A new report by RE/MAX Canada says the average residential sale price in Calgary is estimated to increase by 4.5 per cent this year compared to 2022.
According to the 2023 Fall Housing Market Outlook Report, the price in the city is expected to finish the year at $564,005.
While the report expects the national average residential sale price to remain flat and soften in many markets, Calgary’s year–over-year growth will be the second highest in Canada, behind only Sudbury at 5.0 per cent.
“A shortage of inventory in the region is the biggest influencing factor behind the increase,” said Elton Ash, Executive Vice President, RE/MAX Canada. “Inventory levels, along with the current interest rate environment, have created a seller’s market in Calgary, with sales transactions expected to decrease by 20 per cent through the remainder of year.
“For there to be more balance in the market, we’ll need to see a greater number of new listings and more construction, especially given the region’s inventory levels are even tighter this year than last.”
RE/MAX Canada estimates Calgary MLS sales for 2023 will be about 20 per cent lower than 2022 – but last year set an all-time record in the market for transactions. Also, the report estimates listings will decline by 25.1 per cent in 2023 from 2022.
A Leger survey commissioned by RE/MAX Canada as part of the report found:
- A lack of affordable housing inventory is leading more than half of Gen Zs (55 per cent), and nearly half of Millennials (49 per cent) to change their housing plans;
- 33 per cent of Canadians who are interested in buying and/or selling a home in the next 12 months will wait and see how interest rate changes play out before buying;
- 51 per cent say further interest rate increases this year will not change their financial situation or impact their plans to buy or sell a home;
- Overall, younger Canadians are more likely to rely on Bank of Canada interest rate announcements to determine the best time to buy or sell (47 per cent of Gen Zs and 52 per cent of Millennials);
- One in 10 Canadians are planning to buy a home in the next 12 months.
In general, the RE/MAX report said the housing inventory shortage is having the greatest impact on Millennial and Gen Z homebuyers.
“If the fall market is an early indicator for 2024 activity, we may see a very active first quarter as buyers and sellers take advantage of easing prices into the earlier part of next year,” said Christopher Alexander, President, RE/MAX Canada.
“While we wait for governments to implement a tangible national housing strategy to boost Canada’s supply of both affordable and diverse housing, the market is starting to ease in some regions. This is bringing some much-needed relief from the sky-high prices we’ve experienced over the past couple of years.”
Added Ash: “The Canadian housing market has historically given homeowners great returns and solid financial security. We believe in the long-term health of Canada’s housing market, but in order to protect it, we need to acknowledge and address the housing supply shortage in every city, town, and neighbourhood across the country.”
The lack of inventory is hitting the Calgary market as the forces of Economics 101 set in. A lack of supply combined with high demand leads to prices on an upward trend.
In August, the market experienced a surge in condo sales as overall MLS sales reached a record high of 2,729 sales, according to the Calgary Real Estate Board.
In its monthly MLS statistics package, the board said the sales-to-new-listings ratio remained elevated at 87 per cent, preventing any significant shift from the low inventory situation. Inventory levels in August dropped to 3,254 units, not only a record low for the month but well below the 6,000 units that are typically available. Low inventory combined with high sales this month ensured the months of supply remained low at just over one month, it said.
The unadjusted benchmark price reached $570,700 in August, representing the eighth consecutive monthly gain. Prices have trended up across all property types, with row-style properties reporting the largest increase.
“Higher lending rates have caused many buyers to either hold off on purchase decisions or shift toward more affordable products on the market,” said CREB’s Chief Economist Ann-Marie Lurie. “The challenge has been the availability of supply, especially in the detached market. Inventory levels hit record lows in August, and while new listings are higher than last year, conditions continue to favour the seller, driving further price gains.”
(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)