As the Canadian real estate market (finally) begins to normalize after 20 months of unprecedented momentum, the Calgary housing market is still leading the way when it comes to growth, joining two other cities in the Prairies: Winnipeg and Edmonton.
The housing boom in one of Canada’s largest cities has been a remarkable story to witness since the start of the global pandemic. Calgary had been one of the last major urban centres to experience impressive sales and price growth during the COVID-19 public health crisis, as it had been reeling from the coronavirus impacts in the energy markets.
But now that crude oil is rebounding, interest rates are low, and Calgary’s affordability situation is more tenable than other metropolitan areas in Canada, could Calgary real estate be in for a rebound?
And what about 2022? Before we look ahead, let’s take a peek at market activity this past summer.
Calgary Housing Market Reports the Best Summer on Record
According to the Calgary Real Estate Board (CREB), residential sales surged at an annualized rate of 36.7 per cent in August, totalling 2,151 units. Although sales have slowed down in recent months, year-to-date sales are at their best levels in six years, with 19,516 transactions.
Price growth has been decent, striking a balance between gains and affordability. In August, the total residential benchmark price was $459,600, up 9.4 per cent from the same time a year ago.
Here is a look at how the property segments across the Calgary real estate market performed to close out one of the best summers on record:
Detached
- Prices: +10.6% to $538,700
- Sales: +31% to 1,300
Semi-Detached
- Prices: +9.9% to $430,000
- Sales: +25% to 177
Townhouse / Row
- Prices: +8% to $300,600
- Sales: +57% to 342
Apartment
- Prices: +2.3% to $253,300
- Sales: +49% to 332
Housing supply continues to be the issue in the spotlight. New residential listings surged 9.5 per cent year-over-year, while active listings tumbled 6.9 per cent. Months of inventory, which measures the number of months it would take to exhaust present inventory at the current rate of sales activity, plunged 31.9 per cent to 2.81 months.
“Sales have far exceeded expectations throughout most of the pandemic, driven mostly by demand for detached homes. At the same time, supply could not keep pace and conditions shifted to favour the seller, something that has not happened in over six years,” said CREB® Chief Economist Ann-Marie Lurie in a news release. “With more buyers than sellers, prices rose, providing opportunity for many of the move-up buyers in the market. Over the past several months we have seen some adjustments in supply relative to sales, helping move us toward more balanced conditions.”
Inventory has not kept up with current market conditions, but the latest data do show that housing stock is rising. According to Canada Mortgage and Housing Corporation (CMHC), housing starts surged to 1,110 in August 2021, up from 736 in August 2020. Also, on a year-to-date basis, housing starts have increased to 9,389, up from 5,426 in the first eight months of 2020.
RBC Economics, writing in its Canadian Housing Health Check, stated that Calgary is the most affordable housing market in Canada and is at minimal risk of overheating despite the notable gains in the real estate market.
What’s Next for the Calgary Real Estate Market?
Next year should be a fascinating time in the Calgary real estate market and the broader Canadian housing industry.
The reopening of the nation’s borders will add more demand to an already ultra-competitive housing sector. The Bank of Canada (BoC) could begin to raise interest rates next year, adding to the borrowing costs for homebuyers, which could reduce their buying options. The increased mortgage stress test could also decrease the number of buyers since the qualifying mortgage rate rose to 5.25 per cent on June 1. Workplaces are re-opening, bringing professionals back to where the work is, so telecommuting options will be reduced. In the province of Alberta, the resurgence in COVID-19 infections could weigh on multiple areas and segments of the economy across the western region.
Still, the Alberta economy is creating jobs. Energy prices are surging, facilitating the province’s critical energy sector. The housing industry is doing well. Indeed, all of the major forecasts suggest Calgary and the province of Alberta will continue to grow by a substantial rate this year.
“We forecast that the Alberta economy will start to expand beyond its 2014 peak at some point in 2022, erasing the contraction seen in 2015 after almost seven years,” confirms Alberta Central chief economist Charles St-Arnaud in a report.
Suffice it to say, Calgary appears to be booming again – and that is a tremendous development for the rest of the country!
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