June Preferred Client Update

In April in the Calgary market, we saw an average price drop of -8.31 per cent. That’s pretty big. But is it true? At face value, yes. But let’s consider how the average is calculated. If there are three homes that sell in a month and two are $1,000,000 and one is a $200,000 condo, the average is $733,333. But if next month there is one $1,000,000 home sale and two $200,000 condos, then the average is only $466,666. That is a decline of 36 per cent. Except the higher priced homes are still selling for $1,000,000 and the condos and are still selling for $200,000. The actual prices remain unchanged.

During COVID-19, less homes are selling during isolation and many people have decided to hold off on buying in the higher price ranges. This skews the average. A more accurate indicator is what’s called the Home Price Index or HPI. This looks at the individual prices of each unique property type to determine changes. The year-over-year HPI in Calgary in April, declined a paltry -1.56 per cent. That’s a far cry from the -8.31 per cent average.

Although parts of Canada are reacting differently, Albertans appear to be taking advantage of low interest rates and the government programs to avoid a market full of distressed sellers. While we don’t know what the future holds, after living through five years of an economic downturn, Albertans appear to be better positioned than most provinces to weather this current storm, and that’s evident in the real estate market.

  

 Lowering Our Personal Expenses

One of the things many people learned during COVID-19 is that having your expenses under control is critical to being financially secure. Here are a few things you can do to lower your expenses and start to pad that savings or investment account.

Reduce Phone, TV and Internet Services – Shop around for better deals and… do you really need 300 channels? 

Eat Smarter – Don’t shop when you are hungry, make enough in one meal to freeze for future meals. This will make it easier to eat at home rather than going out.

Reduce Electricity Use – Wear another layer in the winter and a bit less in the summer.
Spend Free Weekend – Make one weekend per month expense free. Also, make a huge list of things you can do for fun without spending money.

Sell Your Car – Consider downsizing your payments to something a couple of years old, or just less expensive.

Downsize Your Home – Very few expenses are higher than expenses related to our home. Studies show that larger homes don’t make us happier.

Buy Used – Save hundreds of dollars by buying used. When you use something new once, it is now used, so you might as well save the money in the first place.