The housing market in Calgary is expected to continue flourishing in 2024, leading to further price growth. According to the annual forecast from the Calgary Real Estate Board (CREB), it will be a seller's market.
A Bright Future for Calgary's Housing Market
The CREB report indicates that while the housing market won't be as tight as it was in 2023, it will still favor sellers. Factors such as inter-provincial migration, listings, and the labor market are expected to support sales activity.
"We expect potential buyers who were on the sidelines due to limited supply choices to re-enter the market as lending rates ease and listings improve," says Ann-Marie Lurie, chief economist at CREB. The report predicts that supply growth will take time, and seller's market conditions will persist through the spring, driving further price growth in 2024.
Key Forecasts for the Year Ahead
Here are some of the report's key forecasts for the year ahead:
- Calgary residential sales are expected to reach almost 28,000, slightly up from last year's figure of 27,416.
- Rental demand will remain high, as population growth continues to impact Calgary's housing market.
- High price ranges will drive supply growth, although the pace of price growth for properties will slow down in the coming year.
- Lower-priced properties will remain in tight conditions, contributing to continued price gains.
- Inter-provincial migration is identified as this year's top risk, and if growth doesn't slow down, it could take longer for housing supply and high price concerns to improve.
Recap of 2023
In 2023, the Calgary housing market saw record-high levels that moderated over the past few years. Sales remained significantly higher than long-term market trends. However, new listings decreased, resulting in more intense price growth and receding home sales.
The upper end of the housing market was the only segment that experienced improved new listings, leading to increased sales for houses priced at $700,000 and above. Calgary's benchmark price was nearly $557,000, a 5.8% increase compared to the previous year.
National Trends and Investment
According to Statistics Canada's national housing market figures for December 2023, Calgary experienced the most significant increase in new home prices among "relatively more affordable markets." In contrast, most of Canada's markets saw a decrease in new home prices year-over-year.
This easing of the national market has prompted construction companies to invest heavily in residential development, as highlighted in the Business Council of Alberta's winter 2024 economic update report. However, residential investment remains 17% lower than 2021 levels. Additionally, labor shortages in the residential sector, coupled with high interest rates, may pose challenges for future investment.
Interest Rates and Bank of Canada's Decision
The Bank of Canada's overnight target interest rate currently stands at 5%, and higher lending rates have successfully reduced inflation to 3% by the end of the year, slightly longer than anticipated. Although the benchmark rate is expected to decrease to 4% by the end of the year, interest rates will still remain considerably higher than pre-pandemic levels.
The Bank of Canada is scheduled to announce its next rate decision shortly.
Calgary's housing market is poised for another remarkable year. With a thriving seller's market and various factors supporting sales activity, it's an exciting time for both buyers and sellers. Keep an eye on this burgeoning market as it continues its upward trajectory in 2024.