Calgary’s housing market has taken an unexpected shift with rising prices and increased sales.
The Canadian Real Estate Association is forecasting that home sales will remain strong this year, resulting in a record number of sales across the country.
A global pandemic didn’t stop Erik Christensen and his wife Cassandra from entering Calgary’s real estate market.
“We saw mortgage rates and how the market was going, and it seemed like a good time to do a small upgrade,” Christensen said.
They recently sold their Calgary house in one day, at $20,000 below the list price of $889,900.
“We priced it right, and we were lucky to hit a hot market,” Christensen said.
In May 2020, Canada Mortgage and Housing Corporation forecast that average home prices would drop between nine and 18 per cent from pre-pandemic levels.
“We had a lot of uncertainty with the pandemic and with the economy, so especially in Calgary, we forecasted generally lower sales and lower prices,” said CMHC senior market analyst Michael Mak.
Reality turned out to be different.
The Calgary Real Estate Board said Calgary saw its best February sales since 2014 and a 3.8 per cent increase in the benchmark price from a year ago.
“A lot has to do with confidence,” said Katherine Bennett, a realtor with RE/MAX Realty Professionals.
“Confidence with the vaccine rollout and the positivity that we are seeing in the energy sector right now is making a huge impact. The number one thing is also interest rates.”
The Bank of Canada kept its key interest rate target on hold in March at 0.25 per cent but that could change by next year.
“Further on into the future, once mortgage rates, say in 2022 and 2023 are higher, that would sort of be a headwind for the housing demand,” said Mak.
Bennett said more homes are selling faster now, at close to asking price like it was before oil prices dropped.
“I think it’s definitely in the hands of the sellers but things are shifting, and we are seeing more properties come on the market right now in March,” Bennett said.
Mak said the increase in the price of oil has contributed to Calgary’s stronger-than-expected performance.
“Right now, we are seeing more of a balanced market leaning toward a seller’s market, especially with seeing some sales and listings figures that are comparable to 2015 levels,” Mak said.
The national average home price is forecast to rise by 16.5 per cent on an annual basis to just over $665,000, according to CREA.
The latest report from CREA suggests that activity will remain strong through 2021, resulting in a record number of sales, but activity is forecast to begin returning to more typical levels with fewer transactions expected in 2022 compared to 2021.