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CREB®'s Q2 2023 Housing Market Report


The Calgary Real Estate Board (CREB®) has released its Q2 2023 Housing Market Report. The report highlights a dynamic real estate landscape in the City of Calgary, showcasing strong trends in sales, demand and pricing.


As expected, sales activity has slowed from last year’s record-breaking pace while staying stronger than long-term trends. What was not expected was the robust demand in the higher price segments of the market despite higher lending rates.


“An influx of migrants coming from Ontario and British Columbia are likely contributing to some of the strength for higher priced properties, as the relative affordability could make migrants less sensitive to the recent gains in lending rates, said CREB® Chief Economist Ann-Marie Lurie. "At the same time, continued strength in our labour market is supporting demand across all property types.”


However, the robust demand is met with a shortage in supply. Housing inventory levels have remained notably low across various segments, encompassing the resale, new home, and rental markets. Despite relatively strong new home starts, these have not been sufficient to alleviate inventory constraints, primarily due to the influx of migrants. Resale supply has also encountered unexpected challenges, as higher lending rates and limited choices in supply have deterred existing homeowners from making changes.


The prevailing shortage in supply has contributed to the continuation of tight market conditions, which has led to stronger-than-expected price growth across all property types in the city. This steady appreciation in prices throughout the year has effectively offset declines observed in the latter half of 2022, ultimately resulting in new record-high prices.


“Home prices have exceeded our expectations as supply challenges have persisted throughout the spring market, added Lurie. “While the pace of monthly gains is expected to slow in the second half of the year, limited supply choice is expected to keep prices elevated throughout the second half of the year.”


Courtesy CREB®


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Move-Up Buyers Drove Demand for Canadian Real Estate in Q2


2023 MOVE-UP MARKET REPORT


Existing homeowners are driving housing market gains ahead of interest rate hikes, as home ownership continues to be a top priority for Canadians from coast to coast


NATIONAL MARKET TRENDS


What began as a trickle of movement into housing markets late in the first quarter turned into a swell, as move-up buyers drove strong demand for residential properties across the country throughout the second quarter of the year. Buyers took advantage of the Bank of Canada’s temporary pause in overnight rate hikes in the second quarter of the year, sparking a flurry of activity in the mid-to upper-price ranges in Canada’s biggest housing markets. Tight inventory levels placed upward pressure on values, prompting double-digit price increases in five of the nine markets analyzed, between January and June of 2023. These include Regina, Greater Toronto, Hamilton, Winnipeg and Montreal. Meanwhile, single-digit price upswings were noted in the four remaining markets – Greater Vancouver, Calgary, Ottawa and Halifax – as sellers held on to properties that fell short of peak price levels reported one year ago. Fear of further rate hikes continues to impact the market psyche, with many move-up buyers hoping to get into the market before rates climb again. RE/MAX brokers noted increased urgency in the market as buyers sought to obtain mortgage pre-approvals with guaranteed rate holds in place for a 120-day period, prior to both the BoC’s June and July announcements.


“January marked the trough for residential activity, as sales and prices reached new lows. When the Bank of Canada signalled its intent to hold on further interest rate hikes, the floodgates opened, sending buyers into the market from coast to coast. Inventory challenges re-emerged in most major centres as demand once again outpaced supply. Quality listings were quickly snapped up, many moving in multiple-offer situations, which served to draw more sellers into the market in April. By May, the market was moving full speed ahead until the Bank announced its decision to raise the overnight rate in June and again in July, taking the wind out of the proverbial sails of most markets, with some exceptions, namely Calgary, Regina and Montreal.” Christopher Alexander President, RE/MAX Canada.


Equity gains also factored into Canadians’ decision to move up to larger homes or better neighbourhoods, despite the pandemic-induced rise and fall of real estate value. This was especially true in central and eastern Canada. With trade-up activity traditionally occurring within four to seven years of the initial home purchase, RE/MAX examined pricing in June 2018 compared to June 2023 and found that almost every market reported a significant upswing in value over the five-year period, ranging from just over three percent in Regina to more than 80 percent in Halifax. “While the threat of further interest rate hikes has given some pause to the market, particularly at entry-level price points, robust equity gains over the past five-year period provided the means and confidence to fuel solid buyer intentions in move-up markets across the country,” explains Alexander.


