Bank of Canada rate hike won't cool Calgary's hot housing market: ATB Financial

Calgary’s housing market is scorching hot, but some economists say the Bank of Canada’s decision to raise interest rates Wednesday won’t cool it down – and that homebuyers will still able to get cheap mortgages to compete for properties.

Rob Roach, deputy chief economist with ATB Financial, says the 25-basis point increase to 0.5 per cent will directly impact Calgarians about to get a mortgage or people with a variable-rate mortgage.

He says though costs will increase right away, the effects of which we could see over the course of the year, it likely won’t majorly impact housing sales unless multiple interest hikes are seen in the future. 

"If you’re looking for a home and you need to move, you’re still going to do it if you can, so you’ll bite the bullet, but it will have a dampening effect because you can only stretch your dollar so far," Roach said.

“It might even make some of those lower-priced properties even more appealing, but there’s only so much this interest hike can do to slow what’s already a super hot housing market."

Calgary’s housing market set a sales record in February as 3,305 homes were sold – a surge of 80 per cent since last year, according to the Calgary Real Estate Board.

The Alberta board says monthly home sales in February are up 1,831 from the same period last year, and monthly new listings soared to 4,652 from 2,859 a year earlier. 

CREB Chief Economist Ann-Marie Lure notes that the 63 per cent increase in new listings caused adjusted inventories to rise above last month's levels. However, with only one month of supply, the market continues to favour the seller.

"Sales have been somewhat restricted by the lack of supply choice in the market,” Lure said.

"While sellers did respond with a record level of new listings this month, the demand has been so strong that the housing market continues to remain undersupplied, causing further price gains."

Lurie adds that the total residential benchmark price for the city rose by nearly six per cent over January levels, and was over 16 per cent higher than levels recorded last February.

The average Calgary home price is $547,730, up almost 13 per cent from $486,490

The majority of the growth has been driven by the detached segment of the market, which has not seen conditions this tight in over 15 years.

The board says this is the fourth consecutive month that the market has dealt with conditions far tighter than what the city experienced last spring.