Calgary housing market to remain tight despite migration slowdown

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Calgary’s tight housing market isn’t likely to see much relief in 2024, despite an expected slowdown in the rate of migration to the city, according a Calgary Real Estate Board report that predicts home price growth will accelerate to 6.56 per cent next year.

The influx of new Calgarians is identified as a pronounced “risk” in CREB’s 2024 Forecast report, which says it will contribute to the diminishing availability of re-sale homes in the region.

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“The new home sector has responded to the recent rise in migration, but ultimately the level of construction will have to be more in-line with the migration figures before we see a substantial adjustment in supply,” the report said.

For five consecutive quarters, net migration has exceeded 30,000 people per quarter, reaching a record high of 56,306 in the third quarter of 2023. Alberta is experiencing an unprecedented surge in both international and interprovincial migration, with 45,194 people arriving from other provinces between the first and third quarters of 2023.

Though interprovincial migration is expected to slow in 2024 and Calgary’s population growth will slow to 3.6 per cent in 2024 from 4.7 per cent in 2023, the gains from recent years will likely keep demand high.

“Despite the slower growth expected, population growth remains high and should continue to fuel strong housing demand throughout 2024,” the report said.

CREB’s chief economist Ann-Marie Lurie said the surge in migration has posing challenges for the real estate market, particularly in the lower-priced home segment.

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“The challenge was limited supply, especially for low-priced homes with the strongest demand. This resulted in significant price growth with the largest gains in our lowest-priced homes.”

In 2023, Calgary’s benchmark home price increased by 5.77 per cent year over year while overall sales dropped 7.6 per cent. Inventory also experienced a sharp decline of 26 per cent, resulting in just 1.3 months of supply in the market.

In the detached home segment, inventory averaged 1,474 units, nearly 48 per cent below long-term trends. Despite a sales pullback, the substantial drop in inventory kept the market firmly in the seller’s territory throughout the year.

According to the report, these consistently tight conditions led to price increases across all districts, with the most significant gains in the most affordable areas of the North East and East districts. Calgary’s annual detached benchmark price surged by almost eight per cent, setting a new record high at $675,783.

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Despite the anticipated increase in new home starts and listings this year, Lurie asserts that sellers will maintain a dominant position in the market.

“Conditions are not expected to be as tight as in 2023,” Lurie said, “but supply growth takes time, and sellers’ market conditions are expected to persist through the spring, driving further price growth in 2024.”

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