“We expect to see more monthly declines…because the gains were very strong at the beginning of the year,” says Ann-Marie Lurie of CREB.
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The arrival of summer heat last month didn’t stop Calgary’s resale real estate market from cooling down due to its red-hot temperature in early spring.
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The Calgary Real Estate Board released its June data this week, showing sales (2,842 in total) fell 2.5 percent, year over year.
“The jump we had in interest rates is probably weighing on the market,” says Ann-Marie Lurie, chief economist at CREB.
Mortgage rates have been rising as the Bank of Canada raised its overnight rate by 1.25 percentage points since March, the same month prices and sales hit all-time records in Calgary.
Interest costs are expected to rise further with the Bank of Canada forecast to raise the credit benchmark another 75 to 100 basis points this month and potentially even more before the end of the year.
Higher borrowing costs are already having an impact. However, not all parts of the market are affected equally, adds Lurie.
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Higher rates slowed detached single-family home sales, down 18 percent year over year with 1,483 transactions. Likewise, sales of semi-detached houses (223) fell by eight percent.
With more buyers outside of these markets, row and apartment sales increased, setting records for June.
Row, or townhomes, are up 35 percent in June from 2021 with 555 sales. Apartment sales grew 31 percent last month from the same month last year with 581 transactions.
“Apartment condominiums eventually leaned toward tighter market conditions,” says Lurie.
The segment had long had more than three months of supply, but last month supply fell to around 2.6 months, a drop of 41 percent from the same period last year. At the same time, inventory fell 22 percent.
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In turn, the reference price of a condominium apartment grew 10 percent, year over year, to $277,400.
Row housing had the lowest supply on the market in 1.44 months, down 46%, while inventory fell 27%. As a result, its benchmark price rose 16 percent to $363,700 in June.
Even amid falling sales, benchmark prices for single-family and townhouses rose as supply remained low relative to demand. The townhouses, for example, had only 1.85 months of supply. In addition, their inventory decreased by 30 percent. Consequently, its reference price rose 13 percent to $581,600.
Amid 1.8 months of supply and an 18% inventory drop, the detached single-family home reference price also rose 16% to $647,500.
Overall, the aggregate reference price of all segments in Calgary increased year over year by 13 percent.
However, even these price gains are likely to run out of steam as the June benchmark was down about one percentage point from May’s price.
“We expect to see more monthly slides as we go forward because the gains were so strong earlier in the year,” says Lurie.
Still, the market is likely to remain strong given the city’s growing economy driven by energy prices, which drive job growth and migration, Lurie adds.
“But the market is definitely showing some signs of stabilization.”