Lending conditions weigh on housing demand
Calgary Real Estate Board (CREB) Activity Report
May sales activity continue to ease with the largest declines occurring in the detached sector. Additional gains in new listings continue to increase inventory levels.
City-wide sales activity in May totaled 1,726 units and is 19 per cent below last years’ levels. This is 24 percent below longer-term averages. Sales activity in the detached sector declined to levels not seen in over a decade.
This is partially due to the impact of rising lending rates and stricter qualification levels causing demand to decrease.
While economic conditions have improved when compared to several years ago, the pace of this improvement has not been enough to outweigh the changes in lending conditions.
Market supply didn’t adjust to sales activity in May, which pushed 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. 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 priced 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).
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.
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.
For the entire CREB® forecast, visit creb.com.
Information was last updated June 2018.