Lending conditions weigh on housing demand:
May sales activity continues to ease with the largest declines occurring in the detached sector. Additional gains in new listings continue to increase inventory levels.
City of Calgary, June 01, 2018 - City-wide sales activity in May totaled 1,726 units and is 19 per cent below last years’ levels. This is 24 per cent below longer-term averages. Sales activity in the detached sector declined to levels not seen in over a decade.
The impact of rising lending rates and stricter qualification levels is causing demand to ease across all product types,” said CREB® chief economist Ann-Marie Lurie . “Economic conditions have improved compared to several years ago, but the pace of economic recovery has not been enough to outweigh the changes in lending conditions.”
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.”
HOUSING MARKET FACTS
- Oversupply issues continue to worsen in each district of the city compared to last year. However, compared to historical conditions, conditions today remain better than in 2016 in both the West and City Centre districts.
- Year-to-date, the West and City Centre areas have recorded prices higher than last year’s levels and continue to edge towards price recovery. Benchmark prices in the West have averaged $733,329 this year, comparable to previous highs.
- City Centre benchmark prices have averaged $693,243, nearly three per cent below previous highs. Most districts have recorded detached prices that remain over four per cent below previous highs.
- Easing new listings in the apartment condominium sector have prevented any further gains in the amount of inventory in the market.
- Supply levels remain elevated compared to sales, keeping year-to-date prices three per cent below last year’s levels and nearly 14 per cent below previous highs.
- Citywide inventory levels remain just below last year. July inventories edged down in the North East, North, North West, South and East areas of the city compared to the previous year.
- Levels remain elevated by historical standards, but any reductions in inventory can help reduce oversupply.
- Like the other sectors, attached sales have been easing this year, with 2,225 sales this year representing a 15 per cent decline over the previous year.
- Gains in new listings pushed up inventory levels and months of supply compared to last year.
- Citywide year-to-date semi-detached prices have eased by nearly one per cent compared to last year. Benchmark price changes have ranged from a three per cent decline in the North West district to a six per cent increase in the South district. Despite the annual gain this year in the South district, semi-detached prices remain nearly five per cent lower than that district’s peak.
- Year-to-date benchmark row prices have increased on a citywide basis due to gains in the City Centre, North and North West districts. The annual gain is a positive move towards recovery, but row prices remain well below previous highs in every district of the city.