So earlier this month there was a big hoop-la (is that even a word?) about the new mortgage rules the feds implemented. If you haven’t heard, as of October 17th, people applying for a mortgage with less than 20% down will now have to qualify at the Bank of Canada’s posted rate. Currently that sits at 4.64% which is considerably higher than most of the big bank’s interest rates of under 2.5% for a 5 year fixed mortgage. What does this mean? It will affect people’s buying power – to the tune of 20-30%. In the short term, it may take some people out of the market, however, long term this will become the new norm. In 6 months, first time buyers getting in to the market will not know what they could have bought before the rules came in. So it will be business as usual. The interesting part about this is that the federal government has deemed it necessary to put some measures in place to make sure Canadians are not so over-leveraged. They must be seeing something they don’t like. Also, I believe they are setting the table to raise interest rates in the next 5-10 years. Overall, I don’t see this being a bad thing for the Canadian housing market even though it may hurt Calgary & Alberta in the short term. Interesting enough, one of the immediate short term benefits of this policy was a rush to buy property. Buyers that saw their buying power reduced substantially made a mad dash to purchase a property before the policy came in to effect October 17th. Sales over the city of Calgary were up 16% (1644 units) compared to October last year. Inventory levels dropped across the board. The city sat at 5400 (500 units less than last month) while levels dropped 12% in the detached segment and 17% in the semi-detached segment. For the short term, this will help to keep prices stable. Most of the inventory decreases happened to be in the lower price ranges of each segment. Detached sales activity was up 18% since October last year. Months of supply sits at 2.49 compared to 2.99 last month. The North and Southeast districts dropped by 1.5% over the last month while the East, West & city centre areas have faired the best year over year. Looking for a good deal? The Southeast & Northeast districts have fallen 6.5% & 4.5% year over year. Overall prices for detached homes are still looking good. Benchmark prices sit at $502,200 (down only 3.2% year over year). The apartment segment saw a little reprieve as inventory levels eased and are only 13% higher year over year (compared to almost 30% higher for most of the year). New listings were down 13% since last October giving prices a chance to level. We will see what the rest of the year brings, however, this segment could use a little good news! Benchmark prices are $273,800 which is down 6.3% since October last year. While the Southeast district is probably your best bet for holding value (prices are only down 1.2% year over year), the city centre benchmark price increased by 0.43% since last month. As far as the attached segment, semi detached homes are still doing well especially in the North & Southeast. Semi detached benchmark prices are only down 2.45% to $386,500. Inventory levels are down 17% since last year and months of supply sits are 2.96. In the city centre prices have dropped less than 1% year over year and there continues to be low supply in the North & Southeast. Row housing could turn in to a viable option considering the new mortgage rules. Looking for a good deal? Check out homes in the North, city centre and the East side as prices in these areas are all down 7+% year over year. The Southeast continues to have good sales activity. The detached and semi-detached product has been in a more affordable range and the selection is good. Given there are a few different access points, lots of amenities (including the new hospital) and desirable communities, it is a good choice to live. Looking outside of Calgary, Airdrie showed better sales activity (above the 10 year average) and sits with just under 3 months supply. Cochrane, Chestermere and Okotoks are all in the same boat with months of supply hovering around 5. Benchmark prices all took a dip in each of these areas month to month by 1-3%.
For a more in depth look at the stats click the links – Calgary or Calgary Region
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