Sales plunge and prices fall in Calgary
Listings are up while sales plunge. That’s how things are looking in Calgary
, according to the latest data from the Calgary Real Estate Board. January’s MLS resale listings were up year-over-year by 42.8 per cent (active listings up 75.2 per cent) while sales are down 34.8 per cent from this time last year. The average sale price is down 0.6 per cent ($457,853) and the median price is 0.3 per cent lower ($412,500). Some experts believe this may be due to buyers playing cat and mouse with sellers; they are expecting prices to fall due to the decline in the energy sector and are waiting longer to buy in the hope that they will get a better price. CREB’s chief economist Ann-Marie Lurie told The Calgary Herald
that the high level of listings could also be homeowners testing the market just in case their personal circumstances force them to sell. She also highlights that a year ago there was a shortage of resale properties so this year’s higher listings appear more dramatic. For buyers, of course, the current climate offers an opportunity to buy a home in Calgary
with slightly lower prices than we’ve seen in the last year, and with the benefits of lower interest rates (and mortgage rates, at some point!)
Experts don’t see lower interest rates increasing household debt
Although an interest rate cut has the potential to increase consumer spending some analysts are suggesting this time will be different. With the banks stalling on passing on the BoC rate cut to borrowers there is no immediate rush to take out new loans anyway, but even if lending rates do drop, as expected, economic uncertainty is likely to prompt caution. With economic uncertainly both here and globally, many Canadians will opt to use the extra cash from lower loan repayments, together with savings already being made from lower gasoline prices, to build up a ‘war chest’ of savings. Most people expect that, despite the recent rate cut and the possibility of another before the year ends, there will then be increases. Borrowing more when the rates come down will only increase exposure to those higher rates at a time when job security and house prices are not necessarily heading higher.
U.S. existing home sales rise
South of the border figures from the National Association of Realtors show that sales of existing homes increased in December by 2.4 per cent. While the data shows some positive movement for the market, the annual figures are not so good. There was a drop in sales year-over-year by 3.1 per cent, marking the first annual drop since 2010. Analysts expect things to pick up though with lower mortgage rates and softer lending regulations showing signs of improving sales especially among first-time buyers.
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