What a difference a few months can make for an entire province. In the initial fallout of the coronavirus pandemic, most of the Canadian real estate market reported massive gains, whether it was the impressive sales activity or the record-breaking price growth. From major urban centres to rural communities, every housing market was posting eye-popping numbers. And the party is still raging!
Alberta was one of the few provinces not to enjoy the substantial housing boom. The crash in crude oil prices, the economic downturn, and the intensifying COVID-19 public health crisis put Alberta at a disadvantage. Suffice it to say, Calgary and Edmonton were outliers, posting numbers that looked very different from the nation’s big cities. As Robert Hogue, a senior economist with RBC Economics, wrote last year: “Alberta’s economy and its housing market are largely out of synch with the rest of Canada.”
Times have ostensibly changed. The western province has now joined the rest of the Canadian real estate market’s substantial increase, with all the key metrics pointing to significant growth. The Alberta real estate market had an enormous first quarter of 2021 as many jurisdictions province-wide witnessed double-digit sales and price jumps.
Can the housing boom in Alberta, from Edmonton to Fort McMurray, be sustained? Indeed, there is a lot of speculation about the country’s real estate bubble on the cusp of popping. But while prices are projected to ease sometime this year, homeowners and homebuyers are unlikely to experience a crash landing anywhere in the Great White North. In fact, the Calgary housing market is coming off its best monthly sales in March since 2007.
“Low lending rates and improved savings have supported sales activity,” said CREB chief economist Ann-Marie Lurie in a statement. “However, sales have been somewhat restricted by the lack of listings. This month there was a jump in new listings, contributing to the strong monthly sales.”
Lethbridge was recently named Alberta’s hottest housing market for 2021 amid a “heavy sellers’ market.” Cottage country is posting record-breaking figures, while Fort McMurray is on the rebound. That said, how did the broader Alberta real estate market perform in the January-to-March period? Let’s look at the numbers from the first quarter.
Stats Show a Strong Q1 For Alberta Real Estate Market in 2021
Calgary (First Quarter / Year-Over-Year (YOY))
- Residential sales: +88.7% to 7,988 units
- Single-detached median price: +11.4% to $504,750
Central Alberta (Q1 / YOY)
- Residential sales: +99.7% to 1,274 units
- Median sale prices: +10.5% to $337,000
Edmonton (Q1 / YOY)
- Residential sales: +78.9% to 5,962 units
- Single-detached median price: +9% to $410,000
Fort McMurray (Q1 / YOY)
- Residential sales: +37.2% to 321 units
- Median sale price: +7.5% to $505,200
Lethbridge (Q1 / YOY)
- Residential sales: +61.8% to 492 units
- Median sale price: +14% to $335,000
Medicine Hat (Q1 / YOY)
- Residential sales: +69.4% to 288
- Median sale price: +9.2% to $318,450
These posted figures are surprising even to the province’s real estate agents. Realtors Association of Edmonton chair Tom Shearer called it “uncharacteristic” for this time of the year. It all comes down to the fundamentals of supply and demand.
Alberta’s Housing Shortage
Like other key areas of the Great White North, Alberta is facing a supply shortage. Overall inventory declined at an annualised rate of 13.4 per cent in March in the Greater Edmonton Area (GEA). In Calgary, citywide months of housing stocks slipped below two months, the lowest level since 2014. The months of inventory for single-detached properties in Medicine Hat numbered 2.7 at the end of the first quarter, down from 6.3 months during the same time last year.
But the rate of new housing construction is picking up compared to the same time a year ago. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts totaled 50,894 in the first three months of 2021, compared to 50,094 in the first quarter of last year. Housing completions have slowed, however, coming in below 50,000 in Q1 2021.
Until new supply comes to market or the Bank of Canada (BoC) raises interest rates, the housing boom in Alberta will continue heading into 2021.
A Never-Ending Story
The same narrative is unfolding throughout the Canadian real estate market:
- Consumer trends are evolving.
- Borrowing has never been cheaper.
- Demand is soaring.
- Supply is eroding.
It is challenging to forecast when the housing surge will hit the brakes. But financial experts say that if you are planning to buy a home, it is best to wait for an opportunity rather than fall victim to the fear of missing out. In this type of market, it can be dispiriting and frustrating for families trying to achieve the Canadian dream. But patience, due diligence, and working with a trusted REALTOR® by your side, will always be the best strategy to employ moving forward.