Introduction:
The Calgary real estate market has recently experienced significant changes, shaped by various factors including supply dynamics, pricing trends, and broader economic conditions. This blog explores these developments, offering insights into the market's current state and future prospects.
Market Dynamics:
Calgary's housing market is currently characterized by a limited supply, driving benchmark home prices higher. However, this unaffordability is pushing consumers towards lower-priced options, causing average home prices to decrease. The number of home sales in Calgary saw an 8.4% yearly rise, with 1,787 homes sold. Detached homes experienced a notable price increase of 16% year-over-year to $723k, while semi-detached homes, townhouses, and condo apartments also saw significant price hikes.
Year-over-Year Analysis:
The city witnessed an increase in sales numbers and new listings in November 2023. A total of 2,227 new listings marked a 67% year-over-year increase, although there was a 17% month-over-month decrease. The sales-to-new listings ratio stood at 80%, indicating a strong seller's market. Year to date, there were 26,058 sales and 32,751 new listings, down 8.4% and 13.5% compared to the same period in 2022.
Population and Housing Starts:
Calgary's population, currently around 1,640,000, is growing at a 5-year average annual rate of over 2.3%. This population growth, coupled with a steady number of housing starts, plays a significant role in shaping the real estate market.
Impact of Monetary Policy:
The monetary policy, particularly the interest rate changes by the Bank of Canada, has been a major driver of the housing market. Higher interest rates have led to reduced home affordability and a decrease in average home prices. Despite these challenges, the market showed resilience with a 19% rise in average house prices from its January low by May 2023.
Market Comparison:
Alberta's real estate market, including Calgary, avoided a pandemic bubble, maintaining affordability compared to other Canadian markets like Toronto and Vancouver. This affordability, combined with a strong job market and high incomes, has driven interprovincial migration towards Alberta, further bolstering the Calgary housing market.
Future Trends:
Looking ahead, the Calgary real estate market is expected to continue its growth, supported by limited supply, low unemployment rates, high rents, low vacancy rates, and steady population growth. However, it remains sensitive to fluctuations in interest rates and the performance of the energy sector.
Conclusion:
Calgary's real estate market presents a unique mix of challenges and opportunities. While grappling with supply constraints and affordability issues, the market is buoyed by strong fundamentals and a robust economic environment. As we look towards the future, these factors will continue to shape the trajectory of Calgary's housing landscape.
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