Calgary’s average home price in February 2023 was $506,685. This is a 7.5% fall from February of the previous year and a 1% decrease from the previous month. The average price of a detached house was $679,479, representing a 0.25 percent yearly increase and a 1.3% monthly increase. Semidetached home price rises were 4.1% on an annual basis and 0.4% on a monthly basis. A typical townhouse now costs $388,463, up 5.9% from February 2022 and 4.2% from January 2023. The average unit price was $280,697, up 2.4% from February 2022 but down 1.0% from January 2023.
Due to the replacement effect, the average home price doesn’t really show how prices have changed. Since increasing home prices and mortgage rates reduce customers’ spending power, they look for more cost-effective options. The kinds of residences in which buyers are interested are changing. In Calgary, condos and townhouses are displacing detached and semi-detached residences. In the two years prior, the Calgary benchmark home price increased by 19%, or 1.5% per year, to $530,900.
There were 1,740 home sales in February 2023. This implies a dramatic decrease in activity when compared to the spring of 2022, although present levels are commensurate with historical norms. The Bank of Canada’s tight monetary policy has impacted the Canadian housing market by raising interest rates. In February 2023, the number of new job ads in Calgary fell 49% year on year while increasing 28% monthly. In January 2023, the sales-to-new-listings ratio climbed from 65% to 73%. Current inventory is equivalent to 1.6 months of sales, up from 1.3 months in January 2023. Benchmark prices have varied over the previous year between $500,000 and the all-time high of $532,000, which was reached in May 2022, but inventory levels remain low. We are seeing a decrease in sales and a huge decrease in listings.
We could use the fact that the median house price in Calgary has dropped by 12% each year to $465,00 as a second price point. The average property price in Calgary has fallen by 1.1% since January 2022. In February of this year, the median price of detached houses fell by 3.6% to $602,750. A semi-detached home’s price increased by 4.6% year on year, hitting $533,940. The annual median price increases for row houses and apartments were 4.9% and 4%, respectively, reaching $372,900 and $262,500.
Monetary policy has been the key driver of the Canadian real estate market in recent months. The Bank of Canada has raised interest rates over the past year to fight CPI inflation. The annual price rise for services is 4.1% for the second half of 2022, while the annual price drop for products is 3.5%.
In the second half of 2022, the consumer price index climbed by 0.3% year on year. The majority of potential home sellers who are bullish on the housing market refer to the little increase in overall prices as proof that the Bank of Canada will soon begin to lower interest rates. Some pessimists regarding the housing market, on the other hand, point out that volatile commodity prices, especially oil prices, have a considerable influence on the cost of consumer goods. They think the Bank of Canada should (and will) prioritize the CPI’s services component. They predict that interest rates will stay steady until 2024, causing the value of real estate to decrease.
While monetary policy affects the whole Canadian nation, it is important to remember that real estate markets are local occurrences. Alberta and Calgary have more economic autonomy (and probably more natural resources) than the other provinces and territories in Canada. Alberta has some of the highest wages and salaries in Canada, while Calgary has some of the highest earnings and salaries in Canada.
In recent years, neither the Alberta nor Calgary housing markets have seen a bubble. As a result, the Alberta real estate market is far less costly than that of Ontario and British Columbia. Calgary’s housing market is far less expensive than those of other major Canadian real estate cities, such as Toronto and Vancouver.