Calgary Real Estate News

Alberta still the fastest growing province in Canada

Alberta continues to lead population growth across the country, even as the rate at which the province is swelling is dropping.

The province received more than 9,000 newcomers from other parts of Canada in the fourth quarter of 2023, pushing annual interprovincial migration to more than 55,000, according to StatCan data released Wednesday. It’s the largest gain in interprovincial migration nationally since comparable data became available in 1972.

The latest update is the continuation of a trend since 2022, which marked a reversal from a spell of migration away from the province between 2015 and 2021, when at one point the price of oil plunged below US$40 a barrel.

Although a majority of migrants in 2023 were from Ontario, the largest interprovincial migration in the final quarter of the year was between B.C. and Alberta, according to StatCan. The majority of B.C. residents leaving that province came to Alberta.

B.C. reported its first negative interprovincial migration (-8,624 residents last year) for the first time since 2012.

Calgary economist Trevor Tombe said he is not surprised by the data.

“Part of what we’re seeing now is really just a consequence of there being a lot of economic opportunities for workers in the province,” Tombe said.

“What’s somewhat new is, of course, the affordability issues that exist, predominantly in Vancouver and Toronto.”

Overall, Alberta grew by 202,324 residents in 2023 — roughly twice the population of Red Deer. Nearly two-thirds were immigrants, while 27 per cent were from other parts of the country and eight per cent were the result of a higher birth rate.

The pace of population growth was 4.4 per cent in 2023, the highest since 1981.

Driving the rise in population were non-permanent international residents, which accounted for 60 per cent of immigration into Alberta.

Rob Roach, economist at ATB Financial, said the rise in international migration is due to the easing of restrictions due to COVID-19, which had tightened the flow of immigrants.

“It’s a temporary spike to catch up from the disruption of the pandemic,” Roach said.

The increase in population slowed to 0.9 per cent from 1.3 per cent in the fourth quarter of 2023 following an overwhelming tide of migration.

“The main reason we’re seeing a bit of a slowdown at the end of the year was the province just couldn’t maintain that kind of record-setting,” Roach said.

Balance needed between immigration and infrastructure

The explosion in the number of newcomers and the UCP government’s vision to grow Alberta from 4.7 million to 10 million by 2050 has raised questions about the province’s capacity to accommodate them.

Frano Cavar, the director of government relations at the Calgary Construction Association, previously called the soaring population a “catch-22,” where immigration helped inject 13,000 jobs into the industry in 2022 but also strained existing infrastructure.

“You do need immigrants, certainly to fill the (labour) gap right now,” Cavar said. “But more increasingly, immigration increases the infrastructure demand. And the question is, are we able to find a balance?”

According to data by CMHC, the province added only 35,223 housing units in 2023.

An increased demand for rentals, bolstered by higher interest rates and a lack of affordable housing, has caused rents in Alberta to balloon by 20 per cent, according to a report by rentals.ca, with an average monthly fee for a one-bedroom in Alberta priced at $1,711.

As vacancy rates in the city plummet to 1.4 per cent, and wait lists for social housing reach 6,679 as of February 2024, renters are finding it more difficult to secure housing.

For instance, one in every six renters has been searching for a place to live in Alberta for more than six months, and more than half say they’re unable to find housing in their price range, according to a separate report by rentals.ca

-By Hiren Mansukhani, Calgary Herald

Calgary Real Estate News

January sees strong sales fueled by boost in new listings

January sales rose to 1,650 units, a significant gain over last year’s levels and long-term trends. The growth was possible thanks to a rise in new listings totalling 2,137 units in January. New listings rose for homes priced above $300,000, but the largest gains occurred for homes priced above $700,000.

The rise in new listings relative to sales did little to change the low inventory situation in the city.  With 2,150 units in inventory, levels are near the January record lows set in 2006 and are nearly 49 per cent below the long-term average for the month.

“Supply challenges have been a persistent problem since last year. This month’s gain in new listings has helped provide options to potential purchasers, supporting sales growth. However, the growth in sales prevented any significant adjustments in supply, keeping conditions tight and supporting further price growth,” stated Ann-Marie Lurie, Chief Economist at CREB®. 

