The Market has continued to decelerate through July, but sales remain above the ten-year average for the month. The new listings coming to market have also slowed, but continue to outpace the sales so the total inventory levels are rising, helping bring the Province back into strong but balanced conditions. 
Below, you can see in the activity through July that the lower inventory is selling at a much higher volume than the higher-priced inventory. This is due to rising interest rates and inflation, reducing purchasing power for buyers. Also notice that the lowest and highest price points are the markets that have moved into balanced months of inventory, but the year-to-date numbers have the markets between $300,000 - $700,000 in a seller's market. 
The showing activity in July across Alberta had a large slow down coming into the August long weekend!  Since then, the activity has considerably rebounded!
The showing activity on CIR Realty's listings also experienced these same trends but July's activity was higher than June's, and August's continued to rise through the first two weeks of the month. The highest increase in showings is in the $400,000 - $700,000 listings.
The Province is positioned very well at this point, and there was a Provincial report that came out projecting that population growth will increase 1 to 2% each year until 2046 when the total Provincial population is over a 6.2Million people. Much of this growth will be in the larger urban centers along Highway 2.  Looking back at the first two quarters of 2022, the Provincial population has increased by 1.4%.
These migration increases can be directly attributed to:
  • Lots of jobs available, and the unemployment down to 4.8% (the peak was 15.3% in May of 2020, and last July was 8.5%).
  • Oil is setting new production records and Natural Gas prices are also rising.
  • Affordability, we still remain one of the most appealing Provinces for Real Estate values.
To expand on that last point, there are a lot of conversations going on about affordability due to inflation and interest rates. WIth interest rates rising quickly through July, and rising prices in most goods, it has forced buyers into lower price points....but they are still buying. We took a look back at historical 5 year fixed mortgages, and the most recent high was 7.39% in 2007. This was just before the Worldwide Financial crisis when interest rates then plummeted to rock bottom rates. 
So what do high-interest rates mean? In most cases, it means that buyers have to adjust their expectations on what they can afford. It doesn't mean the market will tank. We looked at the number of mortgages that went into arrears in Alberta in 2007 when interest rates were over 7%, and the % of mortgages through that year that were behind in payments were between 0.15% to 0.17%. When the economic crisis hit, those rates steadily climbed to a peak in January of 2011 at 0.84%. The most current rate of mortgages in arrears is 0.4% as of May 2022, which has been dropping since May 2020.
The market, economy, and projections for the Province all indicate that strong markets will remain.

Posted by AMANDA KU on


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