Have we moved passed the craziest times? Since record-high sales in March, sales activity has trended down or the second month in a row. We've talked about how the interest rate hikes would affect buyers and it looks like we are finally seeing the impacts on the real estate market. For the last five months, so many buyers were eager to purchase their homes before the rate increases, causing the frenzy of undersupply & multiple offer situations. Sales levels have come down but prices have not. Higher lending rates have dampened sales levels but the market is still struggling with supply challenges & rising prices. We are still in a seller's market and the tight market conditions continue to push prices up but the pace of growth seems to be easing off compared to the first half of the year. Let's take a closer look at how different types of homes are doing.
DETACHED
Steep gains in prices but not in inventory levels. Sounds like a recipe for slower sales growth. Detached homes continue to be a hot commodity and there were not enough to go around. With higher lending rates, it has been more difficult for buyers to pull the trigger on the properties that they want. The tight market for this property type keeps pushing the prices up but not at the crazy pace that we were seeing in the last five months - you guessed it, still a seller's market. Sales trended down across Calgary in the month of May, except in the NE and East districts; these areas are the most affordable and attracted the highest sales levels in the city.
SEMI-DETACHED
Semi-detached homes shared a very similar story with detached homes in May. Slowed sales but increased benchmark price. Slower sales gave this property type a slight gain in inventory levels and despite the pullback compared to April, sales levels are still going strong on a year-to-date basis. As with its close cousin mentioned above, the market continues to favour the seller in the semi-detached segment. Benchmark price increased almost 20% since April, and almost 15% compared to May of 2021. We saw price gains across all of Calgary, with the strongest year-over-year gain of 21.55% in the North district.
ROWS & TOWNS
It seems like there is a good chunk of buyers shifting their focus away from detached & semi-detached homes, and turning to townhomes. With the supply challenges & continued price gains, it is becoming more difficult to secure a property in those segments. Townhomes are generally more affordable than the above property types and may be a good option for some buyers looking to get into the real estate market. Benchmark price came up to $363,300, about 6% increase from the last month. Sales activity trended down but this May saw sales level 33% higher than same time last year - a record high for the month of May.
APARTMENTS
As always, this segment tends to have a life of its own. There was an increase in apartment condos coming to market in the month of May. This is likely because of the encouraging market activity this year, causing many condo-owners to add to inventory levels. This segment is typically more sensitive to supply shifts but it is still moving in an optimistic direction. Benchmark price trended up to $275,300, almost 9% higher than this time last year. Total sales also climbed 66.49% compared to May 2021. Although this home type is still more than 10% below highs in 2014, we saw prices trend up in every district trended up this month to support price recovery.
For the second month in a row, markets have been slowly moving towards more balanced conditions. Increasing lending rates seems to have slowed sales growth, but not price growth. Supply challenges persist & the seller's market is still here to stay. That being said, buyers that are still searching for their property may be seeing less competitive conditions. For example, instead of competing against 15 other offers, they might only be competing against 2 or 3 other groups. Remember the craziness in Q1?
Source: creb.com
