Despite a few minor, year-end glitches, Calgary’s beyond-expectations, hot market real estate good news continues, particularly for resales. But experts caution that Calgary (and Canadian) real estate may be headed for some 2022 speedbumps.
According to respected and knowledgable Corinne Lyall, broker and owner of Calgary’s Royal LePage Benchmark and past president of the Calgary Real Estate Board, Calgary’s booming resale market, which (according to CREB Q4 stats and figures from last fall) continues with strong momentum. “The market was even more active in some cases in the last quarter of 2021, partially because buyers tried to lock in before interest rates are forecasted to rise this year.”
Rumors suggest that mortgage rates may be hiked by this year’s Q2 but, Calgary-experienced professionals like Lyall admit that, so far, it spiking rates remain a rumor. “It’s definitely feasible based on the current inflation rates, although there is concern that some of the inflation may be due to the COVID situation,” she notes. “So, it’s difficult to determine if it’s going to be short-lived or not.”
Although it’s way too early for new year stats, CREB’s Q4 summary shows that Calgary’s housing market had a strong showing, with average home prices in the city reaching $491,160. Whatever the reasons and the unexpected positives, year-over-year, the average sold price in Calgary is up 7.6 per cent compared to fall 2020.
The CREB numbers illustrate that, while average home prices are up in Calgary, it is not the only aspect moving towards a continuing hot real estate market. Total sales for the city are up 46.8 per cent from the year before, and total sales volume is up by 58 per cent.
The 2021 numbers show that all property types had double-digit growth in sales compared to the year before. The most significant growth was seen in Calgary condo apartments, with a 57 per cent increase in sales year-over-year. Total sales volume of condo apartments in Calgary nearly doubled with a 92 per cent year-over-year increase and the other good news for Calgary condo resales is that condos have gained momentum, having a 21 per cent price increase for an average sold price of $285,713.
Calgary’s detached homes had an average sold price of $585,922 and semi-detached homes averaged $499,599.
CREB also cautions that, as a trend, increasing home prices and sales have traditionally been followed up with a decrease in housing inventory. It’s a basic of the real estate market that higher home prices are driven by low inventory. “Without a significant boost in inventory, we will continue to see upward pressure on prices,” Lyall says. “The city’s various downtown revitalization and infrastructure projects, such as the Green Line LRT, are helping drive Calgary’s real estate boost.”
She emphasizes another real estate factor “Calgary remains an affordable place to buy a home, compared to Canada’s other major cities.”
Despite Calgary house price spikes (and only for the sake of comparison) the median price of a single-detached home in Toronto is expected to spike by 11 per cent to $1,564,200, while the median price tag on a condominium is forecast to rise 12 per cent to $763,800. By comparison, the median cost of a condominium in Calgary is expected to increase by two per cent next year to $229,500. The priciest Canadian resale market is Vancouver, where the median cost of a single-detached home is $1,892,800.
Unpredictable pandemic impacts aside, economists suggest that rates may go up because there is usually a catch-up after a steep economic drop like the past couple of years which have triggered lower-than-normal Alberta investment and job growth. Although the Calgary unemployment rate was down slightly last fall, unfortunately it continues to be the highest among major Canadian cities.
“Historically, consumers tend to buy when rates are going up, and tend to wait when they are going down, to see how low they will go. So, if anything, this will continue to impact the increasing sales. Combined with the forecast of rising interest rates and that Alberta is positioned to be the only province to have a positive GDP growth, consumers may be purchasing property in speculation of prices increasing next year,” Lyall says.
“We are seeing more inter-provincial buyers who see Alberta as still affordable and a perfect place to raise their family. Hopefully, we will see more properties come on the market in the spring as consumers see equity increase in their current homes and want to take advantage of that. We haven’t had that type of opportunity in quite awhile.”
Experienced Calgary real estate professionals who have successfully weathered their share of cycles, trends and ups-and-downs, are consistently reluctant about dabbling in predictions and crystal ball gazing.
“I believe that buyers will continue to scramble to purchase before the anticipated price and interest rate increases. As well, there are still leftover buyers from 2021 who haven’t purchased yet,” Lyall suggests. “We will see increased upward pressure on prices if there continues to be low inventory, especially if more Canadians cross provincial borders to Alberta.”
