The spring market in Calgary has traditionally been one that gained strength until around the end of May or early June. That is not the case in 2010, where sales have slipped in May, and buyers seem to be sitting on their hands.Both single family homes and condos showed a decrease in sales activity, compared to last year in May, and to the previous month. Year over year sales were off approximately 20% for both. Single family homes were 7% lower than in April, and condo sales down 19%. So what’s happening out there? That is the question I am being asked every day by my clients and those trying to make sense of the market. I believe it to be a combination of factors, all leading to jittery buyers and slower sales.

When the federal government brought in new guidelines for mortgage approvals in April, many Realtors thought that it would create a sense of urgency among those buyers already pre-approved. That is almost the exact opposite of what has happened. Obviously buyers have decided to take a wait and see attitude, and as the old adage goes, the buyer is always right. Many of my colleagues are struggling to get showings on what they believed to be well-priced listings. Rounds of price reductions seem to be the order of the day, and offers can be low, even on homes that have only started on the market.

The other factors that are contributing to this malaise in the market include the European economic crisis, the resulting stock market drop, and an over-abundance of inventory, and uncertainty of buyers as to their employment and financial stability. Locally in Calgary, new home sales have been strong this year, resulting in those people flooding the market with their current homes, similar to the 2007 market, which was the beginning of the end for strong sales.

The good news, potentially, is that the Bank of Canada has now set their increase, (.25%) and inventory should peak soon. There are still many nervous sellers out there, but some will give up for now, others will drop their prices to accommodate the market, and this cycle will end. Check out this great listing in McKenzie Lake.