The months of supply in January was 1.3 months, falling over last month’s and last year’s levels. The persistent tightness in the market contributed to further upward pressure on home prices. The unadjusted benchmark price in January reached $572,300, a gain over last month and ten per cent higher than levels reported last January.

Detached

A boost in new listings helped support stronger sales this month. However, with a sales-to-new-listings ratio of 77 per cent, there was minimal change in the low inventory situation reported in the detached sector. New listings rose for all homes priced above $500,000, but the largest gains occurred in the over $700,000 market segment. Low inventory levels compared to sales prevented any improvement in the months of supply, which at 1.4 months was lower than levels reported last month and last January. The exceptionally tight market conditions continued to drive further price growth. In January, the unadjusted detached price reached $702,200, nearly one per cent higher than last month and nearly 13 per cent higher than prices reported last year. Year-over-year price gains ranged from a low of 10 per cent in the City Centre and South East districts to a 27 per cent gain in the East district of the city. 

Semi-Detached

With 223 new listings and 131 sales, the sales-to-new listings ratio fell to 59 per cent, the lowest level reported since 2020 and significantly improved over the 82 per cent average reported in 2023. The sudden shift did cause inventories to improve over the last month, but they remain well below long-term trends.The unadjusted benchmark price in January was $625,000, slightly lower than last month but over 11 per cent higher than last January. The monthly decline was driven mainly by adjustments in the higher-priced districts of the West and City Centre. 

Row

Like other property types, new listings and sales rose in January over levels reported last month and last year. However, with 322 new listings and 297 sales, the sales to new listings ratio remained exceptionally high at 92 per cent. This contributed to further reductions in inventory levels, and the months of supply once again fell below one month.Limited supply and strong demand contributed to a rise in prices. In January, the unadjusted benchmark price reached $426,400, up over last month and nearly 20 per cent higher than levels reported in January 2023. While year-over-year prices are higher in every district, the West and City Centre districts saw unadjusted benchmark prices ease slightly over December. 

Apartment Condominium

Apartment-style properties continued to see the most significant gain in sales activity, rising to 488 sales in January, a year-over-year increase of 54 per cent. This was possible thanks to the growth in new listings. However, the gain in listings did little to supply levels; with 682 units, inventories were 40 per cent below long-term trends.Tight market conditions continued to contribute to further price gains. In January, the unadjusted benchmark price reached $324,000, nearly one per cent higher than last month and 19 per cent higher than last January. Prices rose across all districts, with the largest year-over-year gains occurring in the most affordable districts of the North East and East. 

-CREB

Calgary Real Estate News

Strong migration and low supply drive Calgary housing prices in 2023

Sales in 2023 did ease relative to last year’s peak, but with 27,416 sales, levels were still far higher than long-term trends and activity reported before the pandemic. While sales stayed relatively strong, there was a notable shift in activity toward more affordable apartment condominiums style homes.

“Higher lending rates dampened housing demand this year, but thanks to strong migration levels, housing demand remained relatively strong, especially for affordable options in our market,” said CREB® Chief Economist Ann-Marie Lurie. “At the same time, supply levels were low compared to the demand throughout the year, resulting in stronger than expected price growth.”

Inventory levels were persistently below long-term trends for the city throughout most of the year, averaging a 44 per cent decline over the 10-year average. We also saw the months of supply remain well below two months throughout most of the year across homes priced below $1,000,000.

The persistently tight conditions contributed to our city’s new record high price. While the average annual benchmark price growth did slow from 12 per cent in 2022 to nearly six per cent growth in 2023, the price growth was still relatively strong especially compared to some markets in the country.

Detached

With an annual decline of nearly 20 per cent, the detached market saw the most significant decline in sales activity. While sales did improve for homes priced above $700,000, limited supply choices in the lower price ranges caused consumers to turn to alternative housing styles. Despite some recent gains in higher-priced new listings, inventories have remained near record lows, and the months of supply have remained relatively low throughout 2023.

The persistently tight market conditions have supported further price growth for detached homes, albeit at a slower pace than last year. On average, the benchmark price rose by nearly eight per cent in 2023, with the most significant gains occurring in the city’s most affordable districts.

