Calgary Real Estate Market Update - August 2023

In our August Monthly Update, I breakdown what’s happening locally, why it’s happening, and where I believe the market is going, and the hidden market force driving prices.

The Calgary real estate market has been anything but predictable this year. In February, experts predicted a significant drop in home prices across the board, but six months later, the market is defying expectations with record-breaking highs. In this Calgary real estate market update for August, we'll delve into the unexpected trends that have unfolded halfway through 2023, offer insights into what actions you should consider, and explore the reasons why so many predictions missed the mark.

Back in February 2023, the Calgary Real Estate Board projected a nearly 6% decrease in the benchmark price of homes, with single-family homes expected to experience the most substantial decline. Fast forward to August, and the reality is a complete turnaround. Despite economic challenges and repeated interest rate hikes by the Bank of Canada, the Calgary real estate market has hit an all-time high, leaving many surprised.

July saw a historic surge in sales activity, with 2,647 sales recorded, reflecting an impressive 18% year-over-year gain. The affordable apartment condo segment played a pivotal role in driving this growth, highlighting a noteworthy trend that's often overshadowed by other market dynamics.

One of the key factors contributing to the market's resilience is the remarkably low inventory of homes for sale. Compared to last year, the available housing stock has significantly dwindled. The months of supply statistic, a crucial indicator, currently stands at 1.32 months. This means that at the current sales pace, it would take just over five weeks to exhaust the entire inventory. This scarcity has led to intensified competition among buyers, propelling prices upward.

The various housing segments in Calgary are experiencing distinct trends. Single-family homes, both detached and semi-detached, have seen prices rising. The benchmark price for single-family homes reached $690,500 in July, a monthly gain of nearly 1% and a remarkable 7% increase from the previous year. The rise in demand for affordable properties has driven growth in specific districts.

Even more fascinating is the remarkable resurgence of the apartment condominium market. Historically considered one of the weakest segments, this market has experienced a drastic transformation, with increased demand from investors and renters alike. Average prices in this sector are affordable at around $305,900, making it an attractive option for many.

One of the most significant drivers behind Calgary's unexpected real estate market performance is immigration. Alberta is experiencing a population boom, with an influx of approximately 62 people daily. Calgary's population is projected to grow by 110,000 over the next four years. This demographic shift creates a demand that has a more substantial impact on home values than the cooling effect of high-interest rates.

While predicting the future with certainty is challenging, certain trends offer valuable insights. Interest rates are expected to remain relatively stable, potentially creating a more favorable borrowing environment. On the other hand, Canada's ambitious immigration targets, along with housing supply shortfalls, suggest continued upward pressure on prices.

For prospective buyers and sellers, these market dynamics require careful consideration. Sellers should capitalize on the current high valuations but consider their future plans before making a move. Buyers, while tempted by the market's momentum, should prioritize affordability and avoid overextending themselves.

Calgary's real estate market stands out in comparison to larger cities like Vancouver and Toronto, offering affordability that attracts those seeking a lower cost of living. As the population continues to surge, the city's unique appeal could contribute to further price increases.

The Calgary real estate market's unexpected resilience has left many experts scratching their heads. While external factors like interest rates play a role, the profound demand driven by immigration remains the defining force. With prices reaching new heights, navigating this market requires careful analysis, strategic planning, and a deep understanding of both local and global dynamics. As Calgary's population continues to grow, it's likely that the city's real estate landscape will remain full of opportunities.

Thinking of buying or selling? Give us a call for a zero pressure, informed experience. :)

Brad McCallum // REAL Broker // McCallum Group

587.441.4045 // [email protected]

We'd love to help.  Just hit 'reply' for a zero-pressure conversation. :)

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