Detached and semi-detached home sales decline in Calgary with low inventory, high interest rates
'The detached market was just getting almost unaffordable for a lot of people,' expert says
Calgary is seeing a decline in detached and semi-detached home sales as interest rates stay high and inventory remains low for lower-priced homes of those types.
According to a report released Monday by the Calgary Real Estate Board (CREB), there have been "significant slowdowns" in the detached and semi-detached house market, while condominiums and row-style properties rose in sales.
Ann-Marie Lurie, chief economist with CREB, says high interest rates have started to impact detached and semi-detached home sales, shifting buyers toward more affordable options like condos.
"We do see some of the slower demand levels because the supply is so low. It's going to take some time to move into that balanced territory but it is going to take some of that pressure off prices," Lurie said.
"The condo market had really struggled for quite some time. So, it's now started to really turn around, really at the end of last year into this year."
The average cost of a detached home in Calgary was $643,600 in July — nearly 15 per cent higher than the same time last year. However, that's a decrease from the $647,500 average detached home price in June.
The average price for all homes was 12 per cent higher last July.
Lurie said inventory levels are still "far lower" than what Calgary had between 2018 and 2019, and demand is still relatively strong.
While apartment condominium sales continued to slow from record levels reported earlier in the year, new listings in July were still 24 per cent higher than the same time last year.
Meanwhile, detached home sales reached 1,136 in July, which is 19 per cent lower than last year. The average condo price was $278,800, slightly higher than June and nearly 10 per cent higher than last year.
Across the country, national home sales fell by 5.3 per cent in July on a month-over-month basis, according to a report released Monday by the Canadian Real Estate Association (CREA). The average national home price in July was $629,971, compared to $665,850 in June.
The national report indicated housing activity across the country is continuing to stabilize toward pre-pandemic levels. While Canada saw record-setting prices and selling volumes for the first two years of the pandemic, housing activity slowed after the Bank of Canada hiked interest rates in early 2022.
Still a seller's market
Ezra Malo, a real estate advisor in Calgary, said he's also noticed a major reduction in detached and semi-detached home sales while apartment and row-style properties are rising in popularity.
"My opinion is that the detached market was just getting almost unaffordable for a lot of people," he said.
Malo said it's important to keep in mind that Calgary is a unique market in comparison to other large cities in Canada.
"I have friends that work in the Toronto market, the Vancouver market, and they've seen a significant slowdown," he said. "I think with oil and gas the way it is and with affordability in Calgary being so good, we still have a lot of people. So, it is still strong."
Malo said while there are signs of housing activity becoming more balanced, he finds it's still a seller's market right now.
The CREB report found that listings for homes below $500,000 fell by 18 per cent in July compared to 2021, but they rose by 20 per cent for homes more than $500,000.
Almost 80 per cent of the available detached home inventory in Calgary costs more than $500,000, the report said, while new listings for homes priced under $500,000 have been cut by half compared to last year.
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Buyers are also still facing sticker shock when it comes to interest rates, Malo said.
"We're talking about 5 per cent in some cases, right? So, it really does change what people can afford when you increase that interest rate so much," he said.
"It's just making people more, I guess, slower, or slowing down the way they make a purchase because they have to really look at their affordability levels."
However, high interest rates haven't deterred out-of-province buyers to look for homes in Calgary. Malo said he's seen a "major influx" in people selling properties from hot housing markets in other cities and coming to find better deals in Alberta.
"People are just saying, 'Why would I have a mortgage for one and a half million dollars when I could buy a single detached home for around $600,000 in Calgary?"
While Malo said the Calgary market has been "erratic" recently, he thinks August will prove to be a strong month.
With files from Saloni Bhugra