Semi-Detached

Like the detached sector, year-over-year sales growth since May was not enough to offset the pullbacks at the beginning of the year, leaving 2023 sales down by 10 per cent. The decline in sales was driven by pullbacks for homes priced under $500,000, while sales improved for higher-priced properties. The decline in the lower range was primarily due to limited supply choices, preventing stronger sales.

Persistently tight market conditions this year caused prices to trend up throughout most of the year. On an annual basis, the benchmark price rose by seven per cent over last year—a slower gain than the 12 per cent reported in 2022, but still relatively strong. Price growth ranged from a low of six per cent in the city centre to over 16 per cent in the east district.

Row

Limited supply choices in the lower price ranges contributed to the pullback in sales in 2023. Annual sales declined by over 11 per cent despite rising sales for homes priced above $400,000. While new listings did show signs of improving in the second half of the year, all of the gains were reported in the higher price ranges, causing relatively more balanced conditions in the upper price ranges versus the sellers’ market conditions in the lower price ranges.

Conditions favoured the seller throughout the year, supporting an annual benchmark price gain of over 13 per cent. Prices improved across each district, ranging from a low of 11 per cent in the city centre to over 20 per cent price growth in both the North East and East districts.

Apartment Condominium

Apartment-style properties were the only property type to report a gain in sales this year, resulting in a record high of 7,884. The growth in sales was possible thanks to the higher starting point for inventory levels and gains in new listings. However, conditions tightened throughout the year, favouring the seller and driving price growth.

Apartment condominium prices finally recovered from their 2014 high earlier this year and have pushed above those levels, reaching a new record high of $321,400 by December. On an annual basis, the 2023 benchmark price rose by over 13 per cent, a faster pace than the annual growth levels reported last year.  


REGIONAL MARKET FACTS


Airdrie

Primarily due to pullbacks for detached homes, sales in Airdrie declined by 24 per cent over last year’s record high. Low inventory levels and a pullback in new listings have somewhat limited sales. While new listings have risen over last year’s levels for the past four months, they are still 24 per cent lower than last year. The decline in sales and new listings ensured inventories remained low this year, declining over last year’s and falling to the lowest annual average levels seen since 2006.

For the third year in a row, conditions in Airdrie have generally favoured the seller. This has driven further price gains this year, albeit at a slower pace. On an annual basis, the benchmark price rose by nearly five per cent. This year, the price growth for row and apartment-style properties has been more than double that reported in the detached and semi-detached sectors.

Cochrane

Both sales and new listings in Cochrane fell over last year’s levels. However, recent gains in new listings relative to sales did help support some inventory gains. While inventory levels have improved over the low levels reported last year, they remain over 40 per cent below what we traditionally see in the market.

The recent shifts in new listings relative to sales have helped the months of supply stay above two months since September. However, conditions are still relatively tight, and prices continue to rise. While the growth was stronger in the higher-density sectors of the market, the detached benchmark prices increased by four per cent in 2023 over last year.


Okotoks

Supply has been a challenge in Okotoks, impacting sales and prices. While we have seen some improvements lately regarding the level of new listings compared to sales, inventories have remained near record lows and averaged 63 per cent below long-term trends on an annual basis.

Conditions have remained relatively tight throughout most of the year, especially throughout the busier spring season. Despite some monthly variation, prices generally trended up this year and, on an annual basis, rose by over six per cent.

-CREB

Calgary Real Estate News

Dozens of Multiple Offers on Homes Still Coming in Despite Rising Interest Rates

Multiple offer situations continue to be on the rise as the real estate market continues to see high demand during the fastest series of interest rate hikes in Canada’s history.

Over 13,000 residential transactions have taken place within the Calgary city limits to date in 2023, and agents at CIR Realty have reported being in a sale with up to 33 competing offers on a single property. 

The recent increases in interest rates have introduced new complexities into the real estate market, impacting both buyers’ affordability and sellers’ expectations. Amidst these challenges, properties are still selling under multiple offer scenarios.

“We had 75 viewers in 8 hours” says Carl Russel, CIR Realtor who represented a listing in Pineridge, Calgary in June, 2023. 