Necessity was the primary factor driving demand through the first half of 2023. Whether it was a growing family, the need for more space to accommodate new work-from-home arrangements and schedules, or a better school district, quality-of-life considerations were central to purchasing decisions. This proved true regardless of the move being made – whether downsizing or simplifying in more walkable neighbourhoods closer to the core, trading up or making lateral moves, urban or suburban.


“Inevitably, periods of contraction and short-term restraint ultimately give rise to increased pent-up demand. You can only hold back the impetus for so long. Real estate, after all, is driven largely by lifecycle events and broader factors such as population growth. While some will adjust their timing, most purchasers will eventually move forward, and we’ve seen that pattern emerge time and time again as move-up buyers nationwide re-ignite demand and competition for a limited number of listings.” Elton Ash, Executive Vice President, RE/MAX Canada


With July’s 0.25 basis point rate hike, the BoC’s key rate now sits at five percent, and homebuying activity is expected to slow through the summer months in most major Canadian housing markets. However, once it’s clear that the BoC is nearing the end of quantitative tightening and rates start to unwind, demand for housing will likely ramp up yet again. With uncertainty around financing out of the equation, the focus should remain squarely on supply again. In the move-up market and across the board, that will translate to renewed upward pressure on pricing. “One simply cannot understate the serious repercussions the housing shortage will continue to have on Canadian real estate and affordability,” explains Alexander. “In the short term, while the BoC’s movements may clamp down on housing demand, especially at lower price points, we expect they will have unintended consequences, serving as a temporary dam causing pent-up demand to build and new home construction to contract. When the BoC decides to finally relax quantitative measures and the dam bursts, housing supply will fall even shorter amid record population growth.”


CALGARY MARKET TRENDS


While sales in the Calgary housing market remain more than 20 percent off last year’s torrid pace, activity has been exceptionally robust in the first half of the year in Calgary. Inventory shortages across all housing types and price ranges have created a competitive marketplace, with one in every three homes now sold in a multiple-offer situation. Lack of supply has impacted sales figures, with inventory down almost 30 percent compared to last year. According to the Calgary Real Estate Board, more than 14,300 homes have sold year-to-date, down from 18,687 during the same period in 2022. Year-to-date average price now hovers at $539,668, close to two percent ahead of the $529,826 reported one year ago, making Calgary one of the only markets in the country where the average price now exceeds 2022 levels.


Strong economic fundamentals and affordability are behind the push for the Calgary housing market. Values are amongst the lowest in major Canadian centres. During the pandemic, the province saw a significant upswing in in-migration as affordable housing and job opportunities attracted buyers from other provinces, including British Columbia and Ontario. That trend has continued in 2023 as buyers from other provinces seek to realize homeownership.


Move-up buyers have been active in the Calgary housing market, with the greatest demand occurring between $500,000 and $700,000. Listings remain scarce as existing homeowners are reluctant to sell for fear of not being able to find a new home and/or get back into the market. Buyers have subsequently expanded their search perimeters to ensure that any two-storey home with a double-attached garage is considered, whether it’s in the north or south, east or west end of the city. Frustration is building with every lost bid.


The latest of the Bank of Canada rate hikes, intended to quell activity, only served to drive more buyers into the market, many are concerned that housing values will rise beyond their reach. Supply constraints are expected to be the greatest challenge facing buyers heading into the second half of the year when available listings typically decline. At the current rate, unit sales in Calgary are forecast to match or exceed year-ago levels, while average price pulls ahead.


Courtesy RE/MAX Canada.


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Calgary home prices reach new heights

JULY 2023 HOUSING MARKET UPDATE


August 1, 2023


Calgary home prices reach new heights: July sees seventh consecutive monthly gain


Rising rates had little impact on sales this month as the 2,647 sales represented a year-over-year gain of 18 per cent, reflecting the strongest July levels reported on record. The record-setting pace has been driven mainly by significant gains in the relatively affordable apartment condominium sector. Despite recent gains, year-to-date sales have declined by 19 per cent over last year.

 

In line with seasonal expectations, sales and new listings trended down compared to last month. However, this had minimal impact on inventory levels, which remained near the July record low set in 2006. With a sales-to-new-listings ratio of 82 per cent and a months of supply of 1.3 months, conditions continue to favour the seller.

 

“Continued migration to the province, along with our relative affordability, has supported the stronger demand for housing despite higher lending rates,” said CREB® Chief Economist Ann-Marie Lurie. “At the same time, we continue to struggle with supply in the resale, new home and rental markets resulting in further upward pressure on home prices.”

