Lending conditions weigh on housing demand
City of Calgary, June 1, 2018 – 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 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 recovery 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).
“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.