“The house was listed on a Friday at 3pm. I was on the phone for 3 hours with people calling about it and trying to get in early,” said Russel.

“The open house took place the next day, with 75 visitors coming through in an 8-hour period. The high demand resulted in 33 offers following the open house, 15 of which had no conditions,” he said.

For agents representing a sale with multiple offers, navigating these offers is complex. As the number of offers increases, so does the final sale price of a property. 

Lindsey Smith, CEO at CIR Realty, says hundreds of clients lose out on properties they really want because they lack proper representation in multiple offer situations.

“Knowing how to confidently make a competitive offer within your budget is crucial. Buyers and sellers can be facing 10+ competing offers on a single property. A Realtor representing a buyer is laser focused on advocating for their clients’ best interests and providing them with the guidance they need to know that they’ve put their best foot forward in their sale or purchase.” says Smith. 

“One piece of advice I can give is making sure you are putting in your most attractive offer right off the bat when it comes to properties that are in high demand. You don’t want to feel like you left something on the table that could have won you the property in the first place,” says Smith.

For those in the market to buy or sell, speaking with a Realtor and a Mortgage Broker will help ensure they are best positioned to make the most of their sales and confidently place offers in this competitive market. 

-CIR Realty

Calgary Real Estate News

Persistent inflation leads the Bank of Canada to increase its benchmark interest rate

Today, the Bank of Canada increased its overnight interest rate to 5.00% (+0.25% from June) because of the “accumulation of evidence” that excess demand and elevated core inflation are both proving more persistent and after taking into account its “revised outlook for economic activity and inflation.”

This decision was not unexpected by analysts but is disconcerting – as is the Bank’s pledge to continue its policy of quantitative tightening.

To understand today’s decision and the Bank’s current thinking on inflation, interest rates and the economy, we highlight its latest observations below:

Inflation facts and outlook

  • In Canada, Consumer Price Index (CPI) inflation eased to 3.4% in May, a “substantial and welcome drop from its peak of 8.1% last summer”
  • While CPI inflation has come down largely as expected so far this year, the downward momentum has come more from lower energy prices, and less from an easing of “underlying inflation”
  • With the large price increases of last year removed from the annual data, there will be less near-term “downward momentum” in CPI inflation
  • Moreover, with three-month rates of core inflation running around 3.5% to 4% since last September, “underlying price pressures appear to be more persistent than anticipated”, an outcome that is reinforced by the Bank’s business surveys, which found businesses are “still increasing their prices more frequently than normal”
  • Global inflation is easing, with lower energy prices and a decline in goods price inflation; however, robust demand and tight labour markets are causing persistent inflationary pressures in services

Canadian housing and economic performance

  • Canada’s economy has been stronger than expected, with more momentum in demand
  • Consumption growth was “surprisingly strong” at 5.8% in the first quarter
  • While the Bank expects consumer spending to slow in response to the cumulative increase in interest rates, recent retail trade and other data suggest more persistent excess demand in the economy
  • The housing market has seen some pickup
  • New construction and real estate listings are lagging demand, which is adding pressure to prices
  • In the labour market, there are signs of more availability of workers, but conditions remain tight, and wage growth has been around 4-5%
  • Strong population growth from immigration is adding both demand and supply to the economy: newcomers are helping to ease the shortage of workers while also boosting consumer spending and adding to demand for housing

Global economic performance and outlook

  • Economic growth has been stronger than expected, especially in the United States, where consumer and business spending has been “surprisingly” resilient
  • After a surge in early 2023, China’s economic growth is softening, with slowing exports and ongoing weakness in its property sector
  • Growth in the euro area is effectively stalled: while the service sector continues to grow, manufacturing is contracting
  • Global financial conditions have tightened, with bond yields up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation
  • The Bank’s July Monetary Policy Report projects the global economy will grow by “around 2.8% this year and 2.4% in 2024, followed by 2.7% growth in 2025”

Summary and outlook

As higher interest rates continue to work their way through the economy, the BoC expects economic growth to slow, averaging around 1% through the second half of 2023 and the first half of next year. This implies real GDP growth of 1.8% in 2023 and 1.2% in 2024. The Canadian economy will then move into “modest excess supply” early next year before growth picks up to 2.4% in 2025.

