Wide selection and low interest rates are helping drive resale market conditions in Calgary that benefit house hunters, says an economist.
Over the first three months of 2015, the inventory for single-family homes on the resale market in Calgary grew by 84 per cent from a year earlier. That’s 2,754 homes between Jan. 1 and the end of March compared to 1,494 during the same span last year.
“There are lots of listings right now, so lots of supply relative to demand right now,” says Lai Sing Louie, regional economist for Canada Mortgage and Housing Corp. “So what that means is if you’re a buyer, there’s a lot of choice. It’s a market that gives the buyers some leverage in terms of negotiations.”
The benchmark price on single-family homes sold on the resale market last month was $513,800. This marks a slide from benchmark prices in February and January, when they were $516,000 and $518,600, respectively. Benchmark prices are that of a typical home based on a formula that uses various factors to ensure accurate comparisons.
“In terms of people looking to buy a home, this is an opportunity for them,” Louie says. “There’s lots of selection and no pressure to buy immediately, they can take their time to evaluate different homes in different neighbourhoods that they desire, that they can negotiate on. So, this is probably a good time, if you want to move forward into home ownership.”
Another upside to buying a home today are affordable interest rates, adds Louie. Earlier this month, the Bank of Montreal (BMO) pulled back its five-year fixed term to 2.79 per cent from 2.99 per cent. TD Bank later posted the same rate.
“You can get five-year money for under three per cent, which is very low,” Louie says. “Buying now at this price with the low interest rates, it’s a favourable time for people to buy.”
With that said, sales have cooled off compared to the first quarter of 2014. Over the first three months of this year, there were new owners for 2,356 single-family homes. A year earlier, that number was 3,443. Homes sold during this time spent an average of 36 days on the market, which is up from the 30-day average a year earlier.
Buyers seem to have a wait-and-see attitude, says Bill Kirk, past president of the Calgary Real Estate Board.
“They may be anticipating another drop in housing prices or they’ve got concerns about their own employment,” says Kirk. “Everyone has a different reason for making that move but given the current inventory levels, buyers who are already in the market, especially those have built up some good equity by buying in another cycle, may find a window of opportunity to move up into a new home enhanced.”
Northwest Calgary led the city in resale of single-family homes over the first three months of the year. From Jan. 1 to the end of March, there were 773 deals in Zone A, which roughly translates to the quadrant.
The next busiest area for sales was the 621 deals in Zone D, which covers southeast Calgary. Southwest Calgary, or Zone C, had 550 sales. This was followed by 393 deals in Zone B, which covers the northeast end.