f you've been a prospecting buyer in today's market, you know very well how Calgary's real estate market has performed over the last little while, and have probably been wondering -- what the heck is going on? 

There are several factors leading to today's problems, ultimately driven by a lack of supply for housing: 

 1. Supply Issue #1: COVID Hangover

A significant impact to home builders and housing providers nonetheless, to the rest of the world. Uncertainty led builders to sit on their hands, wondering what is happening to the market (slowing / halted market activity), with people adjusting to a new lifestyle (working-from-home), and looking to move away from dense urban centres.

2. Supply Issue #2: Exponential Increase to Interest Rates Since COVID (Homeowners Reluctant to Sell)

Canada'sovernight rate went from 0.50% in March 2020 to now 4.75% in June 2023 - that is a 9.5x increase to borrowing cost to consumers! The insanity of exponential rate increases has led to many who have locked in record-low interest rates, hold onto their homes (and mortgages), ultimately reducing supply that would otherwise be coming onto the market.

Not only would there be heavy penalties associated with breaking fixed mortgages, sellers would have to qualify in a dramatically different rate environment, with their dollars not going as far as it use to.

3. Supply Issue #3: Inter-Provincial and International Migration Favour Alberta

In Q4 2022 alone, Alberta saw >19,000 net migrants from other provinces, largely due to job growth in Alberta paired with a lower cost of living (further details below). A total population add of >58,000 migrants including internationals in only the last 3 months of 2022!

At the time of this email, there are ~1,300 single family detached homes for sale in Calgary, a ~43% decline from the same time last year. 

These key supply issues are compounded by further demand for housing in Alberta:

1. Alberta's Economy is Strong

Alberta's Energy Sector accounts for the majority of economic growth, and the rebound in oil and gas prices have allowed companies who operate here, to invest in human capital and big projects that require skilled labour.

Not only that, but Alberta has began to diversify its economy, with new ventures vested towards diversifying Alberta's economy, creating even more job growth, attracting a larger swath of diversified skilled labour.

2. Lower Cost Attraction

Despite the increased inflation pressures across the country, Alberta's cost of living remains well below other major cities in Canada (Toronto, Vancouver, etc.). This has further attracted those who can move, decide to move to Alberta, allowing their dollars to go further out here.

3. Refugees Coming to Live in Calgary

The large spike in immigration has come from refugees settling in Calgary. >20,000 displaced Ukrainians will make Alberta home, with half of them settling in Calgary. This is on top of ~6,000 Afghan refugees that fled to Calgary before, and not accounting for many others from around the world.

What does this all mean?

Well, all signs are pointing to high real estate prices going higher, and also staying there. This isn't driven by price speculation that we've seen in places such as Vancouver - this is driven by pure fundamentals (supply and demand). Until the Energy Sector takes a significant and prolonged hit and interest rates are prohibitively high, will we see prices start to stabilize and come down (maybe). Remember we still have migrants that are looking to house their families, despite the economy.

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The good news is that we're seeing inflation come down (slightly). Its a move in the right direction, with Core CPI at 3.7% year-over-year in May. We know the Bank of Canada has a target CPI of ~2%, so rate increases aren't completely off the table (further supply squeeze). On the flip side, if we see the BoC cut rates in 2024, there will be a dramatic upturn in home prices here in Alberta given the pent-up demand - so our view is that either way, prices may continue to increase and stay elevated.

What should I to do?

There's a saying in real estate: it's not about timing the market, but time IN the market. As much as I'd like to take an unbiased view, much of Alberta's fundamentals are pointing to buying real estate, and buy soon. Get a rate locked in with a lender so you have the option to buy with a favourable interest rate in case they continue to increase.

There is also nothing wrong with renting. The rental market is strong, and given the increase in home prices, this will push a lot of folks into the rental market, from being a potential buyer. Rents will continue to climb given the supply-demand imbalance, so you have to do what makes sense for you and your family (we're happy to help guide you through a buy or rent analysis). 

We're here to help!

We pride ourselves on providing the best insights, advice, and customer service with those we work with. Don't hesitate to reach out if you have any questions about how to navigate the housing market, buy / selling process - we're here to help you move forward.

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Calgary's real estate market continues to outperform the rest of the country as indicted by the Teranet National Bank House Price Index in May showing a year-over-year drop across Canada (Y/Y Calgary: +8.34%, Y/Y National Index: -7.63%)

Source: Teranet

Sales for the month also rose to a record high in Calgary as indicated by the Calgary Real Estate Board (CREB) – 3,120 transactions occured in May 2023.

What are the driving forces behind the momentum in prices?

• Record levels of migration last year from both international and inter-provincial has lead to enormous demand with limited supply
• A strong job market largely as the result of a stabilizing and improving energy sector continues to lead to high paying professional jobs

How are buyers making sense of the high interest rate environment?

• It really depends on where the buyers are coming from. Relative affordability in Calgary has offset the higher interest rates particularly for inter-provincial migrants coming from a higher cost of living area such as BC and ON.

Any possibility of momentum continuing?

