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Calgary remains top place to search for a home despite supply and interest rate issues

Calgary has retained a top spot for home buyer searches for a second year in a row, according to data from real estate firm Royal LePage.

Between January 1 and June 30, searches for Calgary homes represented 1.9 per cent of all unique searches through the firm’s website.

That number is up from pre-pandemic levels in 2019, when searches represented just 0.8 per cent for Calgary.

Corinne Lyall, broker and owner of LePage Benchmark and past director for the Alberta Real Estate Association, said that this has to do with Alberta becoming the place to be for home buyers after the provincial recession in the mid 2010s, and during the pandemic.

“By the time the 2019, came around, just before the pandemic hit, we were recovering from the recession. It was it was going the right direction, but what the pandemic did was launched us out of the recession.”

“Just like any everybody else across the country, we started to experience people moving and finding places that they felt safe, where they could actually work remotely, and make those decisions differently about their lifestyle.

“Alberta became the place to come because of the level of affordability, and [Calgary] prices were much lower than a lot of places across the country for major city.”

Traditionally, said Royal LePage, the top searched for spots for homes in Canada prior to the pandemic were amongst cities in southern Ontario.

Lyall said that post-recession prices in Alberta were lower than those elsewhere, including Ontario, and that was part of the reason why the searches flipped.

She said that more recently the city has been experiencing between 10 and 12 per cent increases in housing prices, when the normal range is between two and five per cent.

The aggregate home price across Canada, according to Royal LePage’s quarter two Canadian Home Price Update, was $809,200. In Calgary, that price was $643,200, and in Edmonton, $434,400.

Lyall said that signs are now pointing to a slow down in prices, but that isn’t likely to occur this year.

“It’s going to really come down to our inventory levels, and until people are willing to move [from their homes] that’s going to be difficult.”

June 2023 year-over-year sales for MLS listed homes were up by 6.3 per cent, from $3.8 billion in 2022 to $4.1 billion in 2023, according to the Government of Alberta’s economic indicator dashboard.

Year-to-date, sales have been down 26.1 per cent, from $24 billion from January to June 2022 to $17.8 billion from that same period in 2023.

Difficulty in finding homes a 'perfect storm' of factors

Despite that interest in purchasing, home buyers have been having difficulty finding homes in the city, said Lyall.

"A big part of the reason why we're experiencing low inventory, though, is because of interest rates."

She said that that many Calgarians renewed their mortgages in 2021 when the interest rates were far lower, at around two per cent versus the current five, and that has incentived people to stay in their homes instead of selling.

The second aspect has been, said Lyall, the increasing number of people coming to Calgary inter-provincial migration and international immigration.

"We have an influx of people moving here, which is fabulous. I've heard quotes as high as 60 people a day moving to Alberta. But the challenge with that is that we just don't have we don't have the rental properties.

"The rental vacancy rates are the lowest that they've ever been, which is pushing up rental prices."

And the third, said Lyall, is the issues with completing housing starts which is limiting the number of new homes entering the marketplace.

"During the pandemic, the builders couldn't build what they typically would, because of the supply issues, and construction prices being what they were.

"So all of a sudden houses that could have been built in seven months, were being built 12,13, 14 months. And now they're just recovering now to be able to catch up with demand."

Inventory for homes under construction, for all categories including single detached houses and condos, rose from 10,866 in June of 2019, to 20,086 in the Calgary Metropolitan Area, according to data from Statistics Canada.

Those factors, along with the strong economic recovery, have produced what Lyall called the perfect storm for buyers.

"It's definitely a conundrum. And we've heard as much as 2 million Canadians don't have homes—there's no place for them to live, and, of course, that's a whole other crisis—but as far as affordability goes, and and everything else, the pandemic didn't help any of those things."