The Bank of Canada announced its updates on interests rates yesterday, and if you haven't head – rates remains flat at 5%. 

This represents the sixth consecutive announcement by Governor Macklem, who mentioned that now he is seeing necessary conditions for a cut, BUT wants to see sustained progress in inflation before lowering rates. 

Falling in-line with economist expectations, some economists continue to believe rate cuts are inevitable, some as soon as June 2024, and some even believe there may be 2 to 3 cuts THIS YEAR. 

The only offset to this is that US reported inflation yesterday HIGHER than expected, which could influence the Bank of Canada's decisions as they consider various factors such as foreign exchange, trade impact among other things.

The next Bank of Canada meeting will be June 5 where we'll find out what happens, but again all hinges on that ultimate inflation figure. 

More Here

In other news, particularly around Calgary's rezoning proposal: there has been an uproar against Calgary's increased density plans, with many residents fighting tooth and nail... the key date for a week-long counsel meeting beginning April 22, 2024.

The new zoning codes: 

• R-CG in established communities – which is primarily for rowhouses, but also allows for single detached, side-by-side and duplex homes that may include a secondary suite

• R-G in newer communities – which allows for a mix of low-density housing, including single-detached, side-by-side, duplex, cottage housing clusters and rowhouse development, all of which can include a secondary suite

• H-GO in newer communities – which allows for “higher intensity redevelopment than that of R-CG, but still maintains direct ground-level access for all homes (i.e. no apartment forms)

That's a wrap for Q1 2024 – what an incredible quarter for real estate here in Calgary! We've seen record activity, specifically 2,664 properties SOLD in the month of March (+10% MoM) and significantly higher than long term trends. 

We did see new listings come alive (~3,170 units), but materially lower that what we'd see seasonally in March – no change to the supply story. Sales to new-listings in March rose to 84%; total month of supply fell BELOW one month.

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All Residential

• Benchmark Price: $597,600 (+11% YoY)

• Total Sales: 2,664 (+10%  YoY)

• Total New Listings: 3,172 (-4% YoY)

• Sales-to-New Listings: 84%

• Months of Supply: 0.95 Months (-29% YoY)

• Comment: Incredible restriction of supply with less than 1 month of total supply driven by influx of migration across provinces and internationally (see last week's dive into that discussion); 2% month-over-month gain in pricing as a result with the lower priced market seeing the most appreciation given demand. We're also now seeing properties over $1,000,000 move quicker than usual as well (anecdotally). 

Detached

• Benchmark Price: $739,700 (+14% YoY)

• Total Sales:1,151 (+1% YoY)

• Total New Listings: 1,386 (-14% YoY)

• Sales-to-New Listings: 83%

• Months of Supply: 0.97 Months (-29% YoY)

• Days On Market: 20 (-24% YoY)

• Comment: Sales were strong, gaining 1% since last year, but could be stronger if there were detached homes to buy/sell. If you're thinking about selling, now couldn't be a more perfect time. We would expect May/June to roll over in inventory, but given this demand - it could very well last a while... You've seen a 14% price increase on detached homes (very strong), even more on an equity-basis.

Semi-Detached

• Benchmark Price: $658,000 (+14% YoY)

• Total Sales: 250 (+15% YoY)

• Total New Listings: 260 (-7% YoY)

• Sales-to-New Listings: 96%

• Months of Supply: 0.82 Months (-38% YoY)

• Days On Market: 21 (-27% YoY)

• Comment: As we work 'downstream' into more affordable product, we're seeing an increase in sales activity. Note, semi-detached properties in Calgary represent properties from two different eras. We have those older 1970's half duplex homes and also brand new infill product (which are priced near the $1,000,000 mark - some even more depending on location). Basically close to 100% absorption in this bucket.

