April 2023 is showing signs of a cooling of the number of detached homes sold in Calgary and Okotoks. In Calgary, volumes are down 50% over the last couple years. In our last two booms in Alberta, 2007 and 2014, sales volumes where double what we are seeing for this April. The last time volumes were this low was when the market bottomed out in 2011. Okotoks is worse off. Sales volumes are less than half the previous couple years and half that of 2014 and 2007. Part of the problem is inventory; there are only 37 detached homes for sale in Okotoks and under 1,000 in Calgary right now. In our past booms, we had the same issue of low inventory. Affordability is a major issue. Most of the inventory for sale in Calgary (74%) and Okotoks (70%) is above the $650,000 price point. That means in the whole of Calgary, there are less than 300 homes for sale under $650,000 and only 11 in Okotoks. This segment of the market is very hot right now. However, sales volumes (under $650k) are down 65% from last year. It’s a wierd market and my crystal ball is a bit off kilter. We have people moving here, relocations from BC and Ont are up, unemployment is still high relative to other centers. We are in strange times indeed.
March house prices take off in the Calgary Region
Home prices in the Calgary region seem to be defying predictions based on rising interest rates and general economic indicators. Sales volumes are down considerably over the past two years, interest rates have doubled, however, low supply of resale homes combined with what builders are charging for new homes is pushing up the resale market considerably. Many builders seem to be limiting supply of available lots and pre-sale builds which is creating restricted options for buyers and thus keeping prices high. This could be due to lack of skilled labour/supply chain issues or it could be market manipulation and capitalization. It is extremely important to get skilled and experienced advice before buying in today’s market!
Housing Stats for March 2023 (detached)! Calgary: Under $600k: 483 sales with 265 for sale. Hot Hot Hot! The $600-800k home: 424 sales, 401 for sale. One months inventory = sellers market. $800,000+ is a balanced market with 3 months inventory. Still good for this time of year. Okotoks: Under 600,000: 22 sales with 5 for sale (the for sale inventory is starting to creep up as I write this). Hot Hot Hot! The $600-$800,000 market saw 17 sales with 17 for sale at the end of March = Sellers market. High end market is at it’s typical pace. Rural: Very little inventory in the under $1mil mark and very little for sale within a short drive of town. The acreage market is just starting it’s spring push. It will be an interesting ride again this year.
All in all, indicators point to a good spring market with little indication we are at peak pricing. However, be careful not to overpay. Mortgage renewal and cost of financing will likely have an impact on our market at some point this year. Long term interest rates have started to drop which will help mitigate some of the impact on any downward pressure on price later this year.
Foothills County Acreages over $1mil takes off in Feb 2023 (+ additional market info)
The first 10 days of Feb, 2023 are defying market predictions for higher end acreage sales. After a slow start in January of only 2 sales, 8 acreages over $1mil are either sold or conditionally sold so far in Feb! Hang onto your hat! The busy spring market is still a couple months away! Huge profits in the Oil and Gas sector are just being posted which means big bonuses this spring for many in the patch. Stay tuned as I will watch this market segment closely.
Just released today by the Gov’t of Alberta are migration figures. During the last 12 months, Alberta welcomed 79,992 net international migrants and saw a net inflow of 37,117 interprovincial migrants. Alberta is predicted to lead the country in GDP growth in 2023 and 2024 with the province receiving massive royalty revenues. These two factors mean certain segments of our real estate market are set for a very good couple years. Interest rates are predicted to start falling in 6-9 months (depending on who you listen to and what market indicators you consider). International events will as usual dictate our economic course.
I stand by my prediction that 2023 will be the year of the downsize for a good many people. Interest rate hikes will make mortgage renewals painful. Couple this with that fact monthly household operating costs have increased significantly (electricity rates are basically double that of a couple years ago and natural gas rates up 50%). In general, wages aren’t keeping up. There will likely be a further widening of the gap between the haves and have nots in 2023.
Jan 2023 sales holding steady for homes under $600,000
Mortgage interest rate hikes are creating hot demand for detached homes under $600,000, and affordable apartments, duplexes and townhouses in the Calgary region. Calgary January sales are as folllows: Detached homes under $600,000, Inventory of 949 with 866 sales in Jan (hot demand!). Over $600,000 saw 339 sales with 995 currently for sale (slower demand). The bell weather $1mil+ market (a market confidence indicator) remains healthy with 57 sales out of 287 for sale. Note: this is double 2018/19 levels but down from the peak of early 2022 :: Townhouses, Inventory 209 with sales of 209. :: Apartments, inventory of 600 with sales of 318.
In Okotoks, detached homes under $600,000 were desirable with 10 sales in Jan 2023 with only 8 for sale as of Feb 6th. (Sales down 150% from Jan 2022). The over $600,000 market is very slow with only 4 sales out of 21 currently for sale. This market segment is seeing downward pressure on price after big gains over the past couple years. Apartment/townhouse sales are strong with less than 1 months inventory. Prices are creeping up for apartments/townhouses and are finally reaching pricing levels from 15 years ago. This is a good market segment to consider from a value stand point and potential for price gains over the next year or two.
After massive sales and price gains over the past 2+ years, rural property sales in the Foothills region have slowed dramatically. There are 51 acreage homes for sale over $1million and there was only 2 sales in Jan 2023. There are 23 acreage lots for sale under 5 acres and only 1 sold in Jan. The hot market segment for rural is the under $850,000 home. There are only 4 for sale in the whole county and there were 4 sales in Jan 2023.
As we move towards the spring market over the next couple months, I predict the high cost of mortgage renewals will start to take their toll and we will see more inventory come on the market with affordability driving home ownership decisions. 2023 will likely be the year of the downsize after two years of people upsizing their homes during covid.
