The historically high demand for housing in Calgary has cut supply and boosted prices to record levels.
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There indeed may be too much of a good thing when it comes to demand for Calgary’s resale real estate market.
It’s likely a sign of things to come with high demand in the city for homes actually hampering sales growth, says Ann-Marie Lurie, chief economist with the Calgary Real Estate Board.
“There just isn’t any choice in the lower end of the market,” she says. “There still is some inventory, but sales are falling because it’s just not what it used to be.”
In May, however, many buyers were waiting for the Bank of Canada announcement in early June, expecting interest rates to be cut. The central bank did just that, cutting the overnight rate by 25 basis points.
Yet that failed to spark a buying frenzy in large part because the cut was modest, and fixed mortgage rates — the preferred mortgage for most buyers — had largely already priced in that cut before it happened, Lurie says.
“We know the Bank of Canada is moving into its down cycle for rates, but bond yields have already priced in those expected movements.”
Borrowing costs remain a barrier for first-time buyers, but equally so are prices, which have reached record highs in Calgary.
In June, the benchmark price of a home grew 8.5 per cent to $608,000. The benchmark for single-family detached homes jumped 12 per cent year over year to reach $767,600.
Semi-detached homes also grew about 12 per cent to $686,100. Row homes’ benchmark was up nearly 17 per cent to $464,600, and apartments’ benchmark rose 17.5 per cent to $344,700.
All were record highs for Calgary.
Although sales declined year over year in the city, the market remains busy, says a local realtor.
“It hasn’t slowed down,” says Darryle Terrio, broker/owner of Re/Max Complete Realty.
Year-to-date sales at the end of June were still the second highest since 2014, only surpassed by June 2022 when sales records were set in February and March.
Lurie points to tight conditions in single-family homes under $600,000, while homes priced $750,000 or more are seeing sales growth.
That uptick likely reflects the increase in out-of-town buyers from Ontario and British Columbia where average home prices exceed $1 million, and Calgary prices — even at $750,000 or more — offer value to these buyers, she adds.
“We’ve seen a lot of people come from those markets over the past few years, and that has helped prop up the higher end of the market.”
It’s tougher for local first-time buyers, however.
Row homes priced under $400,000 are increasingly scarce, and so are condominium apartments below $200,000, she adds.
Yet relief may be on the way. Inventory in June was up more than nine per cent even as new listings (the number of homes that came onto the market that month) dropped almost four per cent.
More interest rate decreases this year could also boost affordability. But that could only serve to exacerbate the pricing challenges.
“As rates get cut, people can afford more, and then prices will go up more,” Terrio says.