May was another month for records in the Calgary Real Estate market. Sales price reached new levels in both the total residential sales and the single family home segments. Luxury homes are once again helping to boost these numbers with 84, $1MM+ homes selling in the month of May.

It appears as though the steady, positive growth is proof of a stable market with good opportunities for sellers and buyers and inventory is on the rise – although still way below 2012, down 17% from the same period last year.

Tighter mortgage rules have helped to boost the condominium market in Calgary by decreasing buyers “affordability”. Those who still want to live inner city, for example, have had to switch their focus to condominiums.

Rates remain relatively low despite a few lenders raising rates in line with the rising bond market. No significant changes are expected but small variances are to be expected into 2014.

Market still strong!

Still a sellers’ market although if market confidence continues, we may see a balanced market next month. Inventory was up almost 400 units in May but still remains 17% below last years’ level while sales are up almost 7%. Again, strong labour and migration growth as well as tight rental market conditions are all helping to fuel demand.

While properties are selling at a faster pace and closer to list, inventory is still relatively low and buyers more cautious then the last time there was a sellers’ market.

Price expected to moderate

While Calgary home prices set new records again in the month of May, CREB says that “resale price growth will likely moderate, as competition in the new-home sector and sluggish economic growth expectations will weigh on the housing market.”

Inner city and belt line communities’ luxury home market still seems to be going strong, up 5% over May 2012. Demand for moderately priced single family homes is still strong with homes, especially those under $500,000, are selling very close to asking price and quickly.

Rates set to increase slightly

For fixed mortgage rates, you should expect an increase of 0.10% to 0.25% to the 5 year rate over the next 30 days, with some lenders having already increased their rates. The increase is due to the rise in bond yields over the last month. As global economic conditions have not materially changed, aside from these minor variances, mortgage rates will remain near their current levels for the next 12 months.

For variable rates, the Bank of Canada’s (BoC) most recent rate announcement left their overnight rate unchanged. The BoC is still stating that low rates “will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2% inflation target.” This means there will likely be no changes to the overnight rate well into the latter half of 2014.

Bottom line is, despite the slight increase in fixed mortgage rates, rates remain low and should remain so for the rest of 2013, and possibly into 2014. A couple of thoughts on how best to take advantage of the current rates: for buyers wanting cost certainty, especially if they are buying with little down payment, the seven year rate of 3.49% or even the 10 year rate of 3.69% could prove to be a good deal in the long term; and for well-qualified buyers a convertible variable rate, with a discount off of Prime might be their best deal.