It’s The Same… But Different.
Sales volumes are up a little bit but, compared to 2022 (year-to-date), we have not seen as many transactions. This is because of significantly reduced inventory – there are just not as many homes coming to market for a number of reasons. Higher prices and higher interest rates are making it harder for existing property owners to move up to their next house and so they are standing pat, reluctant to put their homes on the market. We are seeing 25% less inventory this year and with such low inventory you can’t expect continued record sales numbers because, well, there just isn’t as much to buy!
As far as the specific sales stats go for the Detached, Apartment condo, Row townhouse and Semi-detached segments, the numbers all follow suit with the overall results for Calgary – prices going up and inventory being under a lot of pressure. To buy a Detached house in Calgary right now will run you on average about $696,000, while at the other end of the spectrum an Apartment condo would be approximately $313,000. Between those two bookends we have Row townhouses at $419,000 and Semi-detached properties at $621,000.
These numbers are considerably higher than what we saw in September of last year, with all segments showing double digit increases over last year’s numbers. But Calgary’s year-to-date average pricing is up a much more modest 4%, due mostly to fewer sales at the higher price points earlier this year. But none of this is really all that much different than what we said last month – still a seller’s market, still very tight out there. So, if it’s not rising prices, what is the most important thing to happen in Calgary real estate in September? Well, it is, of course, the decision by city council to open up all of Calgary’s single family zoning districts to medium density development. On the 16th of September – on a weekend, no less – city council voted in support of the recommendations made by the Housing affordability task force which will pave the way for R-C1 single-family zoning to go the way of the dodo, and for the newer R-CG land use designation to become the default zoning for Calgary. Now, these changes won’t take effect until mid-way through next year, so if you want to be kept up-to-date about this please check out our video where we break down the most relevant recommendations of the task force, and be sure to subscribe to our YouTube channel if you want to be kept up-to-date about how this decision will transform our city – because Calgary is about to start looking a lot different!
So, is this change good for Calgarians? Well, I think this decision is a good one for Calgary. It will serve to rejuvenate many of our old and tired inner city communities and breathe new life into segments of our market that have grown stagnant in recent years. It all means exciting times ahead for Calgary, so be sure to stay tuned for all of the news as our new development regime unfolds! The main reason why Calgary’s city council has decided to open up the zoning rules for our city is because this is their response to the national issue of housing affordability. All across Canada we have seen real estate prices and rental rates escalate very quickly, and municipal governments are coming under increased pressure to remove red tape and spur rapid development of new housing units in order to meet the unprecedented levels of demand being experienced across the country. In Calgary we just aren’t doing enough to match housing supply with the demands of a growing population, and you can see it here.
In August we added 1,680 new housing units, but the City of Calgary’s population growth model suggest we also added over 6,200 new heartbeats to our fine city. And this all makes sense, because this month Calgary made headlines for setting a Canadian record for the highest levels of interprovincial migration ever observed by Statistics Canada.
So, in the context of maintaining Calgary’s relative affordability across the Canadian real estate landscape, we need to play catch up with new housing construction, and that’s the main reason behind the push to add greater density to existing neighbourhoods all across the city. Let’s shift gears now for a look at the Rental market. Rental rates are very similar to August’s numbers, with the average price for a one bedroom in Calgary coming in at $1,950 in September and $2,450 for a two bedroom. If you’d like to rent a 3-bedroom house you can expect to pay around $2,900.
The rental market is also under-supplied, and with respect to adding more rental supply, Finance Minister Chrystia Freeland did rental housing developers a big favour this month by introducing a bill to remove the GST payable on the construction of new rental units, giving an extra 5% to the very tight margins associated with rental unit construction. So, it’s great to see both the federal government and the municipal government pulling some levers to facilitate improved conditions for the development industry to add more supply as fast as possible.
So, what does it cost to buy a home in Calgary right now? Well, based on our average price of $570,000, with a 5.7% down payment – because you can only do 5% down up to $500K, and need to be 10% down beyond that – you would need $32,500 down and your payments would be $3,429 per month.
This is based on a 5-year fixed interest rate of 5.54% courtesy of ratehub.ca. If you have 20% down your down payment goes up to $114,000, and your monthly payments drop to $2,860.
Sounds like a lot, and it is, but Calgary is still less than half the price of Vancouver or Toronto, so in terms of relative affordability we do have it pretty good here in Cowtown.
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