Calgary is seeing a drop in single and semi-detached home sales as interest rates remain high and inventory remains low for low-priced homes of these types.
According to a report released Monday by the Calgary Real Estate Board (CREB), there have been “significant slowdowns” in the market for single and semi-detached homes, while condominiums and townhouses have increased sales.
Ann-Marie Lurie, chief economist at CREB, says high interest rates have started to impact sales of single and semi-detached homes, shifting buyers to more affordable options like condos.
“We’re seeing some of the slower demand levels because the supply is so low. It’s going to take a while to get to that balanced territory, but it’s going to ease some of that price pressure,” Lurie said.
“The condo market had really struggled for a while. So it’s now started to really recover, really late last year into this year.”
The average cost of a single-detached home in Calgary was $643,600 in July, up almost 15% from the same time last year. However, this is down from the average single-detached home price of $647,500 in June.
The average price for all homes was 12% higher last July.
Lurie said inventory levels are still “much lower” than in Calgary between 2018 and 2019, and demand is still relatively strong.
Although condominium apartment sales continued to slow from record levels earlier in the year, new listings in July were still 24% higher than the same time last year.
Meanwhile, single-detached home sales hit 1,136 in July, down 19% from a year ago. The average condo price was $278,800, slightly higher than in June and almost 10% higher than last year.
Across the country, national home sales fell 5.3% in July on a monthly basis, according to a report released Monday by the Canadian Real Estate Association (CREA). The national average home price in July was $629,971, compared to $665,850 in June.
The national report indicates that housing activity across the country continues to stabilize towards pre-pandemic levels. While Canada saw record prices and sales volumes in the first two years of the pandemic, real estate activity slowed after the Bank of Canada raised interest rates in early 2022.
Another seller’s market
Ezra Malo, a real estate consultant in Calgary, said he’s also noticed a major reduction in sales of single and semi-detached homes, while apartments and townhouses are gaining popularity.
“My opinion is that the single-detached market was becoming almost unaffordable for a lot of people,” he said.
Malo said it’s important to keep in mind that Calgary is a unique market compared to other major cities in Canada.
“I have friends who work in the Toronto market, the Vancouver market, and they’ve seen a significant downturn,” he said. “I think with oil and gas the way it is and the affordability in Calgary is so good, we still have a lot of people. So that’s still strong.”
Malo said while there are signs of real estate activity becoming more balanced, he finds it’s still a seller’s market right now.
The CREB report found listings for homes under $500,000 fell 18% in July from 2021, but rose 20% for homes over $500,000.
Nearly 80% of available single-detached home inventory in Calgary is priced over $500,000, the report said, while new listings for homes priced below $500,000 have been cut in half from Last year.
Buyers also still face sticker shock when it comes to interest rates, Malo said.
“We’re talking about 5% in some cases, right? So that really changes what people can afford when you raise that interest rate that much,” he said.
“It just makes people, I guess, slower or slows down how they make a purchase because they really have to look at their affordability levels.”
However, high interest rates have not deterred out-of-province buyers seek homes in Calgary. Malo said he’s seen a “major influx” of people selling properties in hot real estate markets in other cities and coming to Alberta for better deals.
“People just say, ‘Why would I have a million and a half dollar mortgage when I could buy a single-family home for about $600,000 in Calgary?’
Although Malo said the Calgary market has been “erratic” recently, he thinks August will prove to be a strong month.