While location-location is a key factor in real estate, for the Calgary real estate market, the 2023 buzzwords are hot-hot-hot.
Of course, there is much background and analysis to digest, but the Calgary Real Estate Board’s late-summer stats and numbers show:
- The benchmark single-family home in Calgary increased by 6.8 per cent year-over-year to $629,800 in July 2023. In comparison, provincially, the benchmark single-family home sale price in Alberta was up 2.7 per cent from a year ago, to $546,200.
- Calgary’s benchmark townhouse house price increased by 11.6 per cent year-over-year to $431,900 in July 2023. In comparison, provincially, the row/townhouse sale price in Alberta is up by 8.5 per cent from a year ago, to $371,200.
- The benchmark condo price in Calgary increased by 10.1 per cent year-over-year to $313,500 in July 2023. In comparison, provincially, the benchmark condo sale price in Alberta is also up by 8.9 per cent from a year ago, to $269,500.
- Calgary’s benchmark composite home price increased by 5.6 per cent year-over-year to $551,300 in July 2023. In comparison, provincially, the average home sale price in Alberta was up by 2.2 per cent from a year ago, to $483,300.
CREB’s tracking confirms the Calgary hot market, and chief economist Ann-Marie Lurie calls the mid-summer stats the strongest ever reported by CREB and an indisputably record-setting pace.
Calgary is an exception! The real estate story across the country for most of 2023 has been a decrease in sales, primarily due to the impact of higher mortgage rates. The Calgary market is bucking the national cooling trend.
Recent numbers indicate that a slight tempering of the national cool down. But as of mid-year, nationwide home sales were up just 1.4 per cent, year-over-year, compared with Calgary’s 11 per cent hike.
Despite downer predictions about spiked mortgage rates also cooling the Calgary market, area realtors and analysts agree that, while the market may turn lukewarm by late fall or the end of the year, there are no signs of an imminent Calgary slow down.
Area realtors and buyers and sellers are riding the crest of Calgary’s hot market wave. Because Calgary’s population is booming, new housing is in short supply, and prices are cheaper than other big Canadian markets, buyers are stampeding to snap up YYC real estate.
Christian Twomey, CREB chair and popular realtor with RE/MAX Landan Real Estate, has much Calgary expertise and is upbeat but cautious about setting the bar so high. “It is hard to gauge market ‘hotness,’ but the consensus among our more experienced members is that, although it is definitely a positive, it can also be a challenging market rating. For sure it’s up there as one of the most challenging Calgary markets we have seen.
“I don’t think anyone would have predicted such record sales levels, particularly while having such record low inventory levels.”
Despite the exciting positives for the Calgary economy, and especially for sellers, some real estate analysts caution about a possible downside of the hot market. Affordability.
With continued migration swelling the Calgary population combined with Calgary’s low housing inventory, the lack of affordability, already a serious problem in markets like Vancouver and Toronto, affordability could well become a Calgary problem.
“There are several reasons why, so far, Calgary is such a desirable place to live and buy real estate,” says the upbeat and respected Corinne Lyall, owner/broker with Calgary’s Royal LePage Benchmark. “We were recovering from the recession while other major cities had increasing home prices from already strong markets. Because the recession negatively impacted our prices, it led us into an environment of affordability relative to other cities like Toronto, Vancouver, Ottawa and Montreal.”
The benchmark price numbers also highlight a key positive about the Calgary market. Comparative pricing – comparing Calgary to other cities. It is one reason why, even as Canadian interest rates increase, the Calgary cost difference remains stark.
“Another important hot market factor is the forecast for Calgary’s positive GDP for several years. We are an area where companies can thrive and an area where people will move for employment,” Lyall says.
Analysts suggest that Calgary’s housing market may be outperforming the rest of the country because, unlike Toronto and Vancouver whose overheated housing markets have been ongoing topics of national conversation for several years, Calgary is finally just coming out of a years-long slump that actually began – not with COVID years or spiked mortgage rates – but with the oil price crash of 2015.
Caution! Calgary real estate experts agree that, despite complex and volatile factors like the economy, mortgage rates, affordability and consumer confidence, Calgary’s real estate market, (hot or not so hot), like most real estate markets, is ultimately driven by supply and demand.
An important Calgary dilemma is inadequate housing starts, particularly not keeping pace with population growth and the number of people migrating to Calgary. Although the Alberta government data tracks record interprovincial migration, the low level of housing starts contributes to an ongoing lack of supply in the Calgary market.
As more people move to the city, demand for housing goes up. Conventional real estate logic cautions that increased demand, combined with a lack of supply, inevitably leads to higher prices. It is a key reason why Calgary prices keep rising, despite negatives like higher interest rates.
Regardless, area realtors whisper that if it wasn’t for record high Canadian mortgage rates, Calgary’s hot market would be even hotter.
The impact has also spilled over into to a contentious Calgary rental situation. A consequence of high interest rates, together with the population increase, has triggered a significant lack of available Calgary rentals. Some are even calling Calgary’s spike prices a “rent inflation” situation.
Recent data from Rentals.ca tracks that the price of a two-bedroom unit in Calgary was up 17 per cent, year over year, to more than $2,100 a month. By comparison, the monthly mortgage payment for the benchmark price of a condo at $305,900, with a five per cent down payment and a 7.2 per cent interest rate, is about $2,000 a month.
How long can Calgary’s hot market last? “Although no one has a crystal ball,” Corinne Lyall points out, “we are predicted to have a strong economy in Alberta for several years.
“The Bank is Canada predicts that by 2026 nearly all borrowers will have to renew their mortgages. So, the real estate market should become more balanced when more inventory comes to market in a couple of years. But buyers may still want to attempt buying now, as prices could still go up.”