It has been a rough ride for the Calgary real estate market this year. As nearly every major housing market in Canada blossomed in the aftermath of the coronavirus pandemic, Calgary headed in the other direction. While buyers and sellers sat on the sidelines at the height of the public health crisis, many of them did not participate in the pent-up demand trend that was prevalent across the country.
But is this prairie city finally turning a corner?
For the last few months, the Calgary real estate market has been showing signs of life again. From historically low lending rates to a municipal economic recovery, the chief indicators suggest that Calgary is heading in the right direction. The primary obstacle will be how Alberta handles the rising number of COVID-19 infections, with the province reporting as many as 4,000 new cases in one day.
Could near-zero interest rates and temporarily lower prices overcome the coronavirus? Based on current figures, Calgary’s housing market is holding strong against any more pandemic-realted dips.
Steady Growth in Calgary’s Real Estate Market
According to the Calgary Real Estate Board (CREB), detached home sales rose at an annualised rate of 23 per cent in October, reaching 1,764 units. Calgary witnessed overall sales growth, outpacing new listings, which is facilitating tighter market conditions and rising prices.
The Calgary real estate market’s average home prices were up in October from the same time a year ago. Although they have trended upward since the summer, they are still ten per cent below previous highs. Here are the current benchmark prices:
- Detached: $600,000
- Rowhouse: $274,400
- Apartment Condominium: $248,600
The data show that the housing recovery varies depending on the property type.
“Over the past several years, higher lending rates and the stress test pushed many out of the detached housing market. However, recent declines in rates, combined with prices that are lower than several years ago, have brought back some of that demand,” said CREB® chief economist Ann-Marie Lurie in a news release.
“This is helping support more balanced conditions and price improvements in the market. However, price improvements are not occurring across all product type and price ranges and downside risk still hangs over future conditions.”
That said, Lurie did note in an interview with CBC News that citizens need to remain cautious concerning high rates of unemployment, the possibility of another round of lockdowns and restrictions, and the inevitable reduction in federal and provincial income support and benefit programs.
From Hot to Cold … Back to Hot?
Years ago, when crude oil prices were going through the roof, Calgary possessed one of the hottest economies and real estate markets in the country. The energy sector was booming and this industrial prosperity trinkled down into other sectors and regions in the province. When the price of oil crashed to below zero at the height of the coronavirus-induced market meltdown, everything turned upside down. It was worse than anything else the city and the industry had seen before, considering that tens of thousands of workers have experienced the peaks and valleys of the oil and gas business.
When you factor in business restrictions and a broader economic downturn, Calgary’s decline was severe. Now that oil prices are rebounding to around $40 per barrel and the national economy is beginning to reopen and recover, this has ignited a domino effect for the municipality. Thus, from semi-detached to townhomes, the housing sector is experiencing renewed activity and a surge in prices.
Will Calgary eventually become, once again, one of the nation’s hottest real estate markets? All the factors suggest that this is more than likely since Calgary has always been considered one of the most attractive destinations in Canada. Plus, Calgary is part of the 75 per cent of regions that are undervalued, meaning it is more affordable for families desperate to own property within an urban centre.
The Bank of Canada (BoC) is keeping interest rates at 0.25 per cent for at least a couple of more years. The central bank also brought the benchmark five-year mortgage rate to below five per cent. It has signaled that it is ready to employ additional monetary support to cushion the economic blows and help the recovery.
Pent-up demand is still a notable mark in the real estate sector. Buyers and sellers who sat on the sidelines at the height of the pandemic, are continuing to return to the market. The difference this time, however, is that Canadians have far more options at their disposal because of ultra-low borrowing costs and a change in how they work. No longer are they confined to a particular location or proximity to their employer.
Is 2021 the Year for Calgary Real Estate?
If you still want to get in on the ground floor of Calgary’s return to prosperity, now would be an opportune time to pull the trigger. Indeed, there is still plenty of room for growth – in both housing and the broader marketplace. While the rest of the province continues to struggle through containing COVID-19, diligent and adaptable real estate agents have proven that the housing industry can survive and thrive in any bull or bear market.