Despite a marked slowdown from the hectic first half of the year, Calgary has no shortage of activity in its residential market. The new monthly report from the Calgary Real Estate Board (CREB) revealed that the city saw its strongest third quarter since 2014.
CREB says that despite the economic strain caused by the pandemic, the Calgary real estate market remains “resilient.” A majority of resale activity in the third quarter was driven by the almost 4000 detached homes sales or 60% of activity for the period. The benchmark for detached homes was up 1% since last quarter, while months of available supply rose more than 30% to 2.11 months. Prices on all other residential segments were up comparably. Despite this, CREB still warns of an “exceptionally tight market that continues to favour the seller.”
Jesse Davies, a Calgary realtor who runs his own team at Century 21 Elevate Real Estate agrees with that sentiment.
“From my own experience, I wrote seven offers this last week with all different clients, and we didn’t come away with one purchase. On average, there were about five offers that we were competing with on each deal, and those seven deals were across all price levels. Everything from a $250,000 condo up to an $800,000 house,” Jesse told CREW. “We’ve been hearing the rumblings from Vancouver and Toronto about how the market has been behaving, and Calgary is just not used to that type of market. It’s definitely still a strong seller’s market due to the lack of inventory.”
Just as in many cities across the country, the amount of available supply simply can’t reach the level of demand for homes in the market. Low supply and a narrow ratio between sales and listings have kept competition steep for all housing types across the city.
“Looking at the stats: in the last seven days, the number of new listings that came onto the market was less than the actual sales in some cases. I don’t think we’ve ever experienced that in the history of the Calgary market. That’s definitely an imbalance of supply.”
But Davies has hope for increased supply in the coming months, as more sellers take advantage of high home prices. The benchmark price for homes in Calgary actually peaked most recently in 2014, at around $460,000, before trending downwards for many years. Now as prices have once again come above their previous high, sellers who held out to break even on their properties may begin entering the market.
“Now, we’re starting to see that the average price is outpacing the numbers that we had in 2014.
May of 2014 is kind of where the single-family peaked, and then you saw it drastically drop. A lot of times, when I would go on listing presentations, if the owner bought in 2013, 2014, or 2015, they were underwater significantly. So a lot of times they just said that they would wait. Now that prices are coming up again, people may revisit the idea of selling.”
The benchmark price of a detached home in Calgary in Q3 2021 was $538,700, an increase of over 10% year over year. With such massive gains in the detached segment and similar gains of 9.5% and 8.5% in the semi-detached and row housing segments respectively, many investors looking to get in on the Calgary market are turning to the comparatively affordable condo market. Condos in Calgary have seen a 2.47% year-over-year increase in benchmark price. Not a bad amount of growth, but appealing in comparison to other segments in the city, and the markets of other cities. According to Davies, the market is drawing attention from across the country.
“I get a lot of calls from people from Toronto and Vancouver and they ask me about a good place to invest their money. I just had a Toronto investor buy pretty much a new build, around 5 years old. That owner who first purchased that new build would have paid over 500 and the investor got it for around 350. It’s a stunning unit and in really great condition. So, I think there’s a really good chance for appreciation as well as cash flow for this type of investment. If you’re looking at a two to five-year horizon, and this pandemic goes away or becomes a less significant issue, I think there’s a really good opportunity to make some make money on appreciation, as well the cash flow perspective, because renters will be more inclined to rent a condo as interest rates increase.”
Another benefit that draws investors from other cities to homes in Calgary is affordability, says Davies. Calgary is one of the most affordable cities in North America, and one of the cleanest and safest.
“I’ve had quite a few clients that have relocated here from Vancouver and Toronto. The bang for your buck that you get when either purchasing a home or a condo in Calgary is significant. And I think a lot of people are working from home and are seeing this as an opportunity to get into a market that’s been suppressed for the last five years, while the rest of Canada’s been significantly up. In addition, Calgary is a beautiful, clean city. Its proximity to Canmore and the mountains is appealing for a lot of families. These would be the main reasons that people would be attracted.”
The outlook for Calgary looks good as we move into the new year. Davies predicts modest gains and an increase in supply driving an active spring market, as well as a return to a more standard sales process as the pandemic wanes.
“Historically, inventory levels are always pretty low during the winter months, just because people don’t like to move when there’s a foot of snow outside,” said Davies. “So I think what we’re going to see is a ramp-up in the spring, where we’re going to see a lot of properties come on the market, especially if prices continue to uptick. Obviously, that’s going to be dependent on whatever ends up happening with COVID. I think that is another reason that supplies are being suppressed because not everybody is comfortable with a bunch of people coming through their house during a pandemic. So I think there’s gonna be modest gains, both in the detached sector and across all other sectors.”