Mortgage rules hit Calgary housing market with 'collateral damage': CREA
Broker points to higher rates, poor economic conditions and the weather as other factors
Housing sales in Canada were down significantly this year, and Calgary was one of the cities leading the drop, according to a new report from the Canadian Real Estate Association (CREA).
"This year's new stress test has lowered sales activity and destabilized market balance for housing markets in Alberta, Saskatchewan and Newfoundland and Labrador," said Gregory Klump, CREA's chief economist, in a release Tuesday.
"This is exactly the type of collateral damage that CREA warned the government about. As provinces whose economic prospects have faced difficulties because they are closely tied to those of natural resources, it is puzzling that the government would describe the effect of its new policy as intended consequences."
Calgary sales down nearly 20 per cent
National home sales fell 2.9 per cent from March to April, and were down 13.9 per cent from this time last year, the CREA reported.
In Calgary, sales in the first quarter of 2018 were down 18 per cent from last year and 24 per cent below long term averages, according to the Calgary Real Estate Board (CREB).
Calgary real estate broker Len Wong said the drop was influenced by 2017's numbers, which he said started the marketplace off on the wrong foot, coupled with the weather, higher lending rates and the new mortgage rules.
"As of Jan. 1, for example, if you had put 20 per cent down, you qualified for, let's say $500,000. As of Jan. 2, you would have qualified for $400,000 to $420,000," he said.
"That really put a sticker shock and I think sent a chain reaction into the marketplace. I think also Calgary's economy has stabilized but it hasn't gone up, it hasn't gone down, so I think there was no urgency to go out there and buy."
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Wong said he predicts the market will level off in May, and should pick up a bit in the third and fourth quarters. He also suggested sellers ensure they're pricing their homes right to ensure they stand out from the crowd.
"I think it's really critical to make sure sellers understand it's a buyer's market."
Too early to panic, says CREB economist
CREB chief economist Ann-Marie Lurie said she'll be waiting to see if the oversupply in the market goes down.
"The thing that I really look for is not just that sales are slower, but let's see if inventory or the actual product coming on to the market, if that reacts to it," she said.
Lurie said it's too early to say if the slowdown is a significant shift from what realtors had expected, and that the traditionally busy months of May and June should give a stronger indication.
With files from Andrew Brown