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While other residential real estate markets in the country continue to struggle due to higher interest rates and economic challenges, Calgary’s resale market is on fire these days.
Coming off a record July for sales in that month and the highest benchmark price ever, activity so far in August remains robust with MLS sales and prices significantly higher than a year ago.
As of August 23, according to the Calgary Real Estate Board website, MLS sales so far this month of 1,985 are 25.87 per cent higher than the same period a year ago. Meanwhile, the median price of $485,000 has increased by 11.16 per cent year over year and the average sale price is up by 7.51 per cent to $521,047.
Recently, the Calgary Real Estate Board released its Q2 2023 Housing Market Report, which it said highlights “a dynamic real estate landscape in the City of Calgary, showcasing strong trends in sales, demand and pricing.”
As expected, sales activity has slowed from last year’s record-breaking pace while staying stronger than long-term trends. What was not expected was the robust demand in the higher price segments of the market despite higher lending rates, said the report.
“An influx of migrants coming from Ontario and British Columbia are likely contributing to some of the strength for higher priced properties, as the relative affordability could make migrants less sensitive to the recent gains in lending rates,” said Ann-Marie Lurie, CREB’s Chief Economist. “At the same time, continued strength in our labour market is supporting demand across all property types.
“Home prices have exceeded our expectations as supply challenges have persisted throughout the spring market. While the pace of monthly gains is expected to slow in the second half of the year, limited supply choice is expected to keep prices elevated throughout the second half of the year.”
According to the report, the robust demand in the Calgary market is still being met with a shortage in supply.
CREB said housing inventory levels have remained notably low across various segments, encompassing the resale, new home, and rental markets. Despite relatively strong new home starts, these have not been sufficient to alleviate inventory constraints, primarily due to the influx of migrants. Resale supply has also encountered unexpected challenges, as higher lending rates and limited choices in supply have deterred existing homeowners from making changes, it said.
“The prevailing shortage in supply has contributed to the continuation of tight market conditions, which has led to stronger-than-expected price growth across all property types in the city. This steady appreciation in prices throughout the year has effectively offset declines observed in the latter half of 2022, ultimately resulting in new record-high prices,” said the report.
To tackle inflation, the Bank of Canada increased the target rate twice since the first quarter, increasing the policy rate to 5.0 per cent, said CREB.
“While we cannot rule out further gains this year, some national indicators point to slowing economic growth and shifts in the labour market, which could prevent further increases in September,” said the report.
“Meanwhile, conditions in Alberta continue to look promising as a stronger energy and agrifood sector, along with strong population growth and employment gains, are helping offset easing in industries impacted by higher inflation and interest rates. While economic growth is expected to slow compared to 2022 growth, Alberta is expected to report stronger economic growth than most other provinces in the country.”
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
