As we bid farewell to the Calgary Stampede celebrations and draw the curtain on the first half of the year, it's time to dive into the exciting story of the past three months. So, armed with the latest sales data, let's explore the fascinating world of Calgary's real estate.
June 2023 has made history as the highest-selling June on record.
We surpassed expectations once again, with an impressive total of 3,146 sales, translating to an average of 105 sales per day. What's even more remarkable is that June outperformed May in terms of sales—an unusual occurrence in previous years. Typically, May has reigned as the pinnacle of our sales calendar, but this year, it relinquished its throne to June. To put it into perspective, May of the previous year witnessed 3,063 sales, only to plummet to 2,847 in June—a 7% month-over-month drop.
These record-breaking sales figures reinforce the unwavering strength of buyer demand, propelling our market forward and building upon the momentum that has defined 2023 thus far.
You may remember this graph from a previous report…
This relentless surge in demand is fueled by a growth story that has been unfolding for years, with no signs of slowing down. Alberta's attraction as a haven of opportunity continues to captivate individuals from all corners of the country and beyond. Travis Toews, Alberta's former Minister of Finance, summed it up perfectly, "Our lower cost of living, affordable housing, abundant jobs, higher earnings, and lower taxes are attracting newcomers from all over the country and abroad."
Moreover, the influx of people moving to Alberta, as shown by the significant increase in population from other provinces and international migration in the first quarter of 2023, adds to the need for housing. Many start as renters and gradually become homeowners, solidifying the region's growth story. With this trend expected to continue, we can confidently say that buyer demand in Alberta will last for years to come.
Notably, Alberta has the youngest demographic in the nation adding further momentum to our housing demand in the long run. The sheer magnitude of this demand cannot be ignored, even by the biggest fans of the Greater Toronto Area (GTA) and Greater Vancouver Area (GVA).
Now that we've looked at the sales data and understood the sustained demand that lies ahead, let's shift gears and explore the availability of properties in the market. Many have hoped for an influx of new listings to alleviate the tight conditions and provide prospective buyers with more options to explore.
Has this hope finally materialized?
The answer, though not a simple one, can be distilled into two parts—yes and no.
"Yes," in the sense that we have been diligently listing homes at near-record numbers. In June alone, nearly 4,000 new homes entered the market—a pace of approximately 133 homes per day. This supply meets the demands of the 105 sales per day we achieved the previous month. A historical analysis of the past three years reveals that we are consistently adding record numbers of properties to the market during this time of year. Considering the current pace, we shouldn't expect a significant surge beyond what we are already witnessing. Additionally, the landscape is augmented by new home construction, which has experienced a substantial uptick in Calgary. In fact, recent data released by the Canada Mortgage and Housing Corporation (CMHC) indicates a 36% increase in new construction activity in Alberta.
Calgary, in particular, has witnessed a busy construction scene, with a 17% year-over-year rise in housing starts between May 2022 and May 2023. Taylor Pardy, senior specialist of market analysis at CMHC, summarized the situation, stating, "What it means is that Alberta is actually doing pretty well, overall."
However, the answer is also a resounding "no" for buyers hoping for more options and the luxury of time in their decision-making process. Despite the steady influx of new listings, Calgary currently has an all-time low number of homes available for purchase—merely 3,474 in total. Naturally, this situation varies across property types, with new inventory replenishing at a faster pace in areas where demand is highest. For instance, the Apartment market witnessed a remarkable 48% surge in total sales and a 12% increase in new listings compared to the same period in 2022. Conversely, the Detached segment—the most expensive market—experienced a 3% increase in sales over the previous year, yet new listings lagged by 10% in comparison.
This limited number of options, coupled with soaring demand, has resulted in a fiercely competitive and fast-paced market. The recent "Days on Market" statistics offer a compelling testament to this phenomenon. In January, listed properties spent an average of 42 days on the market before being snapped up. By June, this figure had dwindled to an astonishingly low 22 days. This trend is unlikely to shift significantly as we enter the declining phase of new listings, which will persist until December. As a result, Calgary's ultra-tight seller's market conditions will persist for the remainder of 2023, even in the face of potential Bank of Canada lending rate increases.
Despite the upward trajectory of prices, Calgary still remains affordable in comparison to other major Canadian cities.
The latest numbers reveal that mortgage payments as a percentage of income stand at 83% in Toronto, a staggering 95% in Vancouver, and a relatively modest 41% in Calgary.
This stark contrast underscores the persistent affordability gap prevalent among the nation's metropolitan areas. While the federal government grapples with finding a comprehensive solution, it is crucial to acknowledge the difficult task they face. Starting several decades ago, their policies inadvertently contributed to the challenges faced by major Canadian cities today. Although Alberta serves as an answer for many seeking a better quality of life, it cannot feasibly accommodate the aspirations of every individual.
Shifting our focus to the impact of these dynamics on housing prices in the Calgary region, it is only fair to anticipate positive growth, considering the events outlined thus far. And indeed, that is precisely what we have witnessed. Our average residential price has surged to a new record high of $564,700—an impressive 4.4% increase year-over-year, with a $7,000 surge from the previous month. Detached properties experienced a staggering 6% year-over-year price growth, reaching an average of $685,000—an astounding $60,000 increase since January. Apartments witnessed an increase of just under 12% compared to the previous year, with prices surpassing the $300,000 mark for the first time in history, soaring $30,000 since the beginning of the year. Semi-detached homes observed a 6% increase to $613,000, marking a $40,000 surge since January. Lastly, Row Homes demonstrated an 11% year-over-year price increase, averaging at $400,000—a substantial $45,000 jump since the start of the year.
These price increases have impacted every region of our city, with the most notable growth occurring in the Northeast and East quadrants—the areas of greatest affordability. As interest rate hikes nudge prospective buyers to seek opportunities that align with their budgets, these regions become increasingly attractive. Furthermore, positive price growth is not confined solely to Calgary. All seven regions outside the city, which collectively form the Calgary Real Estate Board (CREB) region, have experienced remarkable upward trends.
As we conclude this update and bid adieu to the first half of 2023, it is abundantly clear that the Greater Calgary real estate market remains entrenched in a seller's paradise. With soaring home prices, a thriving construction scene, and a steady stream of eager buyers, there seems to be no end in sight for the appeal of our region. This deeply rooted reality is poised to endure for years to come, unaffected by oil price fluctuations and political maneuvers from Ottawa. Unless a global event impacts the entire planet, those who bet against Alberta's real estate market are, in my opinion, betting against the odds.
I’m excited for Calgary’s long-term future, and I think you should be, too.
This is just an overview of what’s happening this month in the Calgary real estate market. Your own situation is unique. If you’d like to learn how Calgary’s market can help you meet your specific goals, give me a call or send me an email and I’d be happy to help.
Until next month, take care!
Mike Abou Daher
(587) 333-6400 - Work
(403) 809-9386 - Mobile