How much will Calgary grow in 2024?
Just a few days ago the Calgary Real Estate Board released its annual Forecast Report, where the board’s economists provide their analysis and insight into how they think the Calgary real estate market will respond to the economic conditions affecting our market for the rest of the year. The Forecast Report is an excellent resource that is relied upon by countless businesses and public institutions that touch the Calgary real estate industry, so in addition to our regular monthly sales update I will also delve into the report and provide my thoughts on their outlook.
THE CALGARY MARKET IN JANUARY
But first, let’s jump into the stats from January to see if there have been any changes from the flat-lining pricing picture that’s developed since last August.
In last month’s report we made the case that the overall pricing picture for Calgary real estate hasn’t changed that much, with pricing hovering around the low $570,000 mark since August of 2023. Even though CREB does a great job with their analysis and reporting – and believe me, you will want to stay tuned for what we have to say about the Forecast Report – I do wish that CREB would report their pricing comparisons a little differently. You see, CREB compares the most recent month’s sales statistics with the statistics from exactly one year prior. So, January 2024 gets compared with the market conditions from January 2023. And when you do that, the story becomes “Prices have increased 10%!”
But that doesn’t really tell active buyers and sellers what they really need to know, which is that pricing has been FLAT for the last six months. That’s right, we’ve had no price growth for the last half-year in the Calgary real estate market.
THE PRICING PICTURE
The average price of all sales in Calgary in January was $572,300, basically the exact same price that’s been reported for the last six months. This is a far cry from double digit price growth, so sellers need to be mindful not to shoot for the moon when they put their houses on the market in February under the illusion that prices have gone up each month for the last year, because they haven’t – they’ve been stagnant for many months.
THE SALES SUMMARY
When it comes to sales, we are starting our climb back up from the traditional low-point in our market’s pronounced seasonal cycle, which was last December. January’s numbers are up to 1,650 sales, and I would expect this to increase as we work our way out of the slower winter months and into our traditionally very active spring selling season.
These are strong sales numbers, up a whopping 37% percent over what we saw at this time last year, and THAT is a stat worth taking note of. Why is that? Well, stick around for the Forecast Report and I’ll explain it in more detail then.
So, if sellers need to temper their expectations a little bit what does that mean for buyers? Well, my most favorite of all stats – Months of Supply – tells us that the market is tightening up. The strong sales numbers have not been met with enough new inventory, and our market is still very much a seller’s market, as months of supply came in at just 1.3 months.
If we saw no new listings hit the market, Calgary would sell out in a little over five weeks! And if you look at this metric going back to last spring you can see that we’ve been in very tight conditions ever since then, almost normalizing strong sellers’ market conditions for buyers to deal with in Calgary.
THE PRICING PICTURE
Rounding out the update we can see that Detached prices have eclipsed the $700K mark and Semi-detached properties are still pacing well at $625,000.
Row townhouse and Apartment condo pricing is largely unchanged from last month, at $426,400 and $324,000 respectively.
So, what’s my take on all of this? Well, we can see that houses are selling quickly, but buyers are not getting crazy and bidding them up to new heights just yet. But with months of supply trending down and sales increasing, we have the telltale signs that our spring market will bring higher prices and another year of tight conditions in Calgary.
CREB’S ANNUAL FORECAST REPORT
So, what does the Calgary Real Estate Board think? Well, it’s time to take a look at their Forecast Report to see what’s in store for 2024.
CREB looks at many factors when making their sales and pricing forecasts for the year. They do a proper job of it, too, taking into consideration macro-economic factors such as provincial GDP growth, employment growth, international and interprovincial net migration, interest rates and a metric that will be under the spot light a lot more in Calgary: housing starts.
Taking into account all of these factors, CREB is forecasting that the Calgary real estate market is going to hit the repeat button on last year’s performance, with a nearly identical set of numbers.
Prices are expected to increase by approximately 6.6% over 2023’s numbers and sales are expected to equal last year’s figures at just under 28,000 sales for the year.
So, why does CREB think we’re going to have another strong year? Well, Alberta’s economy is expected to grow again, with the GDP forecast to increase by 2.1% in 2024.
And the employment picture is similar, with job growth expected to come in around 1.7% above last year’s numbers.
Calgary has a strong economy, job creation and relative affordability compared to Canada’s other major municipal centres – Toronto and Vancouver – which, as seen in this graph, are TWICE as expensive as Calgary.
These factors all contribute to the most significant metric as it pertains to price growth: Net Migration. Alberta had an incredible year in 2023, gaining just over 45,000 people from other provinces in Canada, while also attracting just under one hundred thousand people internationally.
So, a net gain in Alberta of nearly 150,000 people, over half of which are expected to move to Calgary.
WHAT’S GOING TO CHANGE IN 2024?
So, with all of this recent population growth, has our real estate market changed much, apart from strong price increases? Well, in order to meet all of this demand from newcomers, the development industry has responded with record levels of new construction, starting over $25,000 new homes in 2023.
But the shift in new construction has been towards smaller Apartment-style units, as seen here in this breakdown over the last three years.
Indeed, Apartment condos have almost doubled their market share in the last two years, going from 15% of total sales in 2021 to nearly 29% in 2023.
This is a big change, because the Detached segment used to dominate our market, with nearly 62% of all sales coming from the Detached segment falling to 46% in just two years’ time. This is because the vast majority of new housing starts over the same time frame have been Apartment condos, and they are now starting to reach the resale market and signal a demographic shift amongst the real estate consumption patterns of Calgarians.
ANOTHER STRONG YEAR
Yes, I do.
We’ve had half a year of stagnant prices amid strong sellers’ market conditions. I think this means that buyers will recognize the demand for Calgary real estate, and with so many people moving to Calgary from very expensive markets I think we will see prices get pushed up this spring and summer!
Do you have your eye on a piece of real estate in Calgary, or are you considering a move here from abroad? We can help! Redline Realtors have been serving the Calgary market since 2009, and we’d love to be a part of your home buying journey.