A new year, new challenges, new real estate opportunities in the Foothills Region of Alberta.

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.

Sept 2023 sales of detached homes reaches peak. Apartment sales continue upward growth.

It doesn’t come as any surprise for this time of year that detached homes sales start to wain. It appears Calgary and area reached its peak for price and sales volumes for detached homes this past month. However, 20+% of homes are still selling for list price or higher and inventory of new and used homes for sale remains low. I don’t see any relief on that front with thousands of people coming to our province every month. Apartment sales and row housing continue to be attractive investments and should remain so for the foreseeable future. Inventory levels in all categories remains tight. As long as new construction costs remaining high, we will not see any price relief for buyers anytime soon in both the new and used home markets. The markets are becoming more manageable with less need for buyers to panic.

Two months till Christmas! Crazy where this year has gone.

August 2023 Home and Apartment sales continue upward trends as supply remains an issue

August is usually a month when things slow down in the local real estate market as people get out and enjoy our best month of the year. However, this August defied that trend. The graphs attached are reminiscent of 2006 when the market just never slowed down and pushed through the normal bell curve of annual real estate sales trends. The key fall market indicator in the attached graphs is the supply side of what happened in August. A number of factors are driving our local market conditions: the key ones being: 1) Many current homeowners are staying put as they can’t afford to sell and move given mortgage rate increases and the cost of financing thus restricting the supply of resale homes. 2) New construction costs are extremely volatile and many builders are being very cautious about commiting to new builds and are often having to hold decisions to secure quotes and nail down costs. Thus we have a shortage of new homes, townhomes, and apartments. 3) Labour shortages are driving up new construction costs and timelines for project completions as well as how many projects can be taken on. 4) We are still seeing a good deal of net migration to the province as it remains relatively affordable vs many other areas of Canada.

Without a dramatic increase in new construction and some creative ways for current home-owners to purchase them, we will continue to have a shortage of preowned properties in our region. I had thought we might be peaking after July, but August trends tell a different story. The fall market is usually much stronger than the summer market. Stay tuned.

July 2023 Sales starting to come down to earth, Inventory levels starting to creep up

Our local real estate market is starting to show early signs of price growth decline and a move to more inventory and choices for buyers. This is typical for this time of year. In 2022 we peaked in June. Inventory levels remain low and new builds are still behind demand. Affordability remains an issue with apartment sales and row housing being a popular choice for many. I predict we will see a more balanced market over the next couple months with perhaps a fall run as global and domestic investment dollars focus on our region. We continue to experience good net migration which will protect us from any major market correction due to rising interest rates and cost of living. As far as the longer term future goes and looking at it from a big picture stand point it is worth noting that by 2050 the global population is forecast to grow by 1.5bn to 9.7bn and its middle class to double to 6bn people.