Calgary Home Prices Soar

Is the Calgary real estate market one of the hottest in the country?

The Albertan city is witnessing booming sales activity, soaring home prices, and new supply hitting the housing industry. This is happening as interest rates climb, inter-provincial migration surges and the Canadian economy slows.

Suffice it to say, what’s not to like about current conditions right now?

But many housing market participants, from buyers to sellers to analysts, might be wondering if this is sustainable. One way to determine if this upward trend can continue in the home stretch of 2023 and heading into 2024 is to assess the latest data.

Calgary Home Prices Soaring

According to the Calgary Real Estate Board (CREB), residential property sales advanced nearly 29 percent year-over-year in September, touching an all-time high of 2,441 units. Despite the record increase, year-to-date sales are down close to 12 percent compared to the same time a year ago.

Apartment and condo sales led the way, with a substantial 57 percent year-over-year increase. This resulted from solid demand for apartment-style housing products amid “higher lending rates and tight rental market conditions,” the real estate association noted.

“While inventory levels did see a modest gain compared to last month, thanks to a lower sales-to-new-listings ratio, conditions remain exceptionally tight with 1.5 months of supply,” the report added.

While overall prices are roughly unchanged from the previous month, they have risen at a commendable nine percent pace from last year. In September, the residential benchmark price topped $570,000. Here is a breakdown of the four main property categories on a year-over-year basis:

• Detached: +11.1 percent to $696,100
• Semi-Detached: +11 percent to $621,300
• Townhome: +17.2 percent to $419,400
• Apartment: +14.9 percent to $312,800

Additionally, price gains were seen throughout the Calgary housing market, with most of the gains concentrated in the northeast and east.

Supply has been a key component of the Calgary real estate market, says Ann-Marie Lurie, the chief economist at CREB.

“Supply has been a challenge in our market as strong inter-provincial migration has elevated housing demand despite higher lending rates,” said Lurie in the monthly housing market report. “While new listings are improving, it has not been enough to take us out of sellers’ market conditions.”

New residential listings soared at an annualized rate of 21.6 percent, totalling nearly 3,200 units. But active residential listings tumbled 24.5 percent year-over-year to 3,369 units. Moreover, months of inventory, which gauges the number of months it would take to exhaust the current supply at the present rate of sales activity, plummeted more than 41 percent to 1.38.

Even in an environment of skyrocketing interest rates, new housing construction activity in the Calgary housing sector has been robust this year. In August, housing starts advanced 42 percent from the same time a year ago to 1,680 units, according to the Canada Mortgage and Housing Corporation (CMHC). In the first eight months of 2023, housing starts totalled a little more than 11,400 units, up two percent from the same period last year.

 Population Boom

Alberta is experiencing a population boom.

According to Statistics Canada, Alberta’s population now stands at roughly 4.7 million people as of July 1. This is up about four percent, or roughly 184,400 individuals, from the same time last year.

“In percentage terms, the last time population growth [for Alberta] was this high, Stars on 45 and John Lennon were topping the charts. For music buffs, that’s 1981, when the population grew 4.6 percent,” ATB Financial’s research team wrote in a note Wednesday. “In people terms, however, no other year comes close. This year’s increase in the total population outmatches the previous record in 2013 by 77,800.”

The Western province has witnessed the highest net interprovincial gain in recorded history. Plus, Alberta has seen the biggest interprovincial gain ever for any province.

And this could exacerbate supply issues as demand, particularly from high-priced markets like British Columbia and Ontario, has risen exponentially, Lurie told BNN Bloomberg News.

“A lot of it is to do with the migration that we have coming into the province,” she said. “We’re not just talking from international sources … we’ve been seeing a strong inflow of interprovincial migrants from markets like Ontario and B.C., which for all intents and purposes, generally are a higher-priced market.”

With Calgary homes being much more affordable than in Toronto and Vancouver – the average selling price in these two markets is north of $1 million – households from these major urban centres have an easier time acquiring residential properties in the West Coast city and are a little less sensitive to higher interest rates.

As the population continues upward, Calgary home prices could also continue to jump.