It’s tough to pinpoint where the rollercoaster of Calgary’s residential real estate is at any given time. Ups, downs and flux.
Calgary home sales declined in May for second month, but city is still in a seller’s market. According to CREB, the result is prices that trended up. The benchmark price in Q2 jumped more than 14 per cent year over year to $544,733.
“The lending rate increases have started to impact home sales and are expected to weigh on sales over the second half of the year,” says CREB chief economist Ann-Marie Lurie. “offsetting some of the strong gains reported over the first half of the year. Demand for housing has been strong throughout the pandemic thanks to ultra low lending rates. The strong demand was not met with the same growth in supply, and conditions continued to get progressively tighter resulting in strong seller market conditions.
“In the first quarter of the year,” Lurie adds, “we saw sales rise to all new record highs. Demand has stayed strong as people look to get in before any further rate and price gains occurred. At the same time, the sales were possible thanks to the gains in new listings in the first quarter.”
Due to the end of the pandemic and other influencing factors, like hiked mortgages rates, employment and the economy, CREB forecasts that it will take some time for the demand to be filled and the supply levels relative to sales returns to a balanced level.
The good news? Calgary should start to see this transition to balance before the end of 2022.
Despite wild market swings and volatility, the Calgary-savvy Jared Chamberlain, co-founder of the Chamberlain Real Estate Group with Real Broker admits that, at least Calgary’s Q1 was a bit of an unexpected surprise. “Calgary real estate has seen a whirlwind with market activity, with interest from buyers from other provinces, and significant home value jumps for current owners. We did walk into this year expecting it to continue to be a strong seller’s market, but we didn’t fully expect the flood gates to open like this.
“There is an actual transfer of money coming from other provinces to Calgary,” he notes. “Many homeowners in the Toronto and Vancouver have seen significant increases in their home values over the past years. But when it comes time for them to upgrade or make changes to their housing as their needs change, they suddenly can’t afford the next step up in the location, style or requirements of a home. Tied with work-from-home situations, it has caused many of them to come to Calgary.”
As the Calgary market abates the flux and nudges toward a balanced market, real estate professionals caution about continued speedbumps ahead. With Calgary expertise, Chamberlain offers caution.
“Mortgage rates are increasing. We have been spoiled for the past couple of years with never heard of before low rates. It is hard to say if there will be another price increase after this last one in September 2022, but we could see another.”
“Whom it will affect the most are those already buying and shopping at the top of their price range. If they don’t purchase a home within their pre-approval timeline, rising interest rates tied with increasing values of houses can cause the buyer to re-think where and what they will buy. For those who are on a variable mortgage, you could see your monthly payment increasing too.”
For various Calgary supply and demand reasons, the flux and shifts in the real estate market are turning out to spark an encouraging, positive trend for Calgary’s condo market. “As supply levels fall in the more affordable ranges of detached, semi-detached and row we are starting to see demand shift toward condo product,” Lurie says.
“The demand was strong enough in the first quarter to reduce supply and shift the market out of balanced conditions to favour the seller. This is also starting to have an impact on price, although prices still remain well below previous highs.”
Chamberlain enthusiastically agrees. “Yes! Finally! Condos in Calgary haven’t seen the same price increases that the rest of the market has seen, and in August 2022 we saw a 58 per cent increase year-over-year in condo sales. It’s like the old saying, ‘A rising tide lifts all boats.’ In Calgary, the tide has risen most of the styles of homes values. Condos will see that happen this year.”
He is part of the nationwide realtor chorus empathizing with the frustrating raw deal and discouragement it means for first time buyers. “In Calgary, and frankly all across Canada, first time buyers are having a tough time and literally witnessing the market change underneath them.”
Chamberlain tracks the Calgary stats, trends and projections. “We have noticed a more diverse group of home buyers moving here that have work-from-home jobs and more in the tech sector. The media says Calgary’s tech sector is growing, we see it on the streets with people moving here. Both of these are good signs for the future of Calgary and Alberta.”