Price growth is just starting in Calgary
Alberta Proud has been our motto here in the province for as long as I can remember. And this was prevalent even when we were in the bust cycles of the earlier parts of this century.
This was exactly what kept our province moving and helped put us into the powerful position we find ourselves in once again.
If you remember the headline of last month’s update, it was all about the low number of homes on the market to buy. Well, that hasn’t changed one bit. But today, in addition to that, I’m going to focus on something a little sexier – home prices!
But first, let me get you up to speed with the highlights of March’s real estate data and then I’ll hit you with the good news.
Here’s a sales chart representing the month of March for the last 15 years…
So, how did we do last month? Well, it certainly wasn’t like last year, but across the last 15 years March 2023 is still pretty close to the top. Sales continue to push along at a blistering pace.
Despite Detached, Semis and Row Homes coming down from their incredible peaks in 2022, sales of Apartments have not slowed down. Sales remain virtually the same as they were last year. Here are the figures…
So, what can be said about Sales? Well sales aren’t a problem here in the Greater Calgary market. People want to buy, people continue to buy, and there are no signs of it slowing.
Now let’s take a look at the INVENTORY STORY.
As mentioned earlier, this story remains unchanged. We continue to have the lowest active number of homes on the market for this given month since 2006.
This has increased a bit since last month, with there now being 3,233 available places to buy, up from last month’s 2,749 – a net gain of 484 (up from our next biggest month-to-month gain of just under 300 from January to February.)
To put this into perspective, in 2022 from January to the end of March we saw a net increase in available new homes to buy of about 1,800. This year we’ve seen about 800. That’s a 55% downward change!
That number continues to remain low because of 2 things…
1. The number of new listings coming to market each month has dropped drastically. People are likely comfortable where they are as our economy waits out the global recession. Also, nobody is leaving Alberta for higher priced markets as they once did, and people who don’t absolutely need to list their homes won’t do so in this higher interest rate environment.
2. Sales continue to be strong and are absorbing nearly as many new listings in as they did last year, keeping the inventory total low.
Now, as I was combing through the inventory charts & data from last month, one thing stood out to me. Check this out…
This shows the total active number of homes present in November 2022. This number is eerily similar to our current level of inventory. But the difference is that in November we are in the part of the real estate cycle when this number is supposed to be low. But now, at the end of March, we still have this ‘low’ number, with only 3,323. At the end of Q1 we are in ‘ramp up” mode and we would usually see this number be a few thousand more than it currently is.
I point this out to draw further context to how long our inventory situation truly is.
Now for the headliner of today’s update – THE PRICING PICTURE.
The Calgary Real Estate Board data release will say this… the benchmark housing price increased modestly by 0.8% year-over-year. We peaked last year during our “unicorn year” and then plateaued for a bit. And then, as interest rates rose, we saw a bit of a falling off of prices.
As this next graph shows – and as my updates have been detailing – our market’s been climbing throughout the winter because of all the factors we’ve laid out over the past 4-5 months.
Which might cause you to ask, “Why is this something that Darren would want to emphasize so much?” Well, the story lies in the sub-stories once again.
Let’s start with Detached Homes, our biggest part of the market. Check this out…
March 2022 – $638K. Now up to $648K. So, we are past our peak from last year despite it being the market segment that has been most affected with home buyers seeking affordability (and thus other and more affordable options).
Next, let’s look at Semi Detached…
March 2022 – $572K. Now up to $581K. Again, a year-over-year gain. And the trajectory remains strong.
Let’s check out Row Homes…
March 2022 – $351,000. Now $378K. That’s a massive jump of 7.5%, and way above last year’s peak.
Then we have Apartments…
March 2022 – $265K. Now up to $293K. That’s an even larger jump of 10.6% and past last year’s peak by over $15,000.
I share all of this because right now we are only just finishing MARCH! The biggest part of our real estate market is just beginning. The spring months are when the mass majority of buyers will come out to ‘play’ and push into the market.
They will be doing so in a market that is already showing tremendous strength and upward pricing pressure.
AND it remains one of ultra-low Months of Supply. We are firmly planted in a seller’s market, which can be seen in each of these graphs for the 4 property types…
Another factor is that Canadian Inflation Rates are moving closer and closer to normalized levels…
And 5-year bond yields are coming back down, which means a lowering of 5-year fixed rates…
Our market has absolutely nowhere to go but up. This past month we jumped up 2% month-over-month and it’s my prediction that this will only continue. Charts like the one below will inch upwards across every and all price points, and across all property types.
So, in Summary…
It won’t pay to wait and sit on the fence, as many did with concerns about pricing adjustments and hoping to time the market with a crash.
Now you can see that we have already bounced back up and past the highest pricing we’ve ever seen for nearly everything in the Greater Calgary market.
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