Calgary’s luxury real estate market faces challenging times

With mounting supply and muted sales, downward price adjustments were common: Sotheby's report

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Mario ToneguzziCalgary’s top-tier real estate market saw a regression in the first six months of 2018, following a glimmer of recovery experienced in 2017, says a new report by Sotheby’s International Realty Canada.

The real estate firm’s top-tier report, released on Tuesday, said “the reversion was largely attributed to rising interest rates and the introduction of stricter federal mortgage rules that constrained borrowing capacity, which stalled progress in a city still recovering from a severe economic downturn.”

“With mounting supply and muted sales, downward price adjustments were common across the top-tier condo, attached, and single-family home markets,” it said.

The report said $1 million-plus real estate sales – for condominiums, attached homes, and single-family homes – decreased 11 per cent year over year to 350 units sold in the first half of 2018.

It said the $1-million-plus single-family home market decreased 13 per cent, with 304 homes sold in the first half of 2018, while attached home sales over $1 million dipped 24 per cent year over year to 29 units sold.

“The collision of rising mortgage rates, stricter lending guidelines and cascading governmental policies and taxes have impacted the performance of several top-tier Canadian markets,” said Brad Henderson, president and CEO of Sotheby’s International Realty Canada. “While the Toronto top-tier market remained remarkably resilient in the first half of 2018, and Montreal continued to exude growth and confidence, the Vancouver and Calgary markets decelerated as consumer optimism and local purchasing power diminished.”

The overall Calgary resale housing market has faced a tough road this year. According to the Calgary Real Estate Board website, year to date as of July 9, MLS sales in the city of 8,939 were down 16.69 per cent compared with the same period in 2017.

At the same time, new listings have risen by 5.93 per cent to 20,931. And active listings as of July 9 were 8,854, soaring by 31.95 per cent from a year ago.

So far this year, the average MLS sale price in Calgary of $487,615 is off 0.97 per cent from a year ago and the median price has dropped by 2.27 per cent to $430,000.

Respected business writer Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald in various capacities, including 12 years as a senior business writer.

 


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