Calgary to continue as a balanced market in 2021, prices to increase 3%
Calgary real estate is likely to continue as a balanced market in 2021, with ongoing economic factors related to the oil and gas sectors, as well as COVID-19, expected to impact market activity. Further lockdowns due to COVID-19 will impact housing activity as open houses will likely stop. The average sales price in Calgary increased 0.03% to $458,742 in 2020 (Jan. 1 – Oct. 31), compared to $458,600 in 2019 (Jan. 1 – Dec. 31). The RE/MAX Outlook for Calgary real estate in 2021 is an increase of 3% in average price to approximately $472,504.26.
Who’s Driving Demand for Calgary Real Estate?
Move-up buyers and first-time homebuyers are currently driving demand in the Calgary real estate market, which is expected to continue into 2021. The most popular property type among these buyers are single-detached homes.
First-time homebuyers in Calgary are typically single homebuyers and young couples, looking for single-detached homes. These properties range in price from $350,000 to $475,000. While first-time homebuyers were initially hesitant to buy, many have decided to purchase due to low interest rates.
Move-up buyers in the Calgary housing market are typically families who have been in their home for a number of years, and whose jobs haven’t been affected by COVID-19 or the economy. There has been no real hesitation from move-up buyers who are looking to purchase a new home due to the current climate in 2020. Many of those who are buying have gone through a 5-year recession and have jobs that have been unimpacted by COVID-19.
The condominium market in Calgary is most popular with single homebuyers and retirees/downsizers. The average price for a condominium in Calgary is $226,220. There is currently 7 months of supply for condominiums in Calgary, and this is not expected to improve in the next 1-2 years due to the large number of used properties, as well as lots of new construction.
Calgary’s luxury market is currently driven by move-up buyers with the average starting price for a luxury home in Calgary being $750,00. While COVID-19 has not directly impacted the luxury market in Calgary, it has impacted the economy, which is expected to be a long-term impact.
Calgary’s Hottest Neighbourhoods
Calgary’s top-selling neighbourhoods in 2020 were North Central, South Central and North West/Central West. North Central is popular due to its proximity to both the airport and downtown, which South Central is a newer area that is close to the hospitals. These neighbourhoods are expected to continue to be in-demand in 2021 because of their access to amenities and transit.
Calgary New-Home Construction
Calgary’s new-home construction sales are down currently, with many developers currently looking for land to build on. There was a project that was turned down a few months ago, as the developers did not want to take on more expenses due to COVID-19 and the current economy. The number of homes currently being built in Calgary is sufficient to meet the current demand, and new-home sale prices are very competitive compared to the resale market.
Canadian Housing Market in 2021
Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.
Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:
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Additional report findings include:
- 35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
- 45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
- Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
- 52% of Canadians believe real estate will remain one of the best investment options in 2021
“Despite the tragic impacts of the pandemic, our optimism in the strength of Canada’s housing market has always remained,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “While we’ve seen a significant shift in buyer preferences this year, we believe factors such as the supply issue, pent-up demand and historically lower interest rates will continue to fuel activity in 2021.”
The housing market in Calgary experienced low activity during April and May due to strict COVID-19 lockdowns. However, market activity picked up in June and July. At the start of 2020, Calgary was still dealing with a slow economy due to the oil and gas sector, which was further impacted by the pandemic.
Home prices are expected to remain steady throughout summer and into the fall. Since June, first-time homebuyers in the region have been more active as there are no advantages in waiting for prices to fall.
Higher end properties in Calgary are beginning to sell faster due to falling prices, and acreages in small towns are beginning to see more interest from local buyers. A 3% increase is expected in Calgary, Alberta for the remainder of the year.
Western Canada
While COVID-19 lockdowns in March and April slowed down the housing market in Western Canada, transactions in Kelowna, Saskatoon and Vancouver resumed by May, with sales in both May and June surpassing year-over-year levels. Many buyers put their plans on hold at the peak of COVID-19 lockdowns, but they returned to the market quickly to make up for lost time. Edmonton’s housing market quickly bounced back to pre-COVID levels in June, while Saskatoon experienced its busiest June in years; this momentum is anticipated to continue into the fall market, with RE/MAX brokers and agents estimating a three-per-cent increase in average residential sale prices for the remainder of the year. Overall, brokers and agents in Western Canada say the potential buyers they are talking to are not too concerned with a potential second wave of COVID-19 impacting their real estate journey, and RE/MAX brokers are estimating steady activity to round out 2020.
