May saw a significant reduction in the number of homes sold in the Calgary area, according to figures just published by The Calgary Real Estate Board.

Compared to the same period last year, there was a 20% drop in sales of single family homes during the month, with condominium sales in the city experiencing a similar decline. This downturn represents a stark contrast to the particularly encouraging start to the spring, when there were strong sales in Calgary's residential property market.

CREB president Diane Scott, cites a number of potential reasons for the abatement in sales during May, "We believe there are a number of factors contributing to this marked slowdown including a declining number of first-time homebuyers in the market, a rise in monthly carrying costs as mortgage rates rise and to some extent market jitters in the wake of Greece’s financial crisis.” she said.

The average price of both single family houses and condos, in Calgary, experienced a modest rise of 5% in May, compared to the previous month. Scott went on to say, “Our inventory is shifting to higher price points as move-up buyers enter the market. This has resulted in an overall boost in average price”. She added, “Nonetheless our days on market year-over-year has decreased—suggesting that competitively priced homes are selling.”

The median price (the price that is midway between the least expensive, and most expensive home) of a single family home in Calgary for May 2010 was $420,000. That is a 1 per cent increase, compared with the previous month, and an 8 per cent increase from May 2009. Similarly, the median price of a condo in May 2010 was $279,900; a 5 per cent increase from April 2010 and a 10 percent from May 2009's median price of $255,000.

The CREB president feels that the current decline in sales can be partly attributed, not only to a drop in the number of first time-buyers, but also to a slightly slower start to the forecast activity of those moving up the property ladder. She also feels that, many investors are now listing second homes and condos, having cautiously waited out 2009, "giving an added boost to our inventory” she says.

Despite this drop in sales, Scott confidently states "our economic fundamentals, including employment and net migration, seem to be building momentum and Canada’s overall outlook is positive." adding, "These steady improvements should offer some stability to Calgary’s housing market as we enter the second half of 2010”.

So, now that the weather is improving, and we're noticing some encouraging signs of economic recovery, it will be interesting to watch developments in the Calgary housing market over the next couple of months.

Written by the Justin Havre Writing Team