Are Cracks Starting to Show? The November 2023 Monthly Market Update:

We are now on the cusp of the cold winter months here in Calgary when both the weather
and the real estate market typically start to cool off. Calgary has been running Hot! Hot! Hot! for
basically the whole year, so the question is whether we’ll see things slow down at all this month.
Are we getting any more inventory than we’ve seen before? Well, I’ll take you through all of it and
also, give you a bit of a heads-up about what you can expect the winter months to look like.

 

But first, I’d like to take you back in time two years to October 2021, when Redline Real Estate
Group, an independent Calgary real estate brokerage at the time, decided to merge
with a revolutionary new company to enter the Canadian brokerage space, a tech company called Real Broker.

 

Real Broker’s technology provides an incredible brokerage back end – they do the behind-the scenes stuff that home buyers and sellers count on but never really ever see – in addition to offering real estate agents several ways to build their businesses beyond just buying and selling houses. Anyway, Redline agents took a risk and leaped to join up despite having had a killer year, and I’m happy to announce that we didn’t skip a beat because last week, Redline agents were awarded top honours as Real Broker’s #1 large team in the country! 

 

And it’s all thanks to you guys, our incredibly loyal clients. You folks are the best and, on behalf of all our agents,
THANK YOU very much for your continued support in good markets and bad, as we really wouldn’t be anything
without you. 

 

 

Okay, so let’s get back to talking about the Calgary real estate market because we’re starting to
see some new trends developing. Now, if you were to run with the Calgary Real Estate Board’s
press release, you’d figure it’s the same story again! The year-over-year numbers have
followed almost the exact same trend as September, with continued low inventory, rising prices and
increased sales relative to October of last year. The price for an ‘average’ piece of real estate in
Calgary is now $571,600, up 9% from 2022. 

 

 

 

 

 

 

 

 

 

 

 

Sales are up compared to last year by 17%, and our months of supply still has a ‘one’ in front at 1.47, which
means we are still very definitely in a strong seller’s market.

 

But some will say it feels like the market is slowing slightly in Calgary. There are anecdotal whispers of properties taking longer to sell, showings dropping off and even – gasp!– price reductions occurring in some segments. Now, we are still in a really great market here, but there are some signs of stabilization happening, and to see the trends, you need to look not at comparisons to one year ago but to look at the differences we’ve seen month-over-month in 2023.

 

The Detached segment is a perfect illustration – check out how flat the benchmark price has been over the last three months. It hasn’t moved much after a steady climb for much of the year.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Semi-Detached segment does show growth relative to last year, and prices here have been climbing all year,

with the current price sitting at $629,000 for October, up a bit from September. Still, a closer look does show that we are seeing a spread open up between sales and listings in this segment, which should temper price growth. That will be something to watch over the winter months.

 

 

 

 

 

 

 

 

Checking in on the Row townhouse segment, this portion of the market has been super consistent all year. Look at that trend. It’s what everyone wants to see in a real estate statistic – modest, consistent growth. This is because Row townhouses give such great value. Way cheaper condo fees than apartment condos and often similar living dynamics like bedrooms and bathroom counts to small starter homes. 

 

An average Row townhouse will set you back $425,000 right now. There is great value there, and it is a good bet for anyone priced out of the Detached market or moving to Calgary with a family and wanting something affordable.

 

Apartment condos, however, are not blinking. In my books, this segment and its emergence are the story of 2023, with
the condo market doubling its share of overall sales compared to 2021 and price growth very similar to the Row townhouse segment at 16% year-over-year. As each month passes, Cowtown is becoming increasingly a condo town.

 

 

 

 

 

 

 

 

 

So, what are the big takeaways from the sales stats? Well, we are seeing the more expensive Detached segment level out a bit, and the next most expensive segment, Semi-detached, also has modest growth. But the more affordable asset classes, Apartment and Row townhouse, are still going strong, indicating that there is no doubting the robust fundamental demand in Calgary, but affordability matters to the consumer.

 

So, what’s the reason for this? We read a lot about immigration, interest rates, lack of supply, etc...

 

Has anything changed there?

 

 

The Canadian Immigration minister announced this week that there will be no changes to the planned immigration numbers for 2024 and 2025, with 500,000 new immigrants slated to arrive in each of the next two years before
‘levelling off’ in 2026, where it is forecasted to stay at half a million people per year. That’s a lot of new people, and with interest rates as high as they are, I am sure that Canada will struggle to build enough houses over the next two years to meet this additional demand. 

 

 

Particularly when developers are delaying construction in Toronto due to struggling sales amid unprecedented levels of unaffordability, buyers are walking away from deals, leaving deposits in the hundreds of thousands on the table because they can’t qualify for financing with such high interest rates. 

 

 

No one is winning in the GTA, with high immigration and high interest rates putting so much pressure on their market to the point where supply is coming off the table. Not a good look for them.

 

 

 

But that’s Toronto, and Calgary is in a much, much better place. We are the most affordable primary market
in the country, I expect many of these newcomers to bypass the GTA and continue to work west to Alberta, where real estate is still relatively cheap compared to Toronto prices.

 

So, yes, the weather is cooling, and the market is showing a few subtle signs of doing the same, but the story is the same – the Calgary real estate market is very healthy, with excellent prospects for the future. Things might start to loosen up slightly, but buyers and sellers can trade confidently. So, if you are in the market to trade a piece of real estate this year, maybe consider hiring an agent from an award-winning firm like Redline Real Estate to help you on your next deal.