Calgary condo market ‘heated’: RE/MAX Canada

Interprovincial in-migration continues to push homebuying activity to new limits, as local and out-of-province buyers compete for condominium product in Calgary’s heated apartment market, according to a report by RE/MAX Canada.

The RE/MAX 2023 National Condominium Report said Calgary leads the country with a 22 per cent increase in condominium sales, with more than 5,500 units changing hands between January and August of this year, compared to year-ago levels for the same period. Average price year to date has risen in lock step, climbing eight per cent to $301,887, up from $279,306 in 2022.

“The city’s affordable housing and robust provincial economy have served to attract record net migration to the province this year. In the first quarter of 2023, net-interprovincial migration topped 15,700, the highest level since 2000, according to the Statistics Canada Quarterly Demographic Estimates, Provinces and Territories Table. Add international migration to the equation and it’s easy to see how the sales-to-new- listings ratio rose to 98 per cent in August,” said the report.

“Inventory levels are exceptionally low, down 40 per cent from year-ago levels (1,035 vs 1,700) and are expected to decline in the coming months. Upward pressure on condominium values is expected to continue as a result, with demand currently outpacing supply. Buyers have come to accept that they can no longer narrow their search to sought-after neighbourhoods and have expanded to quadrants of the city. Homebuying activity in key markets such as Bridgeland/Riverside Saddle Ridge, Lower Mount Royal, and Downtown East Village has soared, with sales climbing 58.9 per cent, 49.1 per cent, 42.7 per cent and 41 per cent respectively.  Average price increases in the city’s most popular areas have climbed by double digits, led by Eau Claire at almost 35 per cent. The city’s luxury market has seen a bump in sales as well with 19 properties moving over $1.5 million so far this year, compared to just 10 one year ago.

“After seven years of hardship, the province’s economic engine is firing on all cylinders. The advertising campaigns promoting Alberta, the incentives put in place for businesses, and the reduced level of taxation have all contributed to Calgary’s vibrant housing market. Buyers from Canada’s most expensive provinces – Ontario and British Columbia – represent most of the in-migrants to the city, stimulating homebuying activity at every price point and housing type. Investment dollars continue to filter into the local housing market. Inventory remains the only barrier to greater sales activity, but if they build it, they will come. Overall housing starts in Alberta were up 18.7 per cent to close to 3,400 in August, according to the province’s Economic Dashboard.”

According to the Calgary Real Estate Board, August MLS sales continued to rise over last month and last year’s levels. 

“August sales continue to rise over last month and last year’s levels. Recent gains have caused year-to-date sales to reach 5,582 units, nearly 22 per cent higher than last year’s levels and a new record high for the city. Tight rental markets and relative affordability have driven many purchasers to the apartment condominium sector. At the same time, new listings have struggled to keep pace as the sales-to-new-listings ratio bumped up to 98 per cent in August, causing inventories to ease and the months of supply to drop to one month,” said the board in its August monthly MLS report.

“The tight market conditions have been placing upward pressure on home prices, and as of August, the unadjusted benchmark price reached $309,100, a monthly gain of over one per cent and a year-over-year gain of over 13 per cent. The City Centre is the only district that did not report a monthly price gain, and prices are still below their previous highs in 2014. This is partly due to better supply/demand balances in the City Centre compared to other parts of the city.”

As of October 4, CREB’s website indicated that apartment sales year to date of 6,368 have increased by 25.55 per cent compared to the same period a year ago. In 2022, for the whole year, there were 6,221 sales and in 2021 there were 4,142 sales.

Year-to-date, the median sale price for apartments in Calgary was $277,350, up 14.89 per cent year over year while the average price has risen by 8.07 per cent to $303,942.

The RE/MAX Canada national condo report said Alberta markets are the outliers in the country as affordability attracts interprovincial migration at a staggering rate. 

Nationally, RE/MAX said recent economic indicators suggesting that Canadian homebuyers could be facing increasingly strong headwinds in the form of further interest rate hikes signal the end of a short-lived bounce in condominium activity in major markets across the country.

“The cost of living is out of control in larger centres and even the most affordable housing now carries a pretty substantial sticker price,” said Chris Alexander, President of RE/MAX Canada

“Earnings have not kept pace with housing costs and inflation continues to stretch household budgets thin. Taxation is also an issue, with the City of Toronto gearing up to introduce an even more punitive Municipal Land Transfer Tax in January of 2024. Is it any wonder why buyers are heading west to Calgary and Edmonton or east to more affordable markets such as Halifax?”

(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)