Calgary Market Report - December 2023
Summary
Sales Surge: 2023 witnessed a slight ease in sales compared to the previous year's peak, but with 27,416 transactions, it still surpassed long-term trends.
Shift to Affordability: Homebuying activity noticeably shifted towards more affordable apartment-style condos, reflecting changing preferences in the market.
Inventory Struggles: Throughout the year, the city grappled with persistently low inventory levels, averaging 44% below the 10-year average.
Supply-Demand Dynamics: Homes priced below $1,000,000 faced tight supply conditions, with months of supply consistently below two months, indicating high demand.
Record High Prices: Despite a slowdown in average annual benchmark price growth from 12% in 2022 to nearly 6% in 2023, the city reached a new record high in housing prices with condos leading gains, up 13% YoY.
Resilient Growth: The price growth, though slowing, remained robust, especially when compared to some other markets in the country with all housing types up year-over-year.
“Higher lending rates dampened housing demand this year, but thanks to strong migration levels, housing demand remained relatively strong, especially for affordable options in our market. At the same time, supply levels were low compared to the demand throughout the year, resulting in stronger than expected price growth.”
Ann-Marie Lurie
CREB® Chief Economist
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Calgary Condo Market
Condo Boom: A record high of 7,884 sales led the real estate charge in 2023, thanks to a solid starting inventory and increased new listings.
Seller's Market Surge: Conditions favored sellers throughout the year, tightening the market and driving significant growth in property prices.
Historic Price Milestone: Condos prices soared to a new record high of $321,400 but are still just above their previous levels from 2014 - Calgary never experienced a bubble and prices are still affordable compared to other major cities.
Rapid Price Growth: The 2023 benchmark price witnessed a stellar annual rise of over 13%, outpacing the growth levels reported last year and marking the 12th month of consecutive price increases.
Calgary Townhome (Row) Market
Supply Squeeze Hits Sales: Limited choices in lower price ranges led to a sales dip of over 11% in 2023, despite a surge in sales for homes priced above $400,000.
Upper Price Ranges Balance Out: New listings improved in the second half, but gains were mainly in higher price brackets, creating more balanced conditions in upper ranges compared to the seller's market in lower price segments.
Seller's Market Prevails: Sellers enjoyed favorable conditions throughout the year, resulting in an impressive annual benchmark price gain of over 13%.
District-Wide Price Surge: Prices soared across all districts, ranging from 11% in the city center to over 20% growth in both the North East and East districts, showcasing a citywide real estate boom.
Calgary Detached & Semi-Detached (Duplex) Market
Market Dips: The detached and semi-detached housing market faced a substantial nearly 20% decline in annual sales, with limited choices in lower price ranges leading to a shift in consumer preferences.
Upsurge in Higher Price Ranges: Homes priced above $700,000 saw improved sales, but lower-priced options struggled, prompting buyers to explore alternative housing styles.
Inventory Woes Persist: Despite recent gains in higher-priced listings, inventories remained near record lows, maintaining tight market conditions throughout 2023.
Steady Price Growth: Despite a slower pace than the previous year, persistently tight conditions fueled nearly an 8% average benchmark price increase for detached homes in 2023.
Affordability Districts Lead: The city's most affordable districts experienced the most significant gains, emphasizing the continued importance of affordability in the housing market.
Calgary Rental Market
As expected, rents have been softer and actually decreased slightly month-over-month, consistent with what we are seeing in Toronto and expected based on seasonality and the time of year. The median rent for a unit in Calgary (according to Zumper) is now:
1 Bedroom: $1,827/mo (17% increase YoY)
2 Bedroom: $2,125/mo (17% increase YoY)
3 Bedroom: $2,442/mo (7% increase YoY)
Record population growth will continue to put upward pressure on the rental inventory which is not keeping up with demand.
My Final Thoughts
Affordability continues to be the major factor affecting people’s buying decisions. Consumer demand in Calgary is shifting from detached houses to cheaper alternatives - Townhomes now make up 14% of the market vs 10% two years ago and Condos represent 17% of market share vs 9% two years ago.
Interest rates are expected to start dropping in 2024 but affordability will not be significantly impacted until rates drop 1.5-2% which I think will take 12-18 months. Therefore I expect anything priced at the lower end of the market to continue to outperform, especially condos and townhomes.
The desire for homeownership has not changed and there is significant pent-up demand in the market - MANY people are waiting on the sidelines, waiting for interest rates to come down and once they do, larger price gains could again be on the table. For now, I’ll be more than happy for 13% annual returns!
If you are interested in investing, please get in touch - I have all types of pre-construction properties that can take advantage of today’s market conditions - book a call today and let’s discuss how you can become a Condo Millionaire too!
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METRIC DEFINITIONS
Sales = the number of homes recently sold (i.e. Demand). Higher sales tend to increase prices due to high demand resulting from strong economic conditions.
New Listings = the number of homes recently listed for sale (i.e. Supply). Lower listings tend to increase prices as buyers compete for fewer properties.
Sales to New Listings Ratio: The ratio of sales to new listings entering the market place. Used to existing homes
Inventory = the total number of homes currently available for sale (i.e. Total Supply)
Months of Supply = the number of months it would take to sell all available homes at current sales levels (balance of Supply & Demand). Months of Supply < 4 = Seller’s Market | 4 to 6 = Balanced Market | 6+ = Buyer’s Market
Days on Market (DOM) = the number of days it takes to sell a property from when it was listed. Lower DOM tend to favour Sellers and can indicate competitive marketplaces with scheduled offer dates (i.e. bidding wars).
Benchmark Price = the price of a “typical” home that controls variables and allows for an “apples to apples” comparison over time.