Calgary Housing Market and Update

With the likely return of Donald Trump as the next President of the United States, two outcomes are going to make Calgary the darling city of Canada: a booming US economy and higher demand for oil and gas products.

With the demise of Prime Minister J Trudeau in 2025, Alberta will be relieved of the economic damaging carbon tax, lower interest rates, and less restrictions on oil and gas exports from Alberta.

And Calgary’s more diversified economy boosted by oil revenues is surely going to grow in the next 5 years. With a backlash against alternative energy costs and restrictions, the stage is set for a return of the US economy and Alberta’s economy. Without booming supply gains, and as buyers return with lower mortgage rates in 2025, the stage is set for strong price gains in all housing types in Calgary.

The Alberta Premier Danielle Smith just announced that 90% of all jobs created in Canada were in Alberta. As these stats below show, this province is gearing up good times ahead, except for the struggles of its housing market. A slight reduction in mortgage rates and business interest rates should help to keep optimism alive until the change in Federal politics.\

Across the province of Alberta, home prices are rising and inventories falling. It’s towns and cities need home construction and the province is attracting tradespeople with incentives to move here and work.

Alberta Housing Stats.
Alberta Housing Stats. Screenshot courtesy of albertarealtor.ca

And already, home prices in Calgary are beginning to rise strongly. Sales are down as supply decreases and prices rise.
In May the average home price across the city rose 11% year over year and .7% in the past month. Semi-detached homes rose 12% year over year and 3.3% vs April. Townhouse rose 17% year over and year and .3% vs April and apartments rose 14% year over year and 2.6% vs the previous month.

All told, Calgary real estate is becoming expensive, too expensive for most despite the strong job market and incomes.
Given the economic outlook for growth in the US and abroad, the scenario may be pointing to Toronto/Vancouver type prices in 2026, when mortgage really fall to spur the housing market in the city.

In May, the benchmark price for a Calgary house rose 13% year over year to $761,800 (+1.7% vs April).

Calgary housing districts, sales, price and inventory.
Calgary housing districts, sales, price and inventory. Screenshot: CREB.

Sales of homes in May decreased 6.7% year over, even though only 1.2 months of supply exists. Arguably, this is due to reduced affordability. However, May’s sales were 34% higher than historical averages, so all things said, real estate is still booming in Calgary.

CREB reports new listings totaled 4333 units, up 19% year over year. The sales to listing ratio has dropped to 71%, thus increasing inventory.

Without a good deal of inventory however, Calgary’s real estate market is a sellers market.

Outside Calgary, in Airdrie, Cochrane, and Okotoks, inventory levels are much lower than usual at this time of year. Average prices in Airdrie hit $651000, $699,600 in Okotoks, and $667,700 in Cochrane.

It’s becoming more difficult for Calgary home buyers to find affordable homes in the region.

City of Calgary Real Estate Market

“Although new listings have increased, much of this growth is in higher price ranges for each property type,” said Ann-Marie Lurie, Chief Economist at CREB®. “Our strong economic situation has supported sales growth in these higher price ranges. However, this month’s sales could not offset the declines in the lower price ranges due to a lack of supply choice.”

May Housing Market Report

CREB reports 4,333 new home listings in the city, up 19% from last year, but still only half of the normal home listings for May. Most sales gains were in the >$700,000 range.

Year to date, city home sales are up 4.83% to 5538 units of houses and up 10.8% to 1,086 units of detached homes.

Calgary housing market forecast.
Calgary housing market forecast. Screenshot courtesy of CREB.

Apartment sales are 19.2% above last May’s totals while apartment prices have risen 18.5%. The median detached home sales volume rose 16.3% while prices have risen 15.88% vs 12 months ago.

Semi-detached home new listings have grown 17.6% while supply has dropped 12.3%. Supply of single family houses in the city has fallen 13.5% while new listing only rose 4.38%.

Calgary Housing Inventory by District.
Calgary Housing Inventory by District. Screenshot courtesy of CREB.

In response to economic conditions and excessively high home prices in Vancouver and Toronto regions, more people are migrating to Calgary. The promise of the energy industry is drawing attention to Alberta, as boom times may be back.

WTI oil prices are nearing $80 again this week at a time when Alberta is seeing its oil pipelines increasing delivery. WCS oil price has reached $67 a barrel, only $13 a barrel lower than WTI.

Political changes are occurring worldwide, so it’s difficult to forecast oil demand over the next 5 years. However, an awakening economy in the US and a shift back to carbon based energy supply should generate significant benefits for Alberta. And a shift away from China (xChina trend) should support manufacturing and business across Canada and the US.

Total Alberta Oil Production by year.
Total Alberta Oil Production by year. Image: Province of Alberta.

