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April 2022 was a busy month for the Calgary housing market with 3,401 sales and 4,577 new listings. April 2022 was the second busiest month that the Calgary housing market has ever seen. The average home price in Calgary for April 2022 was $532,100. That's up 4.5% year-over-year but because of the substitution effect, average home prices do not show the true extent of price appreciation.
Compared with last April, people are buying more condos and townhouses while buying fewer detached and semi-detached houses. A better understanding of the market trend can be achieved via the Calgary Real Estate Board's Benchmark Price rising 17% year-over-year to $526,700.
Sales activity in the city of Calgary increased 6% year-over-year to 3,401 home sales. With 4,577 new listings sales to new listings ratio stands at 74%. Inventory stands at 4,850 homes at 1.4 months of supply. Thus, we see a tight market favouring sellers and pointing to likely continued price gains over the next month.
The Calgary region has been the most affordable housing market among the four largest Canadian cities of Toronto, Montreal, Vancouver, and Calgary over the past three years. This affordability acts as a tailwind for the Calgary real estate market as some people are moving their residence from southern Ontario or southern BC to Calgary.
Additionally, Alberta’s favourable income tax rates give an extra incentive to move. Others have made large gains in southern Ontario or Southern BC real estate market and are just moving their investments to another large but comparatively cheap housing market in Calgary.
Another tailwind for the Calgary housing market is supply chain disruptions. Supply chain disruptions materially slow down the completion of new homes and thus limit supply. However, many real estate markets across Canada are facing the same issue.
The third tailwind behind the Calgary housing market relates to Alberta having the fourth-largest oil reserves in the world behind Venezuela, Saudi Arabia, and Iran. As the most populous metropolitan area in Alberta, Calgary houses many headquarters for energy companies. At higher oil prices these companies hire more people and improve the demand in the Calgary housing market. Historically there has been a strong correlation between Calgary home prices and oil prices. Thus the current rise in oil and gas prices is another tailwind for the Calgary real estate market.
In opposition to the three mentioned tailwinds, there is a headwind arising from rising interest rates. This headwind is shared amongst all Canadian real estate markets. This headwind is just starting to show its effect on Canadian real estate markets, and it will be interesting to watch the tug of war between these factors over the next few months.
For April 2022, the benchmark price of a detached home in the city of Calgary increased 19% year-over-year to $628,900. 1,815 detached homes sold is the lowest number of detached homes sold in April for 15 years; this decline is largely due to the very limited supply of detached homes in the city of Calgary. Additionally, the rest of Calgary property types saw the following changes:
While total sales in April 2022 are 6% higher year-over-year, the presence of higher Calgary home prices has led total sales volume to increase by 11% year-over-year. Higher sales and lower inventory levels caused increased competition among Calgary home buyers, and this can be seen through higher sale prices compared to listing prices. For April 2022, the sales to list price ratio was 100.7%. Note that Calgary’s sales to list price ratio remained under 100% for all of 2020 and 2021.
The Bank of Canada started the first of potentially many rate hikes on March 2, 2022, increasing the BoC’s key interest rate from 0.25% to 0.50%. They further increased their policy rate on April 13 by 50 basis points to 1%. Another rate increase is expected on June 1st. These increases have an immediate impact on prime rates and affect variable-rate mortgages and HELOCs. The threat of impending rate hikes has long been looming over Calgary’s housing market as buyers look to lock in mortgage rates before further potential increases.
The possibility of higher Alberta mortgage rates and reduced home affordability likely have caused the past two months of record home sales in Calgary. However, the Calgary Real Estate Board expects higher mortgage rates and higher home prices to weaken the demand for housing in Calgary this year.
Real estate commissions are the fees that home sellers pay to the seller and buyer real estate agents for their services. In Calgary, the total commission rate is structured as 7% for the first $100,000 of a home’s sale price and 3% on the remaining balance. Seller agents usually get half or 50% of this total commission with buyer agents getting the other half. To calculate your real estate commission for Calgary, see our calculator below. For other cities in Alberta, please visit our Alberta real estate commission calculator page for more information.
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