Welcome to my 2023 year end market update. This update is longer and contains more information than my usual market updates. There is a lot of information to digest and I will try and keep this succinct and condensed, highlighting the overall health and future prospects for the Real Estate market in Calgary and the Foothills region of Alberta for 2024.
2023 finished off strong for the Calgary and area resale real estate market. Supply of new and resale product continues to be an issue with very low inventory levels for buyers to choose from. Having said that, we have approx. 50% more inventory for sale now in the resale market than we had back last spring. We continue to grow as a province with people moving here from elsewhere in Canada, especially from Ontario and BC. (123,412 people moved to Alberta in the past 12 months) Some of this net migration is due to cheaper housing, and some is due to the political environment which is attracting like minded individuals to Alberta.
Despite the recent upward momentum in the past few months in new construction starts, construction spending failed to make up for the slow start to the year and was overall down 9.3% YTD. The weakness in 2023 was concentrated in single dwelling investment, which remained below elevated levels from 2022 (-19% YTD). ** (©2023 Government of Alberta | Published: January 5, 2024 | Treasury Board and Finance)
As long as new construction lags, the resale market will remain strong due to simple supply/demand economic fundamentals. There is a serious lack of competition in new home construction as we have few major land developers opening up new lands and only a hand full of large entity home builders that received the rights by the big land developers to build in a given new subdivision. Big builders and land developers have learned lessons from the past booms and busts in Alberta’s economy. Prices will remain high and profits will be maximized by land developers and big box builders as long as cities, towns and counties continue restricting (which includes making it very painful and time consuming to get development permits) how much land gets opened up for new construction and by restricting the number of new home starts. Until the current situation changes and we see a positive increase in new subdivision approvals and starts and we also see a increase in the number of players involved, we will continue to have an overall housing inventory shortage. (Yes, this is a shot across the bow to the bureaucrats involved!).
Crystal ball gazing at it’s best: Expect a 5-10+% growth in Real Estate prices by the end of 2024. I believe we will see an increase in more people needing to downsize this year due to mortgage renewal costs, and home utility bill increases as those come up for renewal in 2024 (Electricity rates and gas rates are double what they were 2.5 years ago). This will effect all home categories. However, without an increase in the number of downsize opportunities, people may look to extend their mortgages instead and stay put. Inventory will remain tight. Acreages will continue to be popular however, not sure how much more price gain we will see in 2024. It really depends on the overall economy and people’s confidence in the markets. Stay tuned!
If you would like to have a chat about the market, if you are thinking of buying or selling or if you are wondering about whether to do that renovation or not, feel free to reach out and call or email me. Check out my contact link on this web site.
