By COLLIN GALLANT on January 12, 2021.
Medicine Hat’s real estate market managed to make gains in 2020, but largely missed an unexpected updraft in activity that lifted Canadian home values beyond all expectation in a pandemic year, said the new president of the Medicine Hat Real Estate Board.
“There’s some uncertainty still in the province and the world, obviously, but we (in Medicine Hat) were a lot more consistent with sales,” said Frank Devine, who took over the post on Jan. 1. “That’s what you want. It is better for everybody.”
He credited low interest rates, attitudes of home buyers and Medicine Hat being relatively insulated from major job losses as the drivers of the market in 2020.
Year-end statistics for the local real estate board released this month show price gains for single-family homes on a typical number of sales – easily beating worst-case scenarios envisioned in the spring.
Some observers felt a steep drop in economic activity caused by the pandemic and lingering recovery would lead to major price reductions as stressed sellers sought to move properties.
Or, fewer sales generally would result from uncertainty about the economic outlook or job security.
Realtors were also hampered in holding open houses, or cancelled them entirely, like the local board did in December, to meet health protocols.
However, Canadian homebuyers responded to the pandemic by closing deals at prices higher.
The Canadian Real Estate Association stated this week that across Canada housing prices rose nearly 14 per cent, driven by major eastern centres. But even the regional gains in Calgary and Edmonton were around five per cent.
In Medicine Hat, year-end figures for 2020 show a steady number of sales of detached homes but at eight per cent higher value. That brought the average selling price of a single-family home in 2020 to $322,500.
Year-to-year comparisons are difficult because the local board changed its reporting format in the summer.
However, a higher number of sales in both semi-detached and row housing showed mixed results on pricing, while the condo market saw results edge lower from 2019.
The average price for a semi-detached unit sale closing price rose to $276,500, the town home’s fell to $199,500, and the average condo came in at $168,600.
At the same time, inventory on the market rose in classes outside the traditional home and lot, while those residences sold faster than new listings came on.
That is a likely result of preference changes away from more communal living environments, said Devine.
“The apartment-style housing may continue to suffer,” said Devine, stating that the fear of a huge number of homes coming on the market as the economy soured didn’t materialize.
As well, new home buyers were likely encouraged to get their situations settled.
“I think the bigger effect on the market will be low interest rates,” said Devine. “Here, you can literally buy a house and live in it for less than the cost of an apartment.”
Economists predict that prolonged periods of low interest rates may need to kindle economic activity coming out of the pandemic. To this point the lending rates have sunk below levels once thought to be the cellar floor. The nation’s best five-year closed rate was a measly 1.64 per cent, though the average was closer to 3.3 per cent. The average of floating rates was 2.4 per cent, the lowest in at least five years.