According to a CBC report, every $1 rise in oil price brings a $630,000 boost to Alberta. Alberta’s own revenue forecasts are based on a continuous $74 oil price for years which may be too low given the likely economic outlook in the US. If

If President Trump loosens anti-carbon regulation, lowers taxes, tightens US imports, and restricts communist China involvement in the US, and blocking China exports through Mexico, the opportunities for Canadian and Alberta companies looks rosy.

Alberta had a CAD$10.4 Billion dollar surplus for fiscal year 2023/2024.

Net Migration into Alberta.
Net Migration into Alberta. Image courtesy of Government of Alberta.

Alberta is seeing record migration inflows at levels that make the 1980’s surge look pale. Most of the migrants are arriving from Ontario with lesser numbers from BC and Quebec. As of March, the population of the province surpassed 4.8 million, making this province an economic force that supports the rest of the country. Potentially, the population could surpass 5 million by Dec 2025. Growing anti-immigrant policies should support job opportunities for Canadians, lower social costs, and reduce demand for housing from current levels, thus easing home prices and rent prices in Alberta.

However, the strong draw to Alberta could be a catalyst for higher home prices ahead.

Calgary’s population rose beyond 1.6 million in 2023.

An expected avalanche win by Pierre Poilievre and the Conservatives in the next election could bring even more freedoms and economic strength from 2025 onward. The trend is moving back to Conservatives globally as debt-fueling liberal governments are failing. An early Canadian Federal election is also a distinct possibility.

While jobs, incomes and people grow wildly in the province, housing supply is not. In fact, housing starts in 2023 fell. This bodes poorly for an expected jump in population, especially 20 to 40 year old Canadians wanting to start families.

The cities of Vancouver, Kelowna, Toronto, Mississauga, and Montreal. likely won’t see much relief in the coming years either as the will to build remains low.  The fact is that current home owners and real estate investors, and banks don’t want to see home prices fall.  Policies will followed that support higher prices.

Add on inflation, and it’s a continuous headache for all Canadians.

International investors with a long term investment strategy should compare what you can buy in Calgary for $460,000 vs what you’ll get in the Vancouver market or Toronto market or Montreal housing market and you can see the long term investment advantages.  Calgary is a much easier place to do business and buy real estate.

Which are The Best Neighbourhoods to Buy a Home in Calgary?

As a long time resident, I can tell you there are many excellent neighbourhoods, with great schools, shopping, and recreation. All of it is accessible.

If you enjoy exercise, you may find the communities along the Bow River best. There is a cycling/walking trail on both sides and the mountain biking park at Canada Olympic Park is on it too.

If you like beautiful views, Calgary has plenty. The northwest area of Calgary including those communities near Spy Hill, Coach Hill, and Nose Hill Park offer amazing views, some of the Rockies and foothills. Be ready for matching prices. The neighbourhoods on the northwest outskirts of the city offer unbelievable panoramic views of the Rocky Mountains to the west. Expect million dollar prices here. Homes on Spy Hill and Coach Hill offer incredible views of almost all of Calgary and the spectacular downtown skyline.

If water sports like sailing and windsurfing are important to you, Calgary has a number of man made lakes in the south end. The South has the largest selection of homes, with the Northwest next in number.

If you like cosmopolitan, the neighborhoods near downtown Calgary will appeal to you with the shops and walkability. And downtown’s plus 15 walkway system is close by too.  Downtown city centre is where the condos are and virtually everything you need is here on 7th, 8th and 9th Avenue . The Bow River pathway is adjacent and Calgary’s convenient light rail transit can whisk you away to shopping in the south end of the city.

With the recession now largely in the rear view mirror, and with the price of oil rising steadily, homebuyers and property investors will be looking at Calgary homes differently.

With house prices so low, the expectation for buying residential properties in 2018 will improve. For speculators, the Calgary market is tantalizing, given that home prices in Toronto, Vancouver, Los Angeles, Bay Area, New York, and Miami have peaked.

In-migration to Calgary is rising and mortgage rates remain low. Although “made to depress” Canada housing policies will constrain the market, the outlook for Calgary real estate is for growth. The extent of that growth of course depends on the price of oil, incoming energy sector investment, and the value of the Canadian dollar vs the US dollar.

Economic Predictions for Calgary

If oil continues to rise steadily in price, Alberta stands to recover economically. Businesses have pared down their costs and are better able to profit from growth. Although not officially a big component of the rosy Canadian economic forecast, Alberta and Calgary are keys to the future.

 

Note: the preceding post is not meant as specific investment advice, but rather as a comparison of real estate investment or home buying opportunities. Please ensure you discuss all investments with a licensed professional.

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