Toyota isn’t the only one having problems with acceleration these days. It seems as though the Calgary real estate market isn’t sure whether to slow down or speed up.
In May, we saw a decrease in the number of sales at the same time as both the median and average prices were increasing. Unusual? I’d say so. There was a deluge of new listings, but it seems as though buyers were making up their minds and were willing to pay top dollar for the house they want.
Sellers, don’t get too excited though. Though the monthly numbers were strong, the buying activity seems to be slowing down. In the first week of May, there were 320 single family sales. In the second week, 328. Third week, 301 and the fourth week saw only 237 sales.
Another reason we may start to see downward pressure on the marketplace is the recent announcement by the Bank of Canada that they increased the overnight lending rate by 0.25% to 0.5%. This means monthly payment increases for variable rate mortgages and you may see lenders increasing their fixed-rate products as well.
For the average buyer, a 0.25% increase in their mortgage rate won’t have a huge impact on their lives, but rate increases can have a bigger impact on consumer confidence and willingness to purchase at today’s prices.
These are definitely interesting times out there and the information available can be hard to decipher. Yes, the market is stable and has shown significant price increases in 2010 (over 5%). However, the absorption rate (how many months worth of inventory we have, at the current rate of sales) has increased from the low 2’s late last year to over 4 (the higher the number, the slower the market). Let’s hope that, like Toyota, we will continue to see growth and confidence despite our acceleration problems!
For advice about your personal situation, whether buying or selling, please contact me. I will work with you to help you achieve your financial and lifestyle goals and interpret the important data for your benefit.
