The update is in for how the February real estate market performed here in Calgary; here's the snapshot (CREB):

In February, there was a notable uptick in new listings, BUT these were zapped up VERY quickly from existing and continued demand for housing across the city. As you have probably noticed in my last few updates - new listings equalled sales, with about 50% more of those in pending status; and even as of right now - there is no change...

Last 7 Days (All Residential) in Calgary:

• New Listings: 999

• Solds: 1,102

• Pending: 1,036

As noted by CREB's Chief Economist, "purchasers are acting quickly when new supply comes onto the market, preventing inventory growth in the market". The biggest challenge continues to be properties under $500,000, seeing a 31% shortage of inventory when compared to the same time last year. 

February Statistics:

Detached Homes

• New Listings: 1,195 (75% of these were listed for over $600K; +20% YoY)

• Sales: 954 (+20% YoY)

• Benchmark Price: $721,300 (+13% YoY)

Semi-Detached Homes

• New Listings: 223 (+16% YoY)

• Sales: 191 (+36% YoY)

• Benchmark Price: $639,100 (+13% YoY)

Townhomes

• New Listings: 457 (+27% YoY)

• Sales: 352 (+12% YoY)

• Benchmark Price: $436,500 (+13% YoY)

Apartments

• New Listings: 836 (+20% YoY)

• Sales: 638 (+30% YoY)

• Benchmark Price: $329,600 (+17% YoY)

If you're thinking about selling - it could not be a better time to take some money off the table. There won't be enough supply to feed the existing demand for quite some time.. Current days on market across all properties: 24 days (down 27% from last year, 33 days).

Some additional headlines from this week:

• Average asking rental prices reached $2,193 last month

• Calgary housing market more competitive due to increased migration, low inventory

• Downtown Calgary is on the rebound: CBRE Canada Market Outlook 2024

Happy Friday! Some key headlines this week – email a bit delayed since I was out of town, but key updates below.

1) The Canadian housing agency (CMHC) decided to SCRAP the First-Time Home Buyer Incentive, which was introduced in 2019 to help first-time homebuyers with lower mortgage payments. 

Deadline to apply: March 21, 2024 (more information)

Benefits: Allows up to 10% of purchase price help from the Government of Canada, who steps in with the down payment (equity), which upon sale (or after 25 years) will be subject to a fixed return paid back to the government.

However, this program was subject to eligibility requirements (household income and size of mortgage), which unfortunately only addresses to a very small population of Canadian residences – the juice wasn't worth the squeeze for the program. 

By now, the Canadian government is slowly starting to realize the issue is supply (and demand); and no Band-Aid fix can help when it comes to fundamental issues. 

2) In Calgary, housing starts are hitting a record level, despite the city's construction shortage – but demand continues to outpace supply.

• 61% increase in single family home starts compared to same period last year

• 48% increase in semi / rows / condos compared to same period last year

These results however, are trying to catch up with the last two years of record immigration to the city. On top of that, the supply takes 9-12 months for detached homes to be built, and quite a lot longer for larger multi-unit complexes. 

3) Bank of Canada holds key rates at 5% as expected by economists

• There remains key risks to higher inflation, such as attacks on Red Sea shipping routes – the worry here is against the clock, and inflation entrenchment if it remains stagnant for too long

• Central bank expects inflation to remain close to ~3% during 1H24 (recall impact of rate adjustments are felt 18–24 months). However, based on the commentary from Macklem, the BoC remains more hawkish than expected...

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:

There's been a lot of buzz in the real estate industry of Calgary city council's proposal to blanket rezone the majority of the city.

What does rezoning mean? It means that the land-use 'rule' for a particular parcel of land will be changed. This will dramatically change the landscape of how the city evolves overtime. 

For instance, a property with R-C1 zoning means that traditionally, only one dwelling unit is allowed on the parcel of land. Rezoning this to a different code, will allow a different use on the same piece of land. Due to the influx of migration and resulting housing crunch, the goal of rezoning is to densify certain communities.

