Once again, Fall is upon us and the Calgary market is adjusting to a slower pace than the recent spring market. Year over year the Calgary market has seen a nice upswing in both sales and prices; year to date for the first half of 2014 shows increases of 15.7% in sales and a 5.5% in prices. Through the spring market we experienced shortages in inventory; often in the least expensive parts of the market in both the inner city and the newer communities in and around Calgary.
Interest rates have been incredibly stable with 5 year rates hovering around the 3% mark. The US and Canadian economies are struggling to gain traction. While the US continues with stimulus to ensure a growing market these measures are slowly being reduced and will continue as we move towards a stronger US economy. Eventually interest rates will have to rise to contain the strength of the move.
You may have read in recent news that a major US rating agency suggested that housing prices in Canada are 20% overpriced. We have seen reports like these before and I find it interesting that most of the reports come from the US. They see the risk of higher home prices but are forgetting what got them into the housing mess in the first place. It was unregulated and unrealistic mortgage practices. There were simply too many mortgages given to people that could not make the payments. Mortgage companies in Canada never allowed the loose lending practices that were predominant south of the border.
The Canadian government has also stepped in with rule changes to limit the extent of borrowing which should help protect the banks and lending institutions from getting into trouble with mortgages. A little known fact is that the foreclosure rate in Canada is at historic low levels. Calgary’s market has been good for a number of years and as I see it only two things could cause a disruption in the housing market in our city. The first would be a drop in the economic activity and the second would be large and unexpected interest rate increases. At this point, neither is expected as Calgary’s economy continues to expand and the government continues to work towards slowly increasing interest rates as the economy improves to prevent the economy from falling back.
As we prepare for the second half of the year, I expect that we have seen most of the price gains for the year and we continue to move towards a slightly more balanced market.
There is a small change in our group. Sabrina Stevenson who joined me last year is about to give birth to her first child and will be taking a six month leave. I know for those of you who have worked with Sabrina, you will join you me in congratulating her on this amazing time. Our newest addition to our team is Shayne Pardee. Shayne is a fully licensed agent and brings eight years of Real Estate experience to our team. She is looking forward to the opportunity to work with you.
As always, if you or someone you know is looking for information on real estate we would be delighted to assist in any way. Please feel free to contact us at any time at 403-685-2413 or email at Real@calgaryconnection.com and don’t forget to check my website at www.calgaryconnection.com.