The Medicine Hat Bubble
I have been speaking with my real estate colleagues over the past few months and the common consensus is that 2020 started out optimistically. Most local realtors felt that Medicine Hat’s housing market was starting off strong. However, the first quarter could not have ended any further from that. When COVID hit, it was like there was a temporary pause button pressed. Buyers and sellers alike did not quite know what to expect and for a few weeks’ things went quiet. That was until the Provincial government deemed real estate an essential service and measures were put into place to keep the market moving. People still needed to find a home and the housing industry adapted to make sure that was still possible.
The fear was that because of COVID, housing prices would take a steep decline. This would be caused because of mortgages defaulting and bank repossessions, which would in-turn create a domino effect. So far, this is not the case for Medicine Hat – so why is our city different? It really comes down to Supply and Demand. Medicine Hat has not seen the same influx in inventory caused by the pandemic as other cities, even of similar scale. This is not surprising taking into consideration past boom and bust cycles. Medicine Hat’s housing prices do not see the same expansion and contraction like other larger centres. Does that mean that houses do not acquire value over time? No, of course not. It means that typically, on average, houses appreciate in proportion to the cost of living. Nationally the cost of living increases between 2 and 3% annually, in Medicine Hat houses follow this curve as well.
Brooklyn Kalista, Owner-Broker with Royal LePage Community Realty says “Yes, real estate is an investment, however, in Medicine Hat we see it differently. You don’t have to dive into the market stats or follow the volatile economic curve to pinpoint the most beneficial time to invest - Medicine Hat seems to be in its own ‘bubble’ for housing and has been, for the most part, able to provide a stable real estate environment. We have not been with out hiccups, but overall, it is a stable market.”
There might not be the same scenarios where someone sold their house for twice what they paid but on the flip side, it’s also extremely rare in Medicine Hat to hear of anyone losing value on their home because our community seems less responsive to the economic ebbs and flows. That being said, we don’t exactly know where all the chips are going to fall once the mortgage deferral programs have ended and government support programs expire, but it’s safe to say Medicine Hat’s housing market has a track record of being more resilient to crisis.