Lethbridge Real Estate Remains in Seller’s Market Territory

The Alberta real estate market has been one of the most affordable segments of Canada’s sizzling housing industry throughout the pandemic-era boom of the last 30 months. But while the western provincial housing market has enjoyed notable strides over the last year, Albertan municipalities are beginning to join the broader slowdown amid higher interest rates, growing uncertainty, and waning demand. The Lethbridge real estate market has recorded exceptional gains since its decline last year. But, as things started heating up, external factors began to weigh on the Lethbridge housing market. Still, homeowners can take comfort in the fact that this is still a seller’s market.

Lethbridge Remains a Seller’s Market

According to the Lethbridge and District Association of REALTORS® (LDAR), residential property sales plunged at an annualized rate of 25.3 per cent, totalling just 186 units. Year-to-date, housing sales dipped three per cent compared to the first seven months of 2021.

The data show that all property categories have witnessed diminishing sales activity levels.

• Detached: -26 per cent
• Semi: -18 per cent
• Townhome: -22 per cent
• Apartment: 33 per cent

“While sales have eased, they remain well above long-term averages for the city,” the association noted.

Prices enjoyed handsome gains in July as the total residential average price advanced 7.6 per cent year-over-year to $341,853. Three of the four residential property categories also posted pricing growth to kick off the third quarter.

• Detached: +9.3 per cent to $394,720
• Semi: +10.3 per cent to $268,236
• Townhome: -4.0 per cent to $228,333
• Apartment: +1.2 per cent to $182,000

Supply levels were mixed. New residential listings slipped 2.2 per cent from the same time a year ago, totalling 228 units. But active residential listings jumped 9.1 per cent year-over-year, with 561 units.

The number of months of supply also soared in July, rising 46.1 per cent to 3.02 months. This measurement assesses the number of months it would take to exhaust present inventory levels at the current rate of sales activity.

In addition, new housing construction has maintained steady growth this year, although it took a breather in June. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts slid at an annualized rate of seven per cent to 39 units. However, on a year-to-date basis, housing starts have surged nearly 25 per cent from a year ago to 429 units.

Overall, according to the LDAR report, the Lethbridge real estate market “continues to favour the seller.” However, if supply continues to trend higher and sales slow further in the Albertan town, “we could see the pace of price growth ease.”

How is the Alberta Real Estate Market Performing?

Are the market developments in Lethbridge comparable to what is occurring in the broader Alberta housing sector? There are indicators suggesting that the province’s real estate industry is easing, with “the largest movements toward balanced conditions.”

Alberta Real Estate Association (AREA) statistics show that residential property sales tumbled 7.4 per cent year-over-year, totalling 6,818 units. Aside from detached homes, the other properties posted sales gains:

• Detached: -15 per cent
• Semi: +6 per cent
• Townhome: +6 per cent
• Apartment: +25 per cent

Price growth was decent, but the longer-term trends suggest a declining market. The total residential average price rose at an annualized pace of 2.6 per cent to slightly more than $437,000 in July. All the property types witnessed increases:

• Detached: +5.6 per cent to $510,424
• Semi: +3.5 per cent to $408,743
• Townhome: +9.3 per cent to $319,050
• Apartment: +2.2 per cent to $247,727

“As housing market conditions shift, we are seeing some downward pressure on home prices,” AREA stated in its report. “While some of the monthly adjustments are due to shifts in the composition of sales, prices have generally trended down for most property types compared to levels reported earlier this year. Despite some recent price adjustments, on a year-to-date basis, the average price in the province remains over six per cent higher than last year’s levels. Moving forward, we anticipate that higher rates will continue to weigh on housing market conditions in the second half of the year, slowing the pace of price growth.”

Is This an Opportunity for Homebuyers?

Interest rates are climbing and are expected to rise even more in the coming months as part of the Bank of Canada’s (BoC) inflation-busting efforts. This also means that financial institutions’ mortgage stress tests will intensify, making it harder for prospective homeowners to be approved.

With recession and inflation fears becoming paramount in the overall economy, many households might be worried about making that giant leap into homeownership. That said, as the association noted and as market experts forecast, more significant declines are ahead, so perhaps families sitting on the sidelines are waiting for the best price within their budgets to execute the most significant purchasing decision in their lifetimes.