Warnings As Calgary House Prices Expected To Climb Higher

The ratio of home sales to new listings gives a good read
on the overall balance in the residential market,” writes ATB in their daily economic comment.

With the ratio climbing to one of the highest readings in recent years, and “given that the city’s population is expanding rapidly with the inflow of interprovincial and international migrants, either more inventory of homes will have to be brought onto the market—or else prices can be expected to climb even more.”

Calgary inventory is at the lowest level since at least 2006 while home sales are the best they’ve been in years.    The immutable law of supply & demand dictates that we’ll see pressure on prices.

Richard Goatcher, an Economic Analyst at CHBA-Alberta wrote today that the home ownership market in danger of overheating and rental supply is close to zero. Affordability will suffer without more supply.

Buyer’s have had some reprieve this month as new listings are up nearly 8% y/y.  However, with a sales to new listing ratio of 72% and listings down over -24% from last year we’re still firmly in a seller’s market.

Back in February I wrote about Calgary’s growing housing affordability gap.  A few days later both RBC and BMO issued their own affordability reports which came to different conclusions than me.

I’ll conclude by reiterating my final thoughts from that post which is apropos:

The resale market is tight with less supply and sales up year-over-year which will put pressure on prices. But if prices rise too high or too quickly, eventually the market will once again reach a  point where affordability eludes enough Calgarians that sales will stagnate and prices will have to adjust accordingly.

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