Spent the day yesterday at CREB's Annual Forecast Conference. Some great takeaways to share, but overall – I am impressed with the resilience of the Calgary real estate market and all the fundamentals pointing towards a very strong market for 2024. 

Spoiler alert – we're expected to see a +6.5% price increase in housing in 2024, based on CREB's estimates. 

News Release

As I've mentioned before, the fundamentals will ultimately dictate price; it's not about timing the market for real estate, but time spent in the market. 

News coming out of StatsCanada this week – Canada's inflation rate slowed to 2.9% (vs. 3.3% as expected) in January, largely driven by a decrease in gasoline prices (-4% YoY). Despite the good news, mortgage interest costs continue to take the #1 place as the key driver for inflation (+27.4% YoY); rent growth taking a #2 spot (+7.9% YoY).

Bank of Canada Governor, Tiff Macklem has addressed the high cost of housing in recent meetings, and now recognizes that simply moving interest rates will not fix the housing affordability issue... it's a complicated problem:

1) Raise interest rates, leading to further inflation and renewal issues

2) Cut interest rates, leading to prospective buyers to dive in with higher ability to purchase driving prices up further.

As a reminder, the BoC has raised rates 10 TIMES since March 2022, but has since held rates flat since July 2023. Economist expect the BoC to start cutting rates this summer. This recent inflation report provides some clarity to the market and the BoC on next steps, on trimming rates back.

HOWEVER... Alberta's inflation rate rose to 3.4% in January, largely due to a rise in power prices (removal of Government cap on power prices), and more acutely in Calgary (+4.1% YoY), with the impact of record high rental prices.

With over 180,000 individuals moving to Alberta over the last 12 months, this is putting a lot of pressure on housing costs. That said, there has been a supply response with construction of new housing to help moderate in the medium to long-term.

As the BoC considers figures on a national basis, there may be little reprieve on continued demand on housing in Calgary, particularly when rates get trimmed back, adding more buyers into the mix. If you're thinking of buying, I'd highly recommend coming well-prepared (down payment saved, pre-approved) and understand the state of the market to help set expectations. Happy to have a discussion to see how we can help!

We took part in an interesting market update from Edge Realty Analytics this week and found some interesting insights, worth seeing below. 

Of course digesting trends / facts / figures from a single source is not always wise, and could present some bias. I always like it when there are others (multiple sources) providing their views on the current housing market situation. 

While I won't provide all the nitty-gritty details here, it's worth reiterating the key summary takeaways from the presentation:

• Markets are expecting BoC rates to drop by 75 bps (0.75%) in 2024, or even more and potentially 125 bps (1.25%)

• Mortgage rates will not go much lower, until the BoC cuts rates

• Mountain of renewals coming up in 2024-2027 (bulk in 2026) presenting significant opportunities (many households may potentially be put in a tough spot come renewals, although the banks are willing to help, there will still be some soft spots)

• Calgary and Edmonton properties are undervalued relative to the rest of Canada (particularly Calgary) – fundamentals look great; resale is limited

• Population growth in Alberta has been exceptional (2022-2023), but expect slower growth later this year, with the rental market normalizing with the already increased rental price increases (this doesn't mean lower rental rates, just means slower rental rate growth of 2-3% per year)

• We don't have enough single family detached homes. period. (comparing new building permits vs. population growth, this represents 1 new building permit for 16 new individuals added to Alberta...)

As of writing this email at near midnight on Valentines Day, the past 7 days have seen the following across all residential property types:

1. New Listings: 820

2. Back on Market: 110

3. Price Decrease: 317

4. Price Increase: 33

5. Pending: 853

6. Sold: 927

7. Expired / Withdrawn / Terminated: 206

Solds are representing 113% of new listings, and new pending (under contract) deals represent 104% of new listings...

If you're looking to sell - now's the best time. Low inventory, and it feels like we're in the midst of an early spring market. Come spring, there will be more listings (more competition for sales).

If you're a buyer, there will be more selection, BUT this will be in lock-step with increased number of buyers as well (again, more competition).

How prepared are you for buying?

Do you have a team that can act fast and provide expert advice?

How can you make your home stand out in a sea of competing listings when the time comes?

Give us a call, we're happy to chat and figure out how we can help. 

Exciting times in the real estate world in Calgary:

1. Blanket rezoning to support an evolving city

2. Extremely low inventory (seasonal but also fundamental)

3. Lots of investment into the city (new arena, new districts; evolving city skyline)

Data are in from January's market performance:

1. Increased Listing Activity: BUT little change to total inventory; months of supply: 1.3 months

2. Benchmark Price Continues to Creep Up: $572,300 (+10% YoY)

3. Detached Prices Reach $702,200 (+13% YoY and 1% MoM)

As expected the bulk of the appreciation has been acutely focused on the lower priced product, specific to east Calgary and townhome and apartment property types.

Summary Below: