Record Prices! (But Still a Bargain)
Canada Day celebrations are over, June is now complete, and we’ve officially finished the first half of the year… so we are going to discuss the main talking points of all 3!
So, being on the heels of another month of sales data, let’s start there.
THE SALES SUMMARY
June 2023 is officially the highest-selling June on record. Last month we did it, and this month we did it again. We succeeded with 3,146 total sales and a 105 sale per day pace.
Not only that, but June ended up outselling May’s total. This is different from last year (and most years), in that May tends to be our peak sales month of the year. For reference, last year May sold 3,063 and then dropped to 2,847 in June – a 7% month-over-month drop.
This means that buyer demand continues to drive our market, further building on the momentum we’ve been experiencing for all of 2023.
You may remember this graphic…
It shows the net inter-provincial population gain and international net migration to Alberta in the 1st quarter of 2023 being at record highs.
This sort of influx of people takes time to settle. Many enter the rental pool initially and then transition to home ownership. It’s this growth story that has been compounding for years and continues to fuel the need for housing.
It’s also part of the reason we know Alberta’s buyer demand will continue, as this stat is not forecasted to change for years & years to come as people continue to move to this province.
“Alberta’s allure is not hard to see,” said Alberta’s former Minister of Finance Travis Toews. “Our lower cost of living, affordable housing, abundant jobs, higher earnings and lower taxes are attracting newcomers from all over the country and abroad.”
With Q2 behind us, I fully expect we’ll see another set of statistics that show this rate of in-migration continuing.
Another thing that doesn’t get a lot of airplay is that, due to these net migration figures, another stat continues to develop – the NET NATURAL INCREASE of our population. It’s not just investors buying into Alberta, it’s a record number of people moving here, growing their families and putting down roots here. Alberta, as a result, is leading the nation in net natural increase in its population. And this will only compound with continued interprovincial and international migration.
And, lastly, we also have the youngest demographic in the nation, further fueling the long-term trajectory of our housing demand. Demand like this can’t be ignored even by the hardcore GTA & GVA fans and armchair economists.
Okay… we’ve covered off the sales data and the continued demand going forward, so let’s shift gears to the topic of available properties on the market to buy.
THE INVENTORY STORY
It’s been the hope of many to see an influx of new properties come onto the market to ease the tight conditions and help buyers hoping to ‘get in’. So, has that finally happened?
The short answer is YES & NO.
“Yes” in the way that we’ve already been doing – listing homes at near record numbers.
We listed just under 4,000 new homes in June. That’s a pace of about 133 homes per day, which is serving to supply properties to the 104 sales/day pace we achieved last month.
The last 3 years of listings at this time of year show we are putting record numbers of properties on the market. I don’t think we can expect much more than the pace we are seeing now.
We are also getting help from new home construction, as well. According to recent numbers released by the Canada Mortgage and Housing Corporation (CMHC), monthly home starts dropped 23 per cent nationally between April and May, while in Calgary the numbers are on the rise. In Alberta there’s been a 36 per cent increase in new construction.
Calgary continues to be busy with 2,078 housing starts in May 2023 compared to 1,769 in May 2022 – a 17 per cent rise year-over-year.
“What it means is that Alberta is actually doing pretty well, overall” said Taylor Pardy, senior specialist of market analysis at CMHC.
So, “Yes”, as you can see. But also “No” if you are a buyer, because you’d always love to see more options to buy, more deals to be had, and the ability to take a little more time in your decision making. Those things simply aren’t options for home buyers in Calgary right now.
Currently, despite what I just mentioned about the pace of new listings, we nevertheless sit at an all-time low number of homes to buy in Calgary, with only 3,474.
This does vary across property types. Where the demand is highest, new inventory is coming on the fastest. For example, the Apartment market saw a 48% jump in total sales and also saw a 12% increase in new listings over the same period in 2022.
On the flip side, in the Detached segment – our most expensive market – sales were up 3% over 2022 but new listings lagged by 10% in relation to last year.
Again, our population is young and made up of a great deal of new people who are just settling here – and we have the lowest percentage of people 65 & older in the nation – so I don’t think we can expect a big bump in Detached inventory to come to market any faster than it already is.
Currently, because of the high demand coupled with the supply situation I just mentioned, our market is very tight and fast moving. You really see it come together in the most recent ‘Days on Market’ numbers…
In January, a listed property spent an average of 42 days on the market before selling.
In February it was 33. In March, 27. In April & May, 24. And now, in June, we are as low as 22 Days on Market!
This will not likely change much, as you can expect the number of new listings to start it’s decline from now all the way through December, as we are now past the peak selling season in Calgary.
If I’m right about the wave of buyer demand continuing its relentless push, this will happen during a time when new listings start to reduce on the re-sale market (and probably some of the builders, too) our ultra-tight sellers market condition will remain throughout the rest of 2023.
So, in essence, don’t expect the market to get any looser anytime soon, even with the latest Bank of Canada lending rate rise, and even if they plan another one in the late summer or fall. Calgary’s recent gains have done little to close the affordability gap that remains among Canada’s major metropolitan cities.
The latest numbers still show mortgage payments (as a percentage of income) to be 83% in Toronto, 95% in Vancouver and then less than half of that, at 41%, in Calgary.
The federal government’s broad stroke solution is an ill-fated attempt to fix a mess they created, starting a few decades ago, in their prize jewels of major Canadian cities.
For the record, I hope they do find a way, because we hear it every single day about how difficult it is to start a life or even maintain one in those major cities. Alberta is an answer for many, but it can’t be an answer for all.
THE PRICING PICTURE
Okay, let’s talk a bit about how all of this has impacted housing prices in the Calgary region.
Now, it’s fair – with all that’s been said so far in this update – that one would expect positive price growth to be happening in our market, as it has been all year.
And that’s exactly what has happened!
Our average residential price has now increased to $564,700 – a new record high, an increase of 4.4% year-over-year and an increase of $7,000 from last month!
We saw a 6% year-over-year price growth in the Detached market, which is now up to $685K – a whopping $60,000 increase from January.
Apartments are up just under 12% year-over-year, now over $300K for the first time ever and up $30,000 since January.
Semi-Detached up 6% to $613K and up $40,000 since January.
And, finally, Row Homes are up 11% year-over-year to $400K and up $45,000 since the beginning of the year.
These price increases are happening in all regions of our city, but are highest in the areas that are most affordable like the Northeast & East quadrants, where people are flocking to get what they want with what they can afford as a result of the interest rate hikes.
And it’s also happening around the city, as well.
We’ve seen positive price growth in every single one of the 7 regions outside of Calgary that make up our Calgary Real Estate Board (CREB) region.
Again, as I always say, the exact Supply (total number of homes available) and Demand (total sales currently happening) numbers are different everywhere, so be sure to speak with an expert to get the right advice for your situation before making a decision.
So, as we finish up this update and finish up the first half of 2023, the Greater Calgary real estate market remains in sellers market conditions, home prices are on the rise, new home construction is in full swing, and there is no end of buyers in sight.
This is not a trend, this is our deeply rooted reality and will be the case in our region for years and years to come regardless of the inevitable oil price swings, regardless of the political moves made by the government in Ottawa, and at this point almost regardless of anything shy of a global event that effects the entire planet.
Those that bet against Alberta are, in my opinion, betting wrong.
If you are in need of some help for your specific situation just drop us a comment, or email at firstname.lastname@example.org so we can hook you up with a specialist from our group of over 90 agents in the region!