City of Calgary, Aug. 15, 2018 – Stricter lending criteria, higher rates and a slow economic recovery weighed on housing demand over the first half of 2018.
This is causing sales to ease more than originally anticipated.
"Easing sales combined with rising inventories has pushed the market into an oversupply situation for all products, affecting pricing for all products, which include detached, semi-detached and row, and apartment," said CREB® chief economist Ann-Marie Lurie.
Overall, prices are expected to ease by over one per cent across the city, with expected declines ranging from 2.5 per cent in the apartment sector to nearly one per cent in the detached sector.
"Prices were not expected to improve this year. However, supply has not adjusted fast enough to weaker than expected demand. This is causing us to make a downward revision from earlier estimates."
Economic recovery is expected to gain further traction in the latter half of 2018. This is expected to help limit the pullback in demand, but it is unlikely it will be enough to offset declines that occurred in the first portion of the year.
Sales activity within the city is expected to decline by 9.7 per cent to 17,047 units, a downward revision from previous forecasted levels.
Easing sales continue to be met with a rising number of new listings on the market, keeping inventories elevated. Slight improvements in conditions for the second half of the year are expected to reduce some of the upward pressure on inventories. However, it is also unlikely the issues of oversupply will correct this year, causing modest price easing across most product types.
"Patience is required during periods of recovery," said CREB® president Tom Westcott.
"This is a market where a solid pricing strategy will make a sellers' home more attractive," said Westcott. "The same kind of strategic thinking is true for buyers who need to consider local market trends against long-term property value to make an informed purchase decision."
Why is the housing market struggling to recover?
Provided by CREB
City of Calgary, August 1, 2018 –
Recent struggles in the job market, accompanied by yet another interest rate increase, is piling on to the decisions potential purchasers have to make in the housing market.
The month of July saw 1,547 units sold in Calgary, nearly five per cent below last year. New listings eased to 2,964 units, causing inventories to total 8,450 units. With more supply than demand, prices continued to edge down, with a citywide average of $435,200. This amounted to a month-over-month price decline of 0.30 per cent and year-over-year decline of 1.89 per cent.
"Despite some positive momentum in some aspects of our economy, our job market has continued to struggle as of late, with some easing in total employment levels over the past few months and persistently high unemployment rates," said CREB® chief economist Ann-Marie Lurie.
"Also, the Bank of Canada raised rates again in July. Rising costs, combined with a slow recovery, are weighing on the demand for resale homes in the city. At the same time supply remains high and is resulting in an oversupplied market."
Citywide months of supply have risen for each property type and currently range from nearly five months in the detached sector to seven months in the apartment sector. These elevated levels have been placing pressure on prices in the city.
Detached benchmark home prices totaled $501,300 in July, down 0.4 per cent from last month and over two per cent from last year's levels. Year-to-date average benchmark prices in the detached sector remain just below levels recorded last year.
The apartment ownership sector continues to see the steepest declines, with year-to-date benchmark prices averaging $257,343, three per cent below last year and nearly 14 per cent below 2014 highs.
"In a buyers' market, it's critical for all parties to have the most up-to-date information to make a fully informed decision, whether you are buying or selling," said CREB® president Tom Westcott.
"A REALTOR® can help make an accurate determination on how much to sell a home for or how much is too much when purchasing one."
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