Calgary housing market expected to stabilize in 2023
Below is a summary of the 2023 outlook report, created by the CREB’s chief economist Ann-Marie Lurie. It was released in January 2023. The full report gives a clear and easy to read analysis of the economic and housing market trends in Calgary and surrounding areas.
According to the report, elevated lending rates are expected to weigh on sales in 2023, bringing levels down from the record high in 2022. However, with forecasted sales of 25,921 in 2023, levels are still expected to be higher than the activity reported before the pandemic.
“Higher commodity prices, recent job growth, record high migration and relative affordability are expected to help offset some of the impacts higher lending rates are having on housing demand. At the same time, we are entering the year with low supply levels which are expected to prevent significant price declines in our market,” said Lurie.
Supply levels declined to the lowest levels seen in over a decade as gains in higher price properties did not offset the supply declines occurring in lower-priced homes. This has left our market in a situation where lower-priced properties still face sellers’ market conditions while higher-priced homes are seeing more balanced to buyers’ market conditions.
While economic growth is expected to slow, forecasters are not calling for a recession in the province of Alberta
The shift between supply and sales by price ranges is expected to create divergent trends in prices depending on property type and price range. Overall, price declines in the upper end of the market are expected to offset gains reported in the lower ranges, causing an annual decline of less than one per cent.
“With much of the pandemic behind us, 2023 reflects more of an adjustment into more typical conditions and a pause on price gains following 12 per cent growth in 2022. While other markets in the country are forecasted to see more significant price and sale declines in 2023, Calgary did not face the same gains as those markets, as prices only recovered from the 2014 highs in 2021,” added Lurie.
Top considerations for 2023
- LENDING RATES
With rates not expected to ease until 2024, higher lending rates throughout 2023 are expected to weigh on housing market demand.
Recent gains in migration are expected to offset the impact of higher lending rates, keeping sales activity stronger than pre-pandemic levels.
Recent job growth in industries beyond what was impacted through the pandemic is expected to prevent a more significant adjustment in sales activity.
Low inventory levels especially for lower priced product is expected to prevent widespread price declines in our city.
Over the first three quarters of 2022, Alberta saw a surge in both international and interprovincial migration contributing to tighter rental markets and ownership demand. Continued economic growth
and relative affordability is expected to support elevated migration levels well into 2023. Much of the interprovincial migration has been driven by people moving from Ontario and BC to Alberta. The recent
shift in migration is expected to help offset the impact of higher lending rates and support a housing market that is stronger than per-COVID levels.
Calgary has seen the largest gain in employment in the province as it benefited not only from job growth related to the removal of COVID restrictions but also reported strong gains in professional, scientific, and technical jobs. Job growth is expected to slow in 2023 to one per cent. However, previous gains in professional jobs and further gains in the sectors such as healthcare should continue to support a relatively stronger housing market.
Job growth in Calgary is expected to slow in 2023 to one per cent
Detached homes outlook 2023
As we move into 2023. we anticipate that supply levels will remain relatively low for affordable product as higher lending rates will prevent more move-up opportunities for some buyers and prevent sales growth in this category. At the same time, much of the new construction tends to be targeted at the higher price ranges limiting the options for consumers in the lower price ranges. However, supply levels are expected to rise in the higher price ranges relative to demand which will cause some downward pressure on home prices outweighing any gains that may still be occurring in the lower price ranges. Overall, detached home prices are expected to ease by less than two per cent.
Semi-detached homes outlook 2023
As we move into 2023, sales activity is expected to ease relative to the high levels achieved over the past two years but remain stronger than activity reported before the pandemic as purchasers continue to seek out more affordable options in the market. At the same time, additional supply options coming from the new home market will add choice to the market. Supply gains are expected to help support more balanced conditions and take some of the pressure off prices, which are expected to stabilize in 2023.
Row houses outlook 2023
Higher lending rates will continue to draw purchasers to this segment of the market, but supply levels will likely remain relatively low in 2023 compared to sales, preventing any significant adjustment in prices. While we do not anticipate prices to ease in this sector, the pace of growth is expected to slow to under one per cent.
Apartment outlook 2023
Rising prices, combined with higher lending rates, are expected to cool sales activity in 2023. However, the relative affordability of apartment condominiums and rising rental rates are expected to keep ownership sales for apartment condominiums above long-term trends. While some supply relief is likely to come through the new home market, it still will take several months before the market shifts into more balanced territory. While there could still be some price adjustments, overall benchmark prices are expected to start to stabilize this year, supporting a modest annual growth of one per cent.
Airdrie, Okotoks, Chestermere, Cochrane, High River, Strathmore and Canmore.