What You Need To Know About Calgary Real Estate • May 2022
Key Takeaways
In May 2022, Calgary’s housing market activity continued to be far stronger than historic levels, driven by the boom related to high oil prices, continued strength in the IT sector, and incredible affordability on a national basis.
Record prices for Detached/Semis are driving people to Townhomes & Condos:
Residential Benchmark Price ↑ 14.5% YoY to $546,000
Townhomes leading price gains ↑ 16.7% YoY
Condos gaining traction with supply decreasing ↓ 57% YoY
Market Summary (YoY)
Detached: Prices ↑17% to $648,500 | Sales ↓ 15% to 1,620 units
Semi: Prices ↑15% to $584,700 | Sales ↓ 4% to 265 units
Townhomes: Prices ↑17% to $363,300 | Sales ↑ 33% to 555 units
Condos: Prices ↑9 to $275,300 | Sales ↑66% to 631 units
New Listings = Supply
The tight market for Detached and Semis saw New Listings decrease considerably. The Sales to New Listing Ratio now sits above 73% and Months of Supply is around 1.5 which indicates a very hot market.
Listings for Townhomes & Condos were up over 17% but these units are also being absorbed very quickly by insatiable demand; Months of Supply is 1.5 for Towns and 2.25 for Condos (a balanced market is 4-6 months).
Supply for all housing types in Calgary continues to be remarkably low, 1.69 months of supply on average which keeps the Calgary market deeply in a sellers market (a balanced market is around 4-6 months).
Sales = Demand
Sales were down for Detached & semis from 2021 (a record year) but still remain well above historic averages. Towns and Condos outperformed with sales rising 33% and 66% respectively.
Detached homes make up the majority of the residential market and were up 17% YoY. Other housing also performed very well: Semis ↑ 15%, Towns ↑17% and Condos ↑9%.
What Does This Mean For the Market?
Many people tried to beat the interest rate increases and rushed to buy homes. Many still have rate holds that will be expiring soon and I expect sales activity to continue to remain elevated historically for the coming months.
Detached homes remain the most popular housing type in Calgary (everyone loves a private yard and the white picket fence dream). However, the data shows that the sharp price gains of Detached homes and very limited availability have purchased many buyers into more affordable Townhomes and Condos. I’ve seen this trend play out many times in the GTA and the price gap between low-rise and condos eventually always narrow - I don’t think Detached and Semis are coming down so this means Towns and Condo prices must go up.
There are 3 major factors that will continue to push demand for the the Calgary market:
1) Oil Over $100/Barrel
Remember when oil was -$40/barrel during the start of Covid. Gas hit $0.60/L at my local gas station but fast forward 2 years and it’s now over over $2.12/L caused by the war in Ukraine and compounded by high overall demand. Alberta has the 4th largest oil reserves behind Venezuela, Saudi Arabia, and Iran and benefiting greatly from oil currently sitting at $118/barrel - in fact Alberta was forecasting a -$18B deficit when oil prices were lower but now are expecting a $500M surplus! They already have no Provincial Sales Tax, No Land Transfer Tax, No Foreign Buyers Tax - imagine what you can do with $500M to benefit the people of Alberta?!
Calgary sees the majority of this benefit because it houses the headquarters for many energy companies who tend to hire more people when oil prices are high, so much so that there are actually shortages for skilled labour. Historically there has always been a positive correlation between Calgary home prices and oil prices which cannot be ignored.
In May, 69% of the country’s total job growth was seen in Alberta.
2) IT Technology Jobs
Even though Calgary is benefitting hugely from the Oil & Gas industry, it is no longer dependent on it. Since the last oil crash in 2014, Calgary has been diversifying into many other industry and is quickly becoming the Silicon Valley of Western Canada. Every week more companies are either moving their Headquarters to Calgary or are setting up operations there:
June 10: Alberta Investing $23M Toward University of Calgary’s Quantum Science Tech Hub ‘Quantum City’
Good employment opportunities ALWAYS attract people which creates additional housing demand.
3) Affordability
As interest rates rise, affordability is eroded for many buyers as the mortgage amount they qualify for is dependent on their income and continues to shrink as interest rates rise and wages stagnate. Unaffordable housing nationally is driving many end users into Calgary where the average person can still buy a detached house. I speak to people all the time in the GTA who are considering moving to Calgary because of the remote work possibilities now available, the amazing job opportunities available, and the amazing low cost of living of the city. This national affordability is create additional housing demand, especially in the resale market.
I have seen cases where investors in the GTA are up $200,000+ on pre-construction units they purchased only 2-3 years ago. These investors are now looking to re-invest those gains into areas that have strong appreciation potential. I’m personally investing in Calgary because I believe in the long-term appreciation potential of the city and I’m working with many investors from across Canada who also see the potential - where else you still buy property for under $500/sf including parking that will cash flow, even at today’s interest rates! The investment fundamentals of new builds are unmatched compared to any other major Canadian city which is creating huge demand for pre-construction properties.
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