Home sales stats for Red Deer look a little different in 2023 with interest rates higher, but strangely enough, the higher rates have only slowed our market a little.
The last two years saw higher than normal home sales in Red Deer mainly because of low-interest rates, but now, with rates higher, shouldn’t sales be much slower?
Interest rates are about 3% higher than they were a year ago and home sales are slower in Red Deer now but not as slow as you’d think.
When interest rates increase homes sales slow because a certain number of buyers no longer qualify and some choose to wait. This leaves the total number of buyers in a market lower than it was. But this year other factors are helping to keep our market active.
Each month I focus mostly on the number of detached homes selling so we have a rough idea of what our market’s doing. But with substantial interest rate increases, we need to look at home sales overall to know what’s actually happening.
Detached home sales were down 28% in May.
And if we looked only at detached home sales stats we would think the market was slower than it is. But if we look at the other segment of home sales stats, attached properties, we see a different part of the market with more sales.
It’s easy to assume that all home sales will slow when interest rates increase but right now it’s not the case. Some buyers who qualified prior to rate increases are not able to buy now but we’re seeing more and more choosing to buy in a lower price range.
Attached home sales were up 27% in May.
Markets see an increase in attached home sales as real estate becomes more expensive. For example, to live downtown in a major city, detached home prices are unaffordable. And because of that more and more attached homes like townhouses and apartment condos pop up. We are seeing this now in Red Deer more.
Red Deer has predominately been a city of detached homeowners but in May attached home sales boomed.
One segment of home sales slowed while another increased. And because of that, home sales in Red Deer overall are only down 10% this year.
We would expect higher interest to slow sales completely but in Red Deer, they’ve just caused a shift.
Another thing I’ve talked a lot about over the last year is inventory rates. High-interest rates will slow a market down and the lack of homes for sale will have the same impact. Right now Red Deer is battling very low inventory. It’s not only high-interest rates pushing buyers to more affordable properties, a shortage of single-family detached homes is doing the same thing.
It would be interesting to see how close home sales stats would be to last year’s numbers if there were more properties for sale.
Red Deer’s market for attached homes has always been much lower than for detached homes but as detached sales decrease we are seeing other properties sell better. Like larger cities, Red Deer is now seeing an increased market for townhomes, duplex properties, and condo apartments.
And with inventory so low home sales might be closer to last year’s numbers if there were more homes available for sale. Overall, home sales are down in Red Deer but not much.
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