This is only a proposal for now, until council votes on this April 22, 2024 – public input will be reviewed on March 7, 2024 (implementation likely June 2024). 

Proposed Rezoning

• R-CG in Established Communities: primarily for the development of townhomes, but also allows for single detached, semi-detached that may include a secondary suite

• R-G in Newer Communities: allows for a mix of low-density housing (including detached, semi-detached, duplex, cottage housing clusters and townhomes, all which can include a secondary suite)

• H-GO in Newer Communities: which allows for higher intensity redevelopment than that of R-CG, but still maintaining direct ground-level access to all homes (no apartments)

These changes make it easier to build various types of housing in the communities and to reduce permit costs timelines. The changes do not prevent certain development, but rather increase the types of housing available to be built.

How does this affect housing in Calgary?

• Short-Term: In the short run, it's likely that prices will run up given the numerous options available for redevelopment. Think of it this way: previously a developer could only build one single detached home in an area with a certain profit margin. After rezoning, they can now consider an array of options to increase that profit margin by building higher density homes. Increasing competition for those specific desirable lots. 

• Long-Term: In the long run, prices should levelize with an abundant array of housing options for consumers; that is, if it can satisfy the demand. Remember, building homes take time (on average 9–12 months for a detached home), even longer for larger complexes (townhouse complex, apartments, etc.).

Timeline

• January 2024: Information sharing with citizens and interest groups

• February 2024: In person and online information sessions

• March 2024: Notification to impacted landowners

• March 7, 2024: Proposed rezoning presented to Calgary Planning Commission and Recommendation to Council

• April 22, 2024: Public Hearing meeting of Council

Resources

City of Calgary Rezoning Proposal HERE

Proposed Rezoning Map HERE

News Coverage HERE

Well, that wraps it up for 2023! Wishing you a wonderful and blessed New Year, filled with health, happiness, and prosperity in 2024!

Thank you to all my clients this past year, I wouldn't be here without your support and trust.

Lets take a look at the performance of the Calgary real estate market over the last year (helpful to look at annual performance for an idea of the longer term trend).

Key fact: The average price for a home in Calgary has appreciated by at >8% since last year (which considers properties across all ages and conditions) and we're a squeeze into lower priced product such as condos and townhomes due to affordability.

More details in CREB's official released figures this week:

Looking ahead, we wonder what could be in store for 2024? There's no crystal ball, but here are the fundamental facts:

• Steepest Canadian Immigration Growth of NPR: Canadian immigration of non-permanent residences surpassed half a million in 2023, part of the steepest single-year rise in at least 50 years – Statistics Canada

• Record Inter-Provincial Migration to Alberta: Alberta saw inter-provincial migration of 45,194 individuals between Q1-Q3 2023 (+103% change from 2022) – Province of Alberta

• Continued Labour Shortage to Build Homes: By 2032, an estimated hiring requirement will exceed 299,000 of construction / trade labour, with nearly 245,000 of planned retirements – BuildForce Canada

• Potential Rate Cut in 2024: Economists are expecting BoC rate cuts in 2024 as a result of a slowing Canadian economy, to help stimulate growth again –  TD Financial

• High Absorption in Calgary: It's clear that the Calgary market continues to demonstrate HIGH demand - the absorption rate (Sales-to-New-Listings Ratio above), remains at or close to 100% across all property types which means for every new listing, there is a sale, with no build up of inventory – CREB

Those are the facts, and these components are likely to drive an insane spring market, depending on what the inventory looks like. These factors are likely to also drive home prices up further, if indeed the BoC eventually cuts interest rates – this will supercharge the Calgary market. 

My advice: if you're thinking about getting into the market, best to ACT NOW. Get the team you need to advise you appropriately (realtor, mortgage broker, lawyer, etc.) to ensure you have a smooth process and the best advice ahead of the craziness.

