Despite challenges, Calgary housing market still healthy

Buoyed by a significant gain in apartment condominium sales, May MLS sales in Calgary rose to 3,120, a new record high for the month. 

And that bodes well for the rest of the year as the city’s resale housing market remains strong and healthy despite some economic challenges.

While the monthly MLS sales gains have not outweighed earlier declines, this reflects a shift from the declines reported at the start of the year. Also, there are fewer new listings on the market than last year, causing inventory levels to fall. With a sales-to-new-listings ratio of 85 per cent and months of supply of one month, conditions continue to favour the seller placing further upward pressure on home prices, according to the Calgary Real Estate Board.

“Calgary’s housing market continues to exceed expectations with the recent gain in sales activity this month,” said CREB Chief Economist Ann-Marie Lurie. “The higher interest rate environment and recent rental rate gains have driven more consumers to seek apartment condominium units. In addition, the recent rise in new apartment listings has provided enough options to support the sales gain. Calgary continues to benefit from the relatively healthy job market and recent population growth keeping housing demand strong across all property types.”

Persistently tight market conditions drove further price growth in May as the benchmark price reached $557,000, over one per cent higher than April and nearly three per cent higher than last year’s monthly peak price of $543,000.

Calgary’s resale housing market experienced record years of MLS sales both in 2021 and 2022.

The idea of homeownership, despite challenges, remains a strong one for people both in Calgary and across the country.

A recent CIBC poll found that despite concerns about affordability, homeownership continues to be an important goal and a great source of pride for Canadians. The homeownership ambition is so important that 63 per cent of those surveyed with children at home say they plan to help their kids with a down payment someday, with 79 per cent citing fears about future home affordability for their children, said the report.

Owning a home remains a top goal for many non-homeowners (71 per cent). Most mortgage holders (82 per cent) and renters (64 per cent) are concerned about how inflation and rising rates will affect their ability to make mortgage payments or keep up with rental costs.

“Many Canadians recognize that homeownership could be out of reach for their children, unless they have help with a down payment,” said Carissa Lucreziano, Vice-President, Financial and Investment Advice, CIBC. “Being able to help your children save for a home is a great gift, however you need to be aware of how it can impact your own finances such as effectively managing your cashflow, paying down your own debt or saving for retirement.”

Given the current housing market, 66 per cent of homeowners say they are likely to stay in their home longer than expected, with 40 per cent saying they may consider selling their home when economic conditions stabilize. Only 31 per cent of people polled say they are in their “forever home,” said the CIBC.

Among all homeowners, 30 per cent say they are likely to take advantage of the newly available multi-generational home renovation tax credit over the next five years.

Despite worries, Canadians continue to save for a new home, according to the CIBC. The most common actions prospective homeowners are taking to afford their home include reducing spending (37 per cent), setting a monthly budget (33 per cent), putting large expenses on hold (31 per cent), adjusting their home-buying expectations (23 per cent), working overtime, or taking extra jobs (22 per cent). 

The recent BMO Real Financial Progress Index revealed that while homeownership is considered an important financial milestone for many Canadians, concerns about interest rates, inflation and a possible economic recession have affected their approaches to homebuying.

“Homeownership continues to symbolize real financial progress, success and security for many Canadians and their families,” said Gayle Ramsay, Head, Everyday Banking, Segment & Customer Growth, BMO.

The survey found that over two thirds (68 per cent) of Canadians are planning on waiting until mortgage rates drop to purchase a home. The majority (68 per cent) of Canadians feel buying a home is more out of reach compared to their parents. Gen Z (ages 18 to 24) (71 per cent) are the most likely to have this outlook, followed by younger Millennials (ages 25 to 34) at 69 per cent and older Millennials (ages 35 to 44) at 65 per cent.

“Amid this challenging and changing market, homebuyers are keeping a keen eye on interest rates,” said Hassan Pirnia, Head, Personal Lending and Home Financing Products, BMO. “Regardless of when buyers are planning their purchase, it’s essential they have a clear understanding of budget and affordability at the start of their homebuying journey.”

(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)