Calgary’s residential real estate market started the summer hotter than hot. It delighted sellers and buyers while area brokers, Realtors, CREB and other real estate professionals are positive but cautious about a fragile market situation. Can it/will it last?
Coast-to-coast, Canada’s housing markets are on fire. According to the CREA (Canadian Real Estate Association) the national average home selling price spiked almost 32 per cent since last winter and new highs as sales reached all-time records.
In Calgary, CREB routinely tracks residential real estate trends and stats. And even the CREB insiders were caught off guard and surprised with the spring numbers. “Nobody expected that it would be as strong as it has been,” says the plugged-in CREB chief economist, Ann-Marie Lurie.
Real estate is a business sector that relies on the vital importance of year-to-year comparisons and analyses. The forgettable anomaly that was last year doesn’t really count.
This time last year, Calgary’s real estate market was in the doldrums. The first wave of the pandemic, combined with a slump in energy prices, had driven the Calgary market to new lows, with spring 2020 sales of only 573 units – a decline of 63 per cent from the year before.
“Calgary prices have been declining since 2014, and we have been in a recovery stage since mid last year,” she says. “The Calgary market also had too much supply. Last year, the demand was slightly starting to improve with a shift in prices, as well.”
She mentions last year’s final stats, showing Calgary gradually reaching seller’s market conditions at the end of 2020. “Now prices are rising but they are still recovering in our market from previous 2014 highs. The inventory gains are still not enough to offset the demand growth and the market continues to favour the seller. But the recent gains in Calgary prices have encouraged more homeowners to list their homes and take advantage of Calgary’s current market situation.”
Calgary real estate professionals underscore the role of the human factor in creating the currently hot Calgary market. The lockdowns, abruptly adjusted work routines and other unpredictable responses to the pandemic shook up some normals in the Calgary market.
“Calgary realtors were suffering from a sluggish real estate market for the last
few years,” says Lorna Hamm, the respected and experienced Calgary realtor with RE/MAX Realty Professionals and outgoing CREB chair. “So, we were all pretty surprised when we began to experience a lot of activity shortly after the government deemed our services to be essential last spring, just as we were emerging from our stay-athome orders.
“It seems consumers were pivoting from their usual trips to warmer climates, ski holidays and entertaining in restaurants and/or at home. Perhaps it was the extra cash in their bank accounts? Or maybe it was sheer boredom that drove so many to change their residences,” she says. “Many people were working from hectic homes and kids were home schooled in inappropriate spaces.”
Hamm notes that conventional real estate factors are still key, even in this hot market. “I believe the market turned around due to low inventory and a large number of buyers competing for the same listings. And the low interest rates are unheard of, for many consumers who had probably taken out mortgages in the six or seven per cent or even higher rates in the recent past. These low mortgage rates make a significant difference in the power to buy.”
Whatever the contributing factors, Lurie explains, “The recent gains in prices have encouraged more homeowners to list their homes and take advantage of the current market situation. However, the inventory gains are still not enough to offset the demand growth and the market continues to favour the seller. Prices have risen, but they are still recovering in our market from previous highs in 2014.
The CREB stats show slightly higher supply levels compared to sales did impact the pace of monthly gains in the benchmark price. Spring 2021 prices remained nearly five per cent higher than last year’s levels and price movements also varied depending on location, although no Calgary area has had price recovery to previous highs. “The months of supply did trend up slightly,” Lurie notes, “but it was not enough to halt the upward pressure on prices.
“The unadjusted benchmark price in May reached $455,200. This is one per cent higher than the month before and nearly 11 per cent higher than prices recorded last year.”
She emphasizes that only detached and semi-detached home prices in certain districts and communities have recovered to the level of previous monthly highs, and while sales have been rising across all product types, Calgary homes priced above $600,000 represent a larger-than-usual share of all sales. Last spring, the upper end of the market only reflected 16 per cent of city sales, compared with this year where it now reflects nearly 26 per cent of all sales.”
According to CREB’s June Market Report, the Calgary housing market activity hit a new May record. Despite strong levels of sales, it did trend downward relative to the previous month.
The Report shows that, due to relatively strong new listings, inventories are trending upward relative to both the previous month and the previous year. This caused the months of supply to increase to 1.7 months and reflects some easing of the extremely tight market conditions seen over the past several months.
However, the detached market continues to favour the seller and prices continue to rise.
Detached home prices rose across each district, with the largest year-over-year gains occurring in the North, North West and South East districts. The gains in prices have been supporting price recovery for detached homes.
“The recent gains in prices have encouraged more homeowners to list their homes and take advantage of the current market situation,” Lurie says. “However, the inventory gains are still not enough to offset the demand growth and the market continues to favour the seller.
“Prices are rising but only detached and semi-detached home prices in certain districts and communities have recovered to the level of previous monthly highs. The pace of price growth will slow, not a fall. The pace of growth will level off, prices will level off and Calgary will move into more balanced conditions.”
Because Calgary demographics include a high proportion of young buyers, condos are a vital Calgary real estate factor. As of June, according to the CREB Report, condominium sales totalled 1,659 units – the highest number of condo sales since 2014.
Despite the improvements, the seasonally adjusted sales did trend down with recent price increases likely supporting some of the strength in new listings. Currently, the citywide condo price remains nearly 16 per cent below 2014 levels.
When it comes to Calgary’s overall residential real estate market, the predictable question is anxious for an unpredictable answer. How long with the hot market last?
“I believe Calgary, compared to other major Canadian cities, is still a very affordable market to buy, especially for first time buyers!” Lorna Hamm says with positivity. “We are a very desirable city to live in with our unique vibrancy and sense of community spirit. Also, we are optimistic that our future is promising with the onset of a tech industry moving in and a small resurgence in the oil and gas sector.”