Early Increase in Mortgage Rates Boosts Calgary Housing Sales - April 2010

Statistics released by the Calgary Real Estate Board indicates that the Calgary housing market enjoyed a healthy boost in March of 2010 as homebuyers anticipate an earlier than expected rise in interest rates..

Sales of single family homes in Calgary have increased by a 29 per cent over the same time a year ago in March. Condominium transactions have been outpacing single family homes with an increase of 37 per cent compared to twelve months ago in the Calgary real estate market.

Diane Scott, president of the Calgary Real Estate Board has said that - “The spring market has come early to Calgary. Improved economic conditions, better employment prospects, and an earlier than expected rise in mortgage rates are all contributing to this early boost in sales this year.”
 
Looking at the numbers in more detail, there were 1,396 single family homes sold in Calgary last month. It is a 35% increase when compared to the month of February when 1,035 single family homes exchanged hands in the Calgary real estate market. In March of 2010, 609 condominiums have been sold vs. 536 units in February or a 14% month to month increase.

“Undoubtedly the recent announcements by all our major banks to raise mortgage rates are motivating buyers to take the plunge,” Scott acknowledges. “But Calgary’s market remains in a healthy position and our sales are not outstripping supply. The rise in demand will also motivate sellers to consider listing this spring.”

“There has been some speculation that mortgage rate hikes will adversely affect housing demand in the long-term, but we should keep in mind that a rise in rates was fully expected. The Bank of Canada has been operating at emergency rates as a response to the global recession.  While a rise in rates may tone down demand later this year, we don’t feel this adjustment will prevent the vast majority of buyers with healthy credit to enter the housing market,” said Scott.   

“Ultimately improvements in employment and economic conditions will drive housing demand—Calgary’s economy has seen solid improvements in the first quarter of 2010,” added Scott.

Average Price of a Single family home in Calgary
• March 2010 - $471,269 (an increase of 12% compared to a year ago)
• February 2010 - $458,254
• March 2009 - $420,354

Average Price of a Condominium in Calgary
• March 2010 - $296,660 (an increase of 4% compared to a year ago)
• February 2010 - $282,880
• March 2009 - $284,056

Single family home listings in Calgary
• March 2010 – 2,988 (an increase of 48% compared to a year ago)
• February 2010 – 2,154
• March 2009 – 2,023

Condominium listings in Calgary
• March 2010 – 1,376 (an increase of 52% compared to a year ago)
• February 2010 - 1,109
• March 2009 – 903

Median Price of a Single family home in Calgary
• March 2010 - $423,000 (an increase of 13% compared to a year ago)
• February 2010 - $411,000
• March 2009 - $375,000

Median Price of a Condominium in Calgary
• March 2010 - $275,000 (an increase of 6% compared to a year ago)
• February 2010 - $265,900
• March 2009 - $260,000

All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.

“Our average price has edged upwards as more move-up buyers enter the market and overall demand strengthens,” says Scott.  “But this is not an unusual trend during a spring market. We expect this modest price growth to continue, but a rise in listings will likely curb this trend,” said Scott.  

“Overall, Calgarians should feel positive about the housing market.  Sales and price growth are in line with a more balanced and normalized market. We are seeing a return to stability and optimism in Calgary as we shake off our recessionary blues.  Mortgage rates are just one factor in the housing equation—a more positive economic outlook and improved job prospects will play a bigger role in the long-term,” added Scott.

Source: CREB