Are Cracks Starting to Show?
Okay, so let’s get back to talking about the Calgary real estate market because we’re starting to see some new trends developing. Now, if you were to run with the Calgary Real Estate Board’s press release you’d figure it’s basically the same story again! The year-over-year numbers have followed almost the exact same trend as September, with continued low inventory, rising prices and increased sales relative to October of last year. The price for an ‘average’ piece of real estate in Calgary is now $571,600, up 9% from 2022. Sales are up compared to last year by 17% and our months of supply still has a ‘one’ in front at 1.47, which means we are still very definitely in a strong seller’s market.
But some will say that it feels like the market is slowing a bit in Calgary. There are anecdotal whispers of properties taking longer to sell, showings dropping off and even – gasp! – price reductions occurring in some segments. Now, we are still in a really great market here, but there are some signs of stabilization happening, and to see the trends you need to look not at comparisons to one year ago, but to look at the differences we’ve seen month-over-month in 2023.
The Detached segment is a perfect illustration – check out how flat the benchmark price is over the last three months. It just hasn’t moved much after a pretty steady climb for much of the year. The average price of a detached property in Calgary is $697,600 – up 12% from October of last year, but essentially identical to what it’s been over the last three months.
The Semi-Detached segment does show growth relative to last year and prices here have been climbing all year, with the current price sitting at $629,000 for October, up a bit from September but a closer look does show that we are seeing a spread open up between sales and listings in this segment which should temper price growth. That will be something to watch over the winter months.
Checking in on the Row townhouse segment, this portion of the market has been super consistent all year. Look at that trend. It’s what everyone wants to see in a real estate statistic – modest consistent growth.
This is because Row townhouses give such great value. Way cheaper condo fees than apartment condos and often similar living dynamics like bedrooms and bathroom counts to small starter homes.
An average Row townhouse will set you back $425,000 right now. Great value there and a good bet for anyone priced out of the Detached market or moving to Calgary with a family and wanting something affordable.
Apartment condos, however, are not blinking. This segment and its emergence are the story of 2023 in my books, with the condo market doubling its share of overall sales when compared to 2021, and price growth very similar to the Row townhouse segment at 16% year-over-year. As each month passes Cowtown is becoming more and more a condo town.
So, the big takeaways from the sales stats? Well, we are seeing the more expensive Detached segment level out a bit, and the next most expensive segment, Semi-detached, has modest growth as well. But the more affordable asset classes, Apartment and Row townhouse, are still going strong, indicating that there is no doubting the robust fundamental demand in Calgary, but affordability matters to the consumer.
So, what’s the reason for this? We read a lot about immigration, interest rates, lack of supply etc… Has anything changed there?
Well, I’m happy to say that, despite the ripples, we’re seeing in the stats this month that the overall outlook remains very positive for Calgary.
The Canadian Immigration minister announced this week that there will be no changes to the planned immigration numbers for 2024 and 2025, with 500,000 new immigrants slated to arrive in each of the next two years, before ‘leveling off’ in 2026, where it is forecasted to stay at half a million people per year.
That’s a lot of new people and, with interest rates as high as they are, I am sure that Canada will struggle to build enough houses over the next two years to meet this additional demand.
Particularly when developers are actually delaying construction in Toronto due to struggling sales amid unprecedented levels of unaffordability, and buyers are walking away from deals leaving deposits in the hundreds of thousands on the table because they can’t qualify for financing with such high interest rates.
No one is winning in the GTA with both high immigration and high interest rates putting so much pressure on their market, to the point where supply is actually coming off the table. Not a good look for them.
But that’s Toronto, and Calgary is in a much, much better place. We are actually the most affordable major market in the country, and so I expect many of these newcomers to bypass the GTA and continue to work their way west to Alberta, where real estate is still relatively cheap in comparison to Toronto prices.
So, yes, the weather is cooling and the market is showing a few subtle signs of doing the same, but the story is the same – the Calgary real estate market is very healthy, with excellent prospects for the future. Things might start to loosen up a little bit, but buyers and sellers can trade with confidence. So, if you are in the market to trade a piece of real estate this year, maybe considering hiring an agent from an award-winning firm like Redline Real Estate to help you on your next deal.