In its July Monetary Policy Report, the Bank noted that CPI inflation is forecast to “hover” around 3% for the next year before gradually declining to 2% in the middle of 2025. This is a slower return to target than was forecast in its January and April projections.  As a result, the Bank’s Governing Council remains concerned that progress towards its 2% inflation target “could stall, jeopardizing the return to price stability.”

In terms of what Canadians can expect in the near term, the Bank had this to say: “Quantitative tightening is complementing the restrictive stance of monetary policy and normalizing the Bank’s balance sheet. Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the 2% inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.”

Stay tuned

Please circle September 6th, 2023 on your calendar as the date of the Bank’s next scheduled policy rate announcement. We will follow that decision closely with an executive summary the same day. In the meantime, First National’s empowered advisors are always here to help you make sense of key economic news and market trends.

-First National

Calgary Real Estate News

Another record-high month for Calgary

The housing market in Calgary witnessed a surge in apartment condominium sales, setting a new total residential record with 3,146 sales achieved in June. Although year-to-date sales are currently 23 percent lower than last year, they remain significantly higher than pre-pandemic levels.

Notably, there has been a positive trend in new listings, providing relief and a monthly increase in inventory levels. However, despite these improvements, the inventory for June stood at 3,458 units, marking a decline of over 36 percent from last year and reaching the lowest levels for June in nearly two decades.

“The demand for housing remains robust, bolstered by a healthy labour market and increased migration levels, which helps offset the impact of higher lending rates,” said CREB® Chief Economist Ann-Marie Lurie. “Although we have seen some recent improvements in new listings, particularly for apartment condominiums, it is not enough to cause any substantial change from the low inventory situation in our city. While new home starts are on the rise, it will take time to observe their impact on supply.”

With a supply of just over one month, the current market conditions continue to favour sellers, placing upward pressure on home prices. In June, the total residential benchmark price reached $564,700, representing a monthly unadjusted gain of one percent and four percent higher than last year’s levels.

-CREB

Calgary Real Estate News

Mortgage rates won’t go back to what they used to be anytime soon: Economist

Canadians will have to adjust their expectation of what a normal mortgage rate level looks like going forward, one economist says.

Speaking with BNN Bloomberg on Friday, BMO Capital Markets’ senior economist Robert Kavcic said the rates Canadians have gotten used to since the 2008 financial crisis are much less than what they will be moving forward.

“This is an adjustment we’re going to have to make as homebuyers and investors. A lot of people were lulled into the belief that what we saw over the last decade was normal, I would argue that the interest rate levels we saw post-financial crisis through the early days of the pandemic were the exception, not the norm,” said Kavcic.

The Bank of Canada resumed its rate hiking cycle earlier this month, boosting the main lending rate in Canada to 4.75 per cent. Kavcic acknowledges this is a high level, but stands firm in his belief that rates will stay above two per cent.

“Five to six per cent lending rates are very restrictive and high, but don’t sit on the edge of your seat and hope we’re going to go back to two per cent or below mortgage rates in the next couple of years,” Kavcic said. “Maybe neutral mortgage rates now are even 100 basis points higher than what we were used to last cycle.”

MOMENTUM COULD SLOW THIS SUMMER

For those looking to buy a house, Kavcic believes demand levels seen over the past couple of months could start to moderate.

“Momentum is going to be tested in the housing market as the Bank of Canada came off the side lines and raised rates in June,” Kavcic said.

He is weighing consumer psychology against demand levels to predict the market’s next move.

“There’s a big psychological component to this market because it started to accelerate almost the minute the Bank of Canada said they’re done raising rates,” Kavcic said. “Who wants to jump into the housing market and pay a million dollars for an average priced home when it’s falling at a 20 per cent rate?”

“Now that the Bank of Canada is tightening again, I think you’ll be seeing that psychology cool off and you’re probably going to see some listings linger on the market a little longer throughout the summer and take some momentum out of the price gains we’ve seen.”

However, Kavcic is worried high population growth is boosting demand and will challenge the psychology of homebuyers looking to stay away from a higher rate market.

