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Interest in interest rates is waning as ever-higher home prices are increasingly top of mind for buyers in Canada, a new survey shows.
Count local buyers among them, says one Calgary realtor.
“It’s frustrating for a lot of first-time buyers,” says Mark Neustaedter, real estate agent with eXp Realty in Calgary.
The largest group of buyers in most markets in Canada, first-time buyers are increasingly challenged to afford a home not solely due to higher interest rates that make it challenging to qualify for a mortgage.
Record high prices are also posing difficulties.
That’s certainly the case in Calgary where, in late July, the average aggregate price for a home reached nearly $700,000. For single-family detached homes — the most popular housing type in Calgary — the average price reached nearly $800,000, Calgary Real Estate Board statistics show. Since 2019, the average price of a single-family home in the city is up about 60 per cent.
Local worries about rising prices are likely reflected in the new survey from Zoocasa, which found more than 42 per cent noted home buyers’ top concern is rising prices.
In contrast, only about 26 per cent state interest rates as their foremost worry.
In Calgary, mortgage rates and home prices are often dual concerns, Neustaedter says.
“Whether worried about rates, prices or both, all first-time buyers are likely to find themselves bidding against each other when it comes to affordable, desirable homes.”
Calgary’s market — like many others in Canada — is challenged by low supply of affordably priced homes. The shortage is most acute among single-family detached homes.
In Calgary, single-family homes priced less than $600,000 are increasingly scarce yet remain in high demand.
CREB’s recently published quarterly update shows new listings for single-family homes in the city in the $500,000 to $599,000 range were down about 25 per cent from last year and nearly 50 per cent from 2021, year to date, ending June 30.
Among homes priced $400,000 to $499,000, new listings were down about two-thirds from last year, and roughly 90 per cent from 2021.
“Anecdotally, we talk more with clients than we did in the past about townhomes … even apartment condos than single-family homes,” says Neustaedter about discussions with first-time buyers.
Those housing types are seeing lower-priced listings dwindle, too, as more first-time buyers find themselves priced out of the single-family detached home market.
The CREB report, for example, notes that supply of townhomes — often the first choice for buyers priced out of single-family homes — has significantly declined for listings under $400,000 compared with previous years.
The segment that has seen new listings grow, however, is also the most affordable — apartments condominiums.
The majority of listings for apartments are below $400,000, CREB numbers show.
Local realtor Richard Fleming says many buyers are still expecting interest rates to fall further than they have, increasing their purchasing power to afford higher priced homes, says Fleming with Re/Max Mountain View.
“Yes, prices are higher in Calgary but, compared to the rest of Canada, we are still affordable and that’s why so many people are moving” from Ontario and British Columbia. That influx of out-of-province buyers has helped accelerate price growth in the city in the last year, and falling rates for mortgages are likely to increase pricing even more as buyers are able to afford higher prices, Neustaedter says.
Yet “there is a pocket of opportunity now for local buyers,” he adds.
Active listings exceeded 4,100 in July, the highest level in the last three years, which means buyers have more options heading into the fall market, he adds.
That said, their housing choices have largely changed, Neustaedter says.
“Purchasing a home is still within reach, but it’s definitely a different market from just a few years ago.”