Whether you’re thinking about buying a new home, selling your home, or both, it’s smart to get a sense of what’s going on with the Calgary market. Trends can help you decide whether now’s the right time to make your move or whether it might be better to wait a few more months.
The following predictions are based on expert analysis and can help you make decisions.
A Stronger Market
In general, Canadians are seeing the housing market slow down. This is especially true in the bigger cities like Vancouver and Toronto. The good news is Calgarians won’t experience this dip. Since the housing market in Calgary lags behind the rest of the country, we don’t see that level of volatility. Residents in Calgary don’t have to worry as much about the pressures of buying and selling at the right time. You can wait until the moment is right for your own unique situation.
High Condo Availability
According to the Royal Bank of Canada, one of the biggest challenges for those in the Calgary area is the high availability of condo-style homes. When there is an abundance of supply, it can decrease the value of those condos. That might be good news for those who are trying to purchase a condo in Calgary, but not for those who want to sell their condo and use the equity to upgrade to a larger home.
Weak Labour Market
Calgary saw a sharp decrease in employment rates in 2016 – a 22 percent drop – and the market has yet to fully recover. There have been slight increases in employment rates throughout 2017 and we expect that trend to continue during 2018. However, the upswing is not enough to significantly increase the demand for homes. This can mean home prices are flat and buyers may be in a better position to make a good deal.
Higher Interest Rates
The Bank of Canada is expected to raise interest rates in 2018. This can increase homebuyers' monthly mortgage payments. Small increases in the rate may only mean a marginal increase in the monthly payment; but overall, might be just enough to make a home unaffordable. Money-conscious homebuyers can increase the amount of their down payment to counter the effects of increased interest rates. Fortunately, most people aren’t looking at homes at the top of their budget range, so these minor increases won’t have a big effect.
Potential Increase in Quick Possession New Homes
Over the past few years, builders in Calgary have increased production of quick possession and spec homes to meet the demand of consumers who want to purchase brand-new without waiting a long time for the construction. Spec homes also serve to fill in lots at the beginning or end of a community’s development. This is a great opportunity for buyers to get good deals on completed brand-new homes with popular upgrades. Purchasing quick possession homes also eliminates some of the guesswork that comes with purchasing a new construction home. You’re able to see exactly what you’re going to get.
The New Mortgage Stress Test
In October of 2017, the Bank of Canada established a new mortgage stress test to ensure home affordability. In a nutshell, everyone applying for a mortgage has to qualify for the posted average mortgage rates or a rate that’s two percent higher than what the bank is offering. In the past, this rule only applied to those who had less than 20 percent as a down payment.
This stress test is effectively decreasing the purchasing power of those who were planning to buy with a large down payment. Higher down payments can make more expensive homes affordable and many consumers are rushing to make their home purchases before the changes go into effect on January 1, 2018. Fortunately for Calgary, experts believe this new stress test is likely to affect Toronto and Vancouver the most.
Throughout 2018, the housing market in Calgary should remain fairly strong. Those purchasing for the first time in the area are making a solid investment. With a strong buyer’s market, you should feel comfortable taking your time in making a decision.