 12 months, even in Calgary, where the economy has been hit with a one-two punch, says Lowell Martens, a broker and owner at ReMax Real Estate in Calgary.

“Calgary has a double problem, COVID-19 and the oil industry, with many more concerned about what is going on in the oil industry,” says Martens. “Continued demand and diminished supply have kept prices steady in Calgary. There are some price adjustments happening already, but expecting average prices to drop 18 percent across the board isn’t realistic.”

Some competition has returned to the market, says Martens.

“We’ve seen some multiple offers on properties in the right neighbourhoods priced appropriately,” he says. “It seems like if there is a price drop in the next few months, it’ll be more aligned with bank predictions of five percent.”

A drop in the average sales price could also be attributed to bargain seekers, taking advantage of low interest rates and targeting lower-priced homes.

“A decrease in average prices could mean that most homes that are selling are doing so in the lower price range, bringing down the overall average,” says Martens. “It’s much easier to see a downward trend over a longer period; one or two months are a short time frame to judge prices. Using the medium or the benchmark pricing strategy is a more accurate way of establishing values than an average. Prices are very much affected by supply and demand, so as the listings increase, we can expect prices to be adversely affected.”

The Calgary Real Estate Board reports 573 sales in Calgary in April, at an average price of $422,655. Of the total sales, 426 sales were below $500,000.

Copyright Postmedia Network Inc., 2020

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