We have experienced one of our best summers in recent memory both in activity and in hot sunny weather. The housing market is moving steadily towards a balanced market of sellers and buyers and buyer’s confidence in the market is increasing. One aspect of weakness in the Calgary housing market continues to be the condominium market, as it was hit the hardest with the recent downturn and is still struggling to find a good balance of buyers and sellers. Prices have now stabilized, albeit at a lower level and activity is starting to increase year over year. With the slower economy we have also noticed that the rental market has also fallen back with rental rates falling approximately 10 – 15 % from their 2014 highs. We have also noticed that the rents have also stabilized at this lower level.
Some additional positive aspects of this recent downturn has been the affordability of housing in and around Calgary. The Royal Bank of Canada publishes their affordability index showing the percentage of housing expenses as compared to average household income. In Calgary, single family homes housing expenses run at a rate of 43% and condominium properties at 25.6%, which are well below the Canadian average of 50.6% and 37.2% respectively. These numbers have increased recently, due to the loss in household income with the slower economy and the stabilization of the Calgary housing market, but as you can see Calgary is still a very affordable place to live. You can view the most recent RBC Housing Trends and Affordability report at https://goo.gl/Ca7j9E.
In our last update we discussed the green shoots which seemed to be appearing in the market. We continue to see these improvements in the general market. It appears that the worst of this downturn is now behind us and home prices are stable or rising slightly. This is an advantageous time to make a move as selection is good and interest rates are still very appealing. Mortgage rates have started to increase off historical lows but the expectation is for a moderate rise in rates over time. Today you can still get fixed rate 5 year mortgage financing for as little as 2.79% and a variable 5 year mortgage for prime less .75%. Today the prime lending rate sits at 2.95%. If you have any real estate questions or would like to explore the housing market in more detail, please feel free to call us. We would be happy to help.