 

In July, the unadjusted total residential benchmark price reached $567,700, marking the seventh consecutive monthly gain. Prices are now over four per cent higher than the previous peak in May of 2022.


Detached


With 1,197 sales and 1,587 new listings in July, inventory levels trended up over last month. However, with 1,720 units available, inventory levels are at the lowest ever reported for July. Inventory levels have declined across all properties priced below $1,000,000.

 

Shifts in sales and inventory have caused the months of supply to trend up over the one month reported over the past several months. However, conditions remain relatively tight, and prices continued to rise this month. In July, the unadjusted benchmark price rose to $690,500, a monthly gain of nearly one per cent and over seven per cent higher than last July. Both year-over-year and monthly price growth was strongest in the city's most affordable North East and East districts.

 

Semi-Detached


With only 248 new listings in July and 211 sales, the sales-to-new-listings ratio once again pushed above 85 per cent. The pullback in new listings relative to sales ensured that inventory levels remained low, and the months of supply remained just over one month.

 

With no shift in the sellers’ market conditions, the unadjusted benchmark price continued to trend up in July, reaching $616,800. Monthly gains were strongest in the North East and East district as both rose by over two per cent compared to June. The only district that experienced stability in monthly prices was the City Centre.

 

Row


July reported 488 new listings and 467 sales, resulting in a sales-to-new listings ratio of 96 per cent. This prevented any additions to the inventory and left the months of supply below one month for the fourth consecutive month.

 

The persistent sellers’ market conditions caused further price gains for row properties. As of July, the benchmark price reached $407,500, nearly two per cent higher than last month and 14 per cent higher than prices reported last July. Prices trended up across all districts, with the highest monthly gain occurring in the west district at nearly four per cent. The slowest monthly gains happened in the City Centre.

 

Apartment Condominium


July sales continued to rise over last year's levels, leaving year-to-date sales 16 per cent higher than levels reported last year. This is the only property type that has reported a year-to-date gain in sales activity. This has been possible thanks to recent gains in new listings. However, conditions remain tight for apartment condominiums with a sales-new-listings ratio of 84 per cent and a months of supply of 1.4 months.

 

The strong demand relative to supply for this property type has driven further price gains this month. As of July, the unadjusted benchmark price reached $305,900, nearly one per cent higher than last month and over 12 per cent higher than last July. While prices are higher than last year in every district, the city center has yet to see the same level of pressure on prices and has reported the lowest year-over-year growth at nearly nine per cent.

 


REGIONAL MARKET FACTS


Airdrie


New listings this month remained comparable to last month. Meanwhile, sales trended down, supporting a modest gain in inventory and a sales-to-new listings ratio of 84 per cent. This also helped push the months of supply back above one month.

 

Despite the monthly gain in the months of supply, conditions remain exceptionally tight and continue to favour the seller. This caused further price growth as the unadjusted benchmark price rose nearly one per cent over last month to $514,100. Prices have been improving across all property types, but the detached benchmark price has pushed above $600,000 in Airdrie for the first time.


Cochrane


With 110 new listings and 85 sales, the sales-to-new-listings ratio remained at 77 per cent this month. This helped contribute to a modest gain in inventory levels, and the months of supply rose to nearly two months.

 

Despite this shift, conditions remained exceptionally tight in the Centre, and prices continued to trend up. As of July, the unadjusted benchmark price reached $529,700, nearly one per cent higher than last month and over three per cent higher than last July. Price growth has occurred across all property types, and the detached benchmark price now sits at $626,100.


Okotoks


July reported 78 new listings and 67 sales, keeping the sales-to-new-listings ratio elevated at 86 per cent and preventing any significant shift in inventory levels. Nonetheless, the months of supply did rise to above one month following the exceptionally low levels reported over the past two months.

 

While conditions are not as tight as last month, the market still favours the seller, and prices trended up over last month, with a benchmark price reaching $586,900. Prices now sit over seven per cent higher than last year, with the most significant year-over-year gain occurring in the semi detached sector. Detached benchmark prices pushed up to $655,100 in July,

 

Click here to view the full City of Calgary monthly stats package.


Click here to view the full Calgary region monthly stats package.


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Data is supplied by Pillar 9™ MLS® System. Pillar 9™ is the owner of the copyright in its MLS®System. Data is deemed reliable but is not guaranteed accurate by Pillar 9™.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.