• It all comes down to supply. Without seeing the supply landscape change, we'll continue seeing price, momentum to the upside. The rental market continues to benefit from a lack of supply and continued demand growth. 

Movement within Calgary happening?

• No doubt it has been a challenge to move up in Calgary. The restricted level of new listings is contributing to the supply crunch. However, the apartment and condominium sector has seen some improvement with some more supply choice recently. There continues to be at least a 50% decline in current active listings relative to last year.

How will this play out if Canada were to hit a recession?

• It really depends on the segment of the market a recession would impact. The energy sector represents the key economic driver for the province, and with sector improvement as we've seen since 2020 with continued job growth, Alberta may not be as accutely impacted by a nation-wide recession.

Source: Ann-Marie Lurie, Chief Economist, CREB

Purchasing your first home is an exciting milestone, but it can also be a daunting process. As a first-time home buyer in Calgary, there are specific tips and tricks that can help you navigate the local real estate market with confidence. In this post, we will share some valuable insights to assist you in making informed decisions and finding your dream home in Calgary.

Determine Your Budget

Before diving into the home buying process, it's crucial to establish your budget. Evaluate your financial situation, including your savings, income, and expenses. Consider getting pre-approved for a mortgage to determine the price range that suits your financial capabilities. This step will help you focus on homes within your budget and avoid any unnecessary disappointments.

Research Calgary's Neighborhoods

Calgary boasts a diverse range of neighborhoods, each with its unique character, amenities, and lifestyle. Research different areas of the city to find the one that aligns with your preferences and needs. Factors to consider include proximity to work, schools, transportation, recreational facilities, and community services. Exploring neighborhood options will help you narrow down your search and find the perfect location for your new home. Leverage your Realtor for where the best areas are based on the life you wish to live!

Work with a Knowledgeable Realtor

Partnering with a professional Realtor specializing in first-time home buyers is invaluable. A Realtor with local expertise can guide you through the entire process, provide market insights, and negotiate on your behalf. They will help you find properties that meet your criteria and navigate the complexities of real estate transactions, ensuring a smooth and successful experience.

Understand Additional Costs

Beyond the purchase price, it's essential to factor in additional costs associated with homeownership. These include property taxes, utility bills, home insurance, maintenance, and potential condo fees. Be sure to consider these expenses when determining your budget to avoid any financial surprises after purchasing your home. Don't forget closing costs!

Home Inspection is Crucial

Never underestimate the importance of a home inspection. Hire a reputable home inspector to thoroughly assess the property's condition and identify any potential issues or repairs. This step will provide you with peace of mind and may save you from costly surprises down the line. If any concerns arise during the inspection, work with your Realtor to negotiate repairs or price adjustments with the seller.

Attend Open Houses and Ask Questions

Attending open houses is a fantastic opportunity to explore different properties and get a feel for the market. Take the time to visit open houses in neighborhoods of interest. Ask questions to the listing agent or the seller, and don't hesitate to request additional information about the property. This firsthand experience will enhance your understanding of the market and help you make more informed decisions.

Conclusion

As a first-time home buyer in Calgary, being well-prepared and informed is key to a successful home buying journey. By establishing your budget, researching neighborhoods, working with a knowledgeable Realtor, understanding additional costs, conducting a thorough home inspection, and attending open houses, you'll be well-equipped to make confident decisions and find the perfect home in Calgary. Remember, buying your first home should be an exciting and rewarding experience, and with the right approach, you'll be on your way to homeownership in no time.

As a real estate agent in Calgary, I've seen firsthand how challenging it can be for buyers in a seller's market. With limited inventory and high demand, it's easy to feel overwhelmed and frustrated. But fear not, there are ways to navigate this market and come out on top. Here are some tips for buyers in a seller's market in Calgary:

1. Get pre-approved for a mortgage: In a seller's market, homes can sell quickly, sometimes within hours of being listed. By getting pre-approved for a mortgage, you'll know exactly how much you can afford and be ready to make an offer when the right home comes along.

2. Be prepared to act quickly: When you find a home that meets your needs, don't hesitate to make an offer. In a seller's market, time is of the essence, and delaying could result in losing out on your dream home.

3. Work with an experienced agent: A knowledgeable real estate agent can help you navigate the market, identify homes that meet your criteria, and negotiate on your behalf. They may also have access to off-market properties that you wouldn't otherwise know about. Ask us how we can help!

4. Be flexible with your search criteria: In a seller's market, you may need to be more flexible with your search criteria. Consider expanding your search area or looking at homes that need some work but have the potential to become your dream home.

5. Don't get caught up in bidding wars: While it's tempting to get caught up in a bidding war, it's important to remember your budget and not overextend yourself financially. Your agent can help you navigate the negotiation process and make a strong offer without breaking the bank.

6. Be patient: In a seller's market, it's not uncommon for it to take several offers before you find the right home. Don't get discouraged, and keep working with your agent to find the perfect property.

Buying a home in a seller's market can be challenging, but with the right approach, you can find your dream home with our help. Get pre-approved, be flexible with your criteria, have a bit of patience, and give us a call!