Over the last 14 months, the Canadian real estate market has soared through the roof, defying any expectation that there would be a downturn amid the coronavirus pandemic. The nationwide housing market has never been hotter, driven by every area of the country, from the largest cities to the smallest communities.
This has first-time homebuyers and young families concerned about entering the real estate market and achieving the ultimate Canadian dream of homeownership. There has been plenty of discussion in the industry about crashes and corrections. Some experts recommend public policy action or an interest rate hike to douse the red-hot real estate market. Who is right? Will it work?
At present, much remains uncertain about when or if substantial decline in the housing sector will arise. For now, it is all about finding opportunities in the real estate market, and there is one major urban centre that young people are taking advantage of: Calgary.
Calgary and the broader Alberta real estate market were late to the party in the aftermath of the first wave of the COVID-19 public health crisis. As many real estate markets across the country witnessed a quick resurgence due to the pent-up demand, Calgary was still reeling from both the coronavirus-induced financial crisis and the collapse in energy prices. This resulted in a plunge in housing valuations and a slow climb from the depths of a bear market.
That said, first-time homebuyers may have seen an opportunity to live in a great urban hub and used the prolonged drop or stagnation to purchase the home of their dreams. This wave of demand may have contributed to the return to notable growth in one of Canada’s largest cities.
First-time Homebuyers Snatch up Calgary Real Estate
According to the Calgary Real Estate Board (CREB), sales activity reached a new record in the month of April, soaring 462 per cent to exceed 3,200 transactions.
The average price for a home in Calgary advanced 20 per cent year-over-year in April to $509,294. Prices for all property types reported growth, but it was most pronounced for detached homes, increasing 11 per cent to $529,100. Despite the double-digit gain, this is still below the national average of $700,000.
The good news for many homebuyers in the municipality is that inventory levels are trending upward, with a slight tilt in the seller’s favour. CREB figures highlighted that more than 4,600 new listings entered the market in April, continuing to bring new supply to the market. The price gains and tighter market conditions are nudging homeowners to list their properties more than a year after the COVID-19 public health crisis began. However, CREB® chief economist Ann-Marie Lurie, warns that the months of supply are still below two months, giving home sellers an advantage amid strengthening demand.
“Despite entering the third wave of COVID-19, there is more optimism of economic recovery when the economy re-opens,” said Lurie in a statement. “However, the recent surge in home sales could be a result of potential buyers wanting to enter the market before any further changes occur in prices, interest rates and lending policy. This could erode some of their purchasing power.”
More supply is coming to the market, too. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts climbed 1,299 in April, up from 575 the same time a year ago. In the first four months of 2021, housing starts topped 4,100, compared to 2,807 in 2020.
Ultimately, the Calgary real estate market remains competitive. Still, it is not as fierce as Toronto, Vancouver, Montreal, or even the small towns across the country ensuring bidding wars and blind bidding conditions. Surrounding regions are also improving, with Airdrie, Cochrane, and Okotoks witnessing greater sales activity and higher prices.
What Does the Rest of 2021 Look Like For the Calgary Housing Market?
The recovery of the Calgary housing market has been remarkable to watch. Near-zero interest rates, a prolonged downturn in real estate prices, and evolving consumer trends – many elements contributed to the city’s housing and broader economic rebound. It also helped that energy prices have stabilised and returned to pre-crisis levels, bolstering consumer confidence.
Overall, as the RE/MAX Outlook for Calgary real estate in 2021 highlighted, the Calgary housing industry sits comfortably in a balanced market, with prices forecast to rise a modest three per cent to approximately $472,504. At a time when the national average price for a property is north of $700,000, Calgary has struck a fine balance between growth and affordability, which might be why first-time homebuyers are snatching up detached homes, townhouses, and condominiums within one of the few remaining accessible Canadian housing markets.