May was another tough market especially for the detached sector which say inventory levels continue to climb while sales continued to decline by 19% as compared to May 2017 and 24% compared to long term Calgary averages. These declines can be directly correlated with the impacts of rising lending rates and stricter stress tests when qualifying buyers. Economic conditions have started to improve with unemployment levels and the price of oil trending positively but these indicators usually take months to see the effects. We are seeing the effects of a perfect storm coming to light with long depressed oil prices, high unemployment rates and tougher mortgage qualifying rules.
Market supply has not adjusted to sales activity and is pushing months of supply to 4.9 months. Elevated supply relative to demand prevented any further price recovery in the market and city-wide residential benchmark prices totaled $436,900 in May. This is similar to last month and 0.6 per cent below levels recorded last year.
Detached sales and inventories have risen across all price ranges, but the amount of excess supply has been most notable for homes price above $500,000. Months of supply for the higher price ranges remain high compared to the past several years. However, they still remain below record levels that occurred post financial crisis (2008 – 2009).
“The changes in the lending market are preventing some people from moving up in the market. Uncertainty has also caused others to wait on making changes to their housing situation,” said CREB® president Tom Westcott.
“However, there are pockets of the market that have not seen the same supply increase. It makes it so important to understand the dynamics of your community.”
If you have any questions or are thinking of Buying or Selling in Calgary contact Jesse Davies today at 403-969-2363 and let him help you better understand the market and how you can take advantage of it.