The pandemic housing boom has made it increasingly difficult to find balance in the Canadian real estate market, with healthy activity on both the demand and supply sides. After 18 months of impressive growth nationwide, the majority of Canada is tilted in favour of sellers rather than buyers, which is expected to continue in 2022. But one major urban centre is not showing signs of overheating, price acceleration or overvaluation: the Calgary real estate market. This is excellent news for young families and first-time homebuyers eager to break into the market.
Calgary and the broader Alberta real estate markets were slow to catch up to the rest of the country after the first wave of the COVID-19 crisis. The economy came to a standstill, the energy sector hit a major roadblock, and coronavirus infections overwhelmed the entire country. Fast forward to the present day: the Calgary housing market has rebounded, but it has not echoed the affordability crisis affecting so many other Canadian housing markets.
Calgary Real Estate Market Receives a “Low Risk” Rating
Canada Mortgage and Housing Corporation (CMHC) recently published its latest Housing Market Assessment report. This snapshot of the housing industry zeroes in on four critical metrics of imbalances that impact buyers, sellers, builders and renters. These four indicators measure overheating, overvaluation, excess inventories and price acceleration.
Calgary received a low-risk rating in three of the four categories. It scored a moderate risk rating for excess supply. CMHC’s reading of Calgary was essentially the same as its March assessment, with the primary difference in its excess inventory score, which was considered high.
“You’re basically seeing healthy activity on both sides (supply and demand) of the marketplace,” said CMHC analyst Michael Mak.
Mak added that the excess inventory rating was not as revealing because it contained rental vacancy figures for Calgary.
Moreover, the sales-to-new listings ratio (SNLR) tilts in favour of sellers at around 60 per cent, below the threshold of an overheating possibility of 85 per cent. The SNLR gauge is vital to determine if we’re in a buyer’s or seller’s market.
“The sales-to-new listing ratio is now at 2013-2014 levels,” he added. “That’s pretty much reflective of Alberta’s market right now,” Mak notes.
So, how is the Calgary real estate market performing anyway? Let’s look at the data.
Calgary Real Estate Market is Booming.
Now here’s the catch – the “low-risk” rating doesn’t translate to tepid activity. In fact, this local real estate market is flourishing with strong sales, growth in inventory and price gains. According to the Calgary Real Estate Board (CREB), residential sales rose to 2,186 units in October 2021, up 24 per cent year-over-year.
The strong sales activity has supported growth in prices as well, with average price up close almost nine per cent year-over-year to $460,100. Price gains have occurred across all property types on a year-over-year basis:
- Detached: +10.5% to $540,900
- Semi-Detached: +8.9% to $427,800
- Townhome: +7.3% to $300,300
- Condo: +0.4% to $252,200
CREB figures did show that inventory is beginning to tighten, but not at the concerning levels seen elsewhere across the country. New residential listings rose 1.6 per cent year-over-year in October, while active listings declined 16.3 per cent to 4,870.
“Moving into the fourth quarter, the pace of housing demand continues to exceed expectations in the city,” said CREB® chief economist Ann-Marie Lurie in a news release. “Much of the persistent strength is likely related to improving confidence in future economic prospects, as well as a sense of urgency among consumers to take advantage of the low-lending-rate environment.”
Other regional markets are performing well, too. For example, Airdrie, Cochrane and Okotoks have witnessed decent numbers this year in sales activity or price growth. And it all comes down to supply.
New housing construction has improved from 2020. According to CMHC data, housing starts increased at an annualized rate of 27.8 per cent in October 2021, to 1,255. This is up from 982 unit starts at the same time a year ago. Year-to-date, housing starts in Calgary have topped 11,600, up from 7,443 in the first 10 months of 2021.
What’s in store for Calgary? The local economy is staging a rebound, and many sectors are benefiting from these gains, including the real estate market – both commercial and residential. Only time will tell what lies ahead in 2022.