Have a wonderful start to the year, and lets help you achieve you home ownership goals this year!

As widely expected, the Bank of Canada held it's policy rate FLAT at 5% last week, marking the third time the BoC held rates flat since July of this year. CPI fell to 3.1% in October with a pending economic slowdown, economist struggle to see how the BoC would raise rates again, if we continue to see this downward trend. Recall, the BoC looks at Canada as a whole, not on a provincial or municipal level at that, for making key policy decisions.

The next policy announcement will be on January 24, 2024, where we'll get our next update.. but for now, no news is good news, providing some stability for both buyers and sellers of real estate. Based on historical performance, every time we see rates drop / decline / held flat, we expect an upturn in property prices a few months after. Will this time be different? Unlikely (rates down, asset prices up). But, as the bank would say – it all depends on inflation (CPI).

Given this, the Calgary Real Estate industry largely expects a even more robust demand come the spring time, on top of the already heated market (high immigration, high interprovincial migration, high business investment, etc.). Advice for Calgary real estate today: buy now, refinance later.

Source: Bank of Canada, Pillar9 MLS Data

Looking at the inventory trend across all property types in Calgary, we continue to be in a very undersupplied market (<2.5 months of inventory) – see below. From March this year to September, we've saw ~1 month of inventory across all property types, leading to a strong sellers' market.

Recently, we've seen a nice uptick in listings leading to ~2 months of supply (seasonal impact).

What will happen if rates drop, more buyers step in, and demand increases further? Mayhem.

Again, this is based on the numbers, facts and data. If you're thinking about waiting for prices to come down, you have to look at the fundamentals and the trend history – ask questions!

Source: Pillar9 MLS Data

Let me know how I can help – just a call / email / text away. Enjoy the holiday season!

Last Tuesday (November 21, 2023), Deputy Prime Minister and Federal Minister of Finance, Chrystia Freeland presented the 2023 Fall Economic Update and introduced the new Canadian Mortgage Charter – providing guidance for Canadian homeowners who may be struggling with their mortgage payments or upcoming renewals.

Let's take a look at these 'new' initiatives in the Charter below, 6 key items:

1. Allowing temporary extensions of amortization periods for mortgage holders at risk

• It's in a lender's best interest to help their clients maintain their payment schedules and just 'sound business'
• Lenders have a myriad of tools to help a struggling client, and is situation dependant – extending amortization periods are an option, and represents just one of the tools available to support a constructive relationship

2. Waiving fees and costs that would have otherwise been charged for relief measures

• Already exists as part of OSFI guidance a few weeks ago, and have been adopted by most (if not all) lenders

3. Not requiring insured mortgage holders to requalify under the insured minimum qualifying rate when switching lenders at renewal

• Already exists as part of OSFI guidance a few weeks ago, and have been adopted by most (if not all) lenders
• Note, insured mortgages represent a small cohort of the Canadian majority, who have uninsured mortgages

4. Contacting homeowners 4-6 months in advance of their mortgage renewal to inform them of their renewal options

• Already exists
• You automatically enter the 'renewal period' 4 months before mortgage expiry - regardless of whether a lender contacts you
• Lenders and mortgage brokers may extend their contact window to 6 months to advise on the upcoming renewal

5. Giving homeowners 'at risk' the ability to make lump sum payments to avoid negative amortization, or sell the principal resident without any prepayment penalties

• Already exists, related to #2 above

6. Not charging interest on interest, in the event that mortgage relief measures result in a temporary period of negative amortization

• If mortgage payments are missed (principal and interest), the unpaid interest gathers more interest
• A discussion with the bank will help resolve these issues through a mutual agreement, but again lender dependant
• Options have always been open to discuss with a lender

Sadly, the creation of the Charter does not bring any new relief for at-risk Canadians, BUT it does bring awareness of the challenges and possible solutions / discussions to pursue. 

Aside from political posturing, the key takeaway is to work with knowledgeable professionals and to not take everything in the news at face value!