The Calgary Real Estate Board says stricter lending criteria, higher interest rates and a slow economic recovery weighed on housing demand in the city over the first half of 2018 and MLS sales have dropped off more than first anticipated.
According to the board’s website on Wednesday, so far this year there have been 10,734 transactions in the city, down by 14.87 per cent compared with the same period a year ago.
The drop in demand has been coupled with rising inventory. New listings are up five per cent from a year ago to 24,492 and as of Wednesday, active listings on the market of 8,551 have risen by 24.87 per cent.
The elevated number of listings combined with the fall in demand has impacted prices. The median price so far this year of $429,125 is off by 2.03 per cent from last year and the average sale price has decreased by 0.63 per cent to $487,209.
“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 Ann-Marie Lurie, CREB’s chief economist, in the board’s mid-year report.
The report said MLS sales are expected to fall by 9.7 per cent to 17,047 units for the year. It also said prices are expected to be down by over one per cent 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,” said Lurie.
In its report, CREB asks why the housing market is struggling to recover. Here are its answers:
- Higher lending rates and stricter qualifications are preventing some first-time buyers from transitioning to the ownership market. This is also impacting the ability of some existing homeowners to consider moving up to a higher price point.
- While the economy is improving, this remains a story of recovery, as the economy has not yet reached the levels of pre-recession activity.
- The type of job growth has shifted, as employment gains have not occurred in our traditional sectors.
- Consumer confidence continues to be impacted by concerns about Alberta’s prospects and how much more this could impact housing prices, particularly now with elevated inventories.
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.