Townhomes

• Benchmark Price: $448,700 (+20% YoY)

• Total Sales: 449 (+16% YoY)

• Total New Listings: 536 (+6% YoY)

• Sales-to-New Listings: 84%

• Months of Supply: 0.79 Months (-24% YoY)

• Days On Market: 17 (-18% YoY)

• Comment: An incredible pace of appreciation in townhomes... with an eye-popping 20% since last year, this is THE YEAR OF TOWNHOMES. We saw some increase in inventory last month (likely due to the season), but at just 0.79 months of supply - this property type represents more size at a reasonable budget upgrading from condo-type lifestyle.

Apartments

• Benchmark Price: $337,700 (+17% YoY)

• Total Sales: 814 (+20% YoY)

• Total New Listings: 990 (+8% YoY)

• Sales-to-New Listings: 82%

• Months of Supply: 1.06 Months (-29% YoY)

• Days On Market: 23 (-28% YoY)

• Comment: Another eye-popping return figure of 17% since last year. As expected in this group, more supply relative to the other property types but at only 1 month of product available, this is a very tight sellers market (more balanced market is ~2.5 months of supply). 

Hopefully everyone made it out just fine after our annual spring snowpocalypse; just feeling the thaw now.

Biggest headline this week: Calgary needs more housing!

The Canadian Mortgage and Housing Corporation (CMHC) says more housing is needed across the whole country, especially in Calgary (no surprise there). 

New home starts remained stable near all-time high levels (compared to last year), but Canadian cities are still experiencing a severe shortage. Demand for housing has grown significantly from an influx of immigration (and significant inter-provincial migration). 

In 2023, Calgary's housing starts increased by 13% – 19,579 units. However, notably detached homes experienced only a 2% growth, while townhomes and apartments experienced a 34% and 17% growth, respectively. 

However, just because housing starts remain at all-time highs, this doesn't mean completions are also there. The building industry has been plagued by rising costs, labour and material shortages have led to longer lead-times. This, ultimately leading various levels of government in Canada to announce housing initiatives (i.e., Calgary rezoning initiative).

To give a sense of the incredible population growth Alberta experienced in 2023, see below:

Source: Statistics Canada

Between January 1, 2023 and January 1, 2024 – Alberta added 202,324 residents (roughly the population of TWO RED DEERS, in 365 days). The only other record pace of annual population growth was seen in 1981!

Where are all these people coming from you may ask: 27% inter provincial migration, 73% international migrants.

Source: ATB Financial

The good news? Well, Alberta continues to lead the pack in attracting people who want to live and work here. There is a forecasted slowdown in population growth (so we can take a breather), but will still remain strong compared to the rest of Canada and other developed economies, driving further economic expansion and development in our province. 

However, growing pains ARE pains, and getting to a balanced real estate market will take TIME – maybe a long time. All comes down to supply and demand. 

It isn't Calgary if we don't get the obligatory snow dump here right before spring, about 8 inches as of writing...

Speaking of DUMPS, the Calgary new listings stats have also taken a deep dive this week (Spring Market 'heating up', rather, it seems as though it has already arrived).

Sold homes represent a staggering 113% of new listings in the last 7 days... with about 108% new pending deals to-boot. At this rate, many realtors really wonder, will there be anything to sell come April / May?

Notably, a few anecdotal observations on my own listings as well... 

1) Single family detached home (Highwood) – new infill, under contract within 24 hours of listing

2) Original 1945 bungalow (Tuxedo Park) –  prime land for infill building, under contract within 4 days of listing (24 showings, 6 offers); 108% of list price

3) Fourplex townhome (Parkdale) – gorgeous, well-maintained, under contract within 36 hours (20 showings, 3 offers); 105% of list price

... the list goes on...

Absent knowing the future, now is the best time to capitalize on gains made on your property if you're thinking about selling since there isn't much out there. Similar to listing your home in the dead of winter where listings are low, you're in the best negotiating position when there isn't much supply. 

On the buy side, it pays to be patient, but also to execute a purchase with precision. Although there are 'deals' to be had, you may be looking for a while if you're trying to fulfill the ideal buyer triangle (Features, Location, Price). My best advice: put your best foot forward when submitting an offer – no penny pinching, because you'll end up getting pinched in this market. 

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.