Ann Marie CREB Economist came to provide us an update on the status of the Calgary market this Monday, a few key takeaways to share (apologies for the lengthy email but a lot of gold nuggets in here):
1. Interest rates ease as Canadian economy slows
• Current inflation rate of 2.5% (target of 2% per BoC)
• Canadian GDP growth of 0.5% in Q2 2024
• Interest rates expected to reach 4.0% by the end of this year (from 4.25% today)
2. Calgary’s rental market remains very strong
• Rental construction in Calgary has been robust, completing nearly 7,000 apartment units YTD (2024), HOWEVER, approximately 73% of that represents exclusively for rentals and only 1,894 units are for ownership (of which ~38% is estimated to be rented out)
• Currently there are 14,856 apartment units under construction, of which 55% represents exclusively for rentals
• Rents in Calgary have increased by 4% since last July
3. Population growth remains KEY to housing activity
• We’ve seen approximately 377,725 individuals move to Alberta on a NET basis since 2021, with the majority of folks moving in 2023
• We’ve seen a slowdown in migration this year largely due to policy changes on foreigners, BUT the people that have moved here represents significant demand on our housing supply, and we’re catching up
• Still, Alberta has seen a net migration figure of ~45,000 just from January – March this year, with more than 50% of those moving right into our city
4. Prices are expected to remain strong – fundamental metrics do not point to boom / bust cycle
• The key for prices to drop is if supply dramatically increases, and people leaving Calgary
• We aren’t expecting negative migration anytime soon, and prices for homes have remained very strong (likely a new floor)
• Looking at the graph below, we can see the relationship between migration and the average detached home prices in Calgary
5. Seeing a shift in market, but inventory remains tight – current trend represents seasonal slowdown
• We’re seeing shifts in the market with more listings coming to market (this is healthy)
• An increase of ~37% of total inventory compared to August last year, but is still 25% BELOW the 10 year average
• At 2.1 months of supply (balanced market is around the 3-4 months of supply)
6. Where are these listings coming from?
• Listings growth is coming from HIGHER priced homes
• No apartments in Calgary under $200K
• No detached homes in Calgary under $400K
• Below is a split of where the listings are coming from, with 78% of detached homes listed above $600K
7. Prices are showing signs of stability
• This is a healthy sign for a sustainable market and likely sets a new floor for prices in Calgary
• We’re seeing months of supply come back up (to 2 months), away from an extreme seller’s market (<2 months)
• Sales are limited by lack of lower priced supply
8. People continue to move here due to 2 main reasons
• Relative affordability
o Calgary CMA has the highest household income relative to Edmonton, Vancouver and Toronto
• Economic growth
o 2024F GDP for Alberta expected to reach 1.7% (as compared to national growth of 0.5%)
9. 2024 Migration Forecast
If you have any questions or want to see the entire presentation – please reach out!