Slow market recovery driving down home prices, real estate report says

Sales of Calgary homes have been slower to recover than expected, according to the Calgary Real Estate Board’s mid-year economic and housing outlook update.

CREB said the trend is due to stricter lending criteria, higher rates and a slow economic recovery, which have weighed on housing demand during the first half of the year.

“Prices were not expected to improve this year. However, supply has not adjusted fast enough to weaker-than-expected demand,” CREB chief economist Ann-Marie Lurie said in a statement. “This is causing us to make a downward revision from earlier estimates.”

The real estate board is forecasting housing prices to decrease by more than one per cent across the city overall. Declines range from a one per cent price drop in the detached home sector to 2.5 per cent in the apartment sector.

Lurie said all housing prices — including the detached, semidetached and row, and apartment sectors — have been affected by oversupply this year, due to a combination of easing sales and rising inventories.

But Calgary’s housing market has struggled due to a number of factors, said the CREB, including higher lending rates and stricter qualifications, which have prevented some first-time buyers from becoming homeowners. Existing homeowners who had considered moving up to a mor expensive property have also been affected.

The struggling economy also continues to play a role. While it continues to recover and is expected to gain further traction later this year, the economy still hasn’t reached the conditions present before the recession began.