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Canadian Housing Market Outlook
Leading indicators from RE/MAX brokers and agents across Canada’s housing market point to a strong market for the remainder of 2020. According to the RE/MAX Fall Market Outlook Report, RE/MAX brokers suggest that the average residential sale price in Canada could increase by 4.6% during the remainder of the year. This is compared to the 3.7% increase that was predicted in late 2019.
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The pandemic has prompted many Canadians to reassess their living situations. According to a survey conducted by Leger on behalf of RE/MAX Canada, 32% of Canadians no longer want to live in large urban centres, and instead would opt for rural or suburban communities. This trend is stronger among Canadians under the age of 55 than those in the 55+ age group.
Not only are Canadians more motivated to leave cities, but changes in work and life dynamics have also shifted their needs and wants for their homes. According to the survey, 44% of Canadians would like a home with more space for personal amenities, such as a pool, balcony or a large yard.
Canadians equally split on their confidence in the housing market
Canadians are almost equally split in their confidence in Canada’s real estate market, with 39% as confident as they were prior to the pandemic, and 37% slightly less confident. When it comes to the prospect of a second wave of COVID-19, 56% of Canadians who are feeling confident in Canada’s real estate market are still likely to buy or sell.
“While COVID-19 lockdowns slowed Canada’s housing market at the start of a typically busy spring market, activity bounced back by early summer in many regions, including Vancouver and Toronto,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Despite the tragic impacts of the pandemic, our optimism in the strength of Canada’s housing market has always remained, and current market activity further exemplifies this. Many homebuyers are now exploring different neighbourhoods that better suit their new lifestyles, and real estate agents are getting busier and working more with buyers from different major cities. According to our brokers and agents across the RE/MAX network, Canada’s fall market is expected to see spring market-like activity.”
Additional highlights from the 2020 RE/MAX Fall Market Outlook Report Survey:
- 48% of Canadians would like to live closer to green spaces
- 48% of Canadians say it’s more important than ever to live in a community close to hospitals and clinics
- 33% of Canadians would like more square footage in their home and have realized they need more space
- 44% of Canadians want a home with more outdoor space and personal amenities (i.e. balcony, pool etc.)
About the 2020 RE/MAX Fall Market Outlook Report
The 2020 RE/MAX Fall Market Outlook Report includes data and insights supplied by RE/MAX brokerages. RE/MAX brokers and agents are surveyed on market activity and local developments.
The Calgary housing market will lean toward buyers in 2020 with a zero percent residential sale price expectation. This is dependent on a number of different factors, including the province’s economy and the fate of the Keystone Pipeline. The city’s employment rate and overall economy will have the greatest impact on the housing market, along with strong population growth.
Calgary’s buyer’s market is due to its economy and high unemployment rate which is expected to continue into 2020 should major changes not be made. Housing affordability isn’t a concern due to low condo prices allowing buyers to easily enter the market. Despite the high unemployment rate, the city’s population is increasing due to residents from other parts of Alberta moving to the city.
Condominiums and two-story detached homes are the most popular properties in Calgary while Coventry Hills, Evergreen and Northeast Calgary are expected to be the hottest markets of next year because of their affordability. First-time and move-up buyers are expected to drive demand in 2020, with more first-timers entering into the market compared to past years, due to the city’s overall younger population compared to the rest of Canada.
From a national perspective, RE/MAX anticipates a leveling out of the highs and lows that characterized the Canadian housing market in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected, with an estimated 3.7-per-cent increase in the average national residential sales price.
As more Canadians have adjusted to the mortgage stress test and older Millennials move into their peak earning years, it is anticipated that they will drive the market in 2020, particularly single Millennials and young couples. A recent Leger survey conducted by RE/MAX found that more than half (51 per cent) of Canadians are considering buying a property in the next five years, especially those under the age of 45.
Click to read the full RE/MAX 2020 Housing Market Outlook Report.
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