“End of the day we still have the strongest population growth we’ve seen since at least [since] the early 1970s. Those new families and Canadians need a place to live and we just physically cannot meet that demand with supply,” said Kavcic. “Fundamental demand will come to a bit of a stalemate with consumer psychology in the second half of this year.”

THE ROAD AHEAD FOR HOUSING SUPPLY

When it comes to boosting housing supply, Kavcic doesn’t think accelerating new build projects is the answer.

 “It’s just not the solution, it’s a noble and commendable goal but it’s just not something we can come to,” said Kavcic. “The industry is already operating at 100 per cent capacity with employment rates at a record low in construction. To think that we can double output from a level that is already fully stretched seems like an ambitious goal and I don’t think we’re going to get it.”

-Sydney Punchard, BNN Bloomberg

Calgary Real Estate News

These are the Canadian cities where homes have become more affordable since 2022

Homes were slightly more affordable in May than they were a year ago, according to new data from Ratehub.ca, though researchers warn the phenomenon may be short-lived.

Ratehub.ca looked at the average home prices in major Canadian cities in May 2023 and May 2022 and calculated the average annual income needed to buy a home. Affordability improved in eight out of the 10 cities included in the research.

The report said the trend was a consequence of the Bank of Canada’s steep series of interest rate increases over the last year. That policy cycle has led to soaring mortgage rates and an elevated stress test used to qualify for a mortgage, now in a range of 7.39 per cent, up from 6.77 per cent last May.

“Combined with softer home prices in most markets across Canada, the overall affordability picture has actually improved,” the report said.

James Laird, co-CEO of Ratehub.ca, said in a written statement that it’s “not surprising” that affordability improved year-over-year with the changes in mortgage rates, stress test limits and softer prices in many markets.

“At this time last year, mortgage rates (and therefore the stress test) had already started to increase. Hence, the dynamic of a far higher stress test year over year has started to disappear,” Laird said.

WHERE DID AFFORDABILITY IMPROVE?

Hamilton saw the biggest decline in the income required to buy a home, as the average price dropped $105,200. Buyers in the southern Ontario city needed $9,520 less annual income to purchase a home last month than they would have a year earlier, with an income of $171,330 required to make a purchase at that price.

Victoria, B.C., ranked second on the list of more affordable housing markets, with the average income needed to afford a home dropping by $7,160 to $171,600. Ottawa came third with buyers needing $4,670 less in annual income to buy a home for $645,400.

Toronto ranked fourth on the list of cities with improved affordability. People needed $3,450 less annual income – at $222,600 per year – to afford a home in the city at an average price of $1.16 million.

Vancouver ranked sixth, with buyers needing $590 less annual income to afford a home for the average price of $1.19 million.

There were also affordability improvements in Edmonton, Montreal and Winnipeg.

WHERE DID AFFORDABILITY GET WORSE?

There were two cities where home affordability did not improve.

In Calgary, where the average home price increased year-over-year, buyers needed $7,420 more in annual income to buy a home.

In Halifax, people needed $3,400 more in annual income to purchase a home, as the average price only deceased “minimally,” by $9,500.

SHORT-LIVED TREND

Month-over-month real estate trends in May differed from the annual picture, and the report warned that “the narrowing year-over-year gap may be short-lived.”

“The tight supply of available homes for sale continues to put a boil under price growth, and support favourable seller conditions,” it said.

Home sales and national average prices ticked up in May from April, according to the latest data from the Canadian Real Estate Association – though at $729,044, the average price remained below the peak documented in February 2022 of $816,720.

The recent interest rate hike by the Bank of Canada, bringing its overnight lending rate to 4.75 per cent earlier this month, could further slow the housing market, the report warned, as it will “impact the borrowers already on the margins.”

“The resulting higher stress test will reduce the number of those who can qualify for a mortgage at today’s rates, particularly those who were already stretching their affordability. This could result in softening housing market activity in the coming months,” the report said.

Laird said the slight increase in housing affordability will even out before too long.

“By the end of 2023 we expect affordability to be flat year over year, since both rates and home prices will eventually be close to even when compared year over year,” he said.

-Holly McKenzie-Sutter, BNN Bloomberg