On August 16, 2023, CREB® released its Q2 2023 Housing Market Report for Calgary and the region. The main message: prices rose faster than expected because supply never caught up.
Key findings
- Sales slowed from last year’s record pace but stayed above long-term trends.
- Demand for higher-priced homes was unexpectedly strong despite higher lending rates.
- Inventory stayed low across the resale, new home and rental markets. New home starts were relatively strong but not enough given migration.
- Higher rates and limited choice kept some existing owners from listing.
- Price gains this year fully offset the declines of the second half of 2022, leading to new record highs.
What CREB said
Chief Economist Ann-Marie Lurie said migrants from Ontario and British Columbia are likely behind some of the strength in higher-priced homes, since Calgary’s relative affordability makes them less sensitive to rates. She added that monthly gains should slow in the second half of the year, but limited supply should keep prices elevated.
What it means: do not expect a price correction this fall. Expect a calmer pace rather than lower prices.
The quarter in numbers
The report itself is a review and outlook, so it helps to look at the monthly CREB figures behind it. The total benchmark price rose from $541,800 in March to $550,800 in April, a new monthly record at the time, then to $557,000 in May and $564,700 in June. The previous peak was $546,000 in May 2022. In other words, the second quarter took prices from below the old high to well above it.
Calgary total benchmark price, spring and summer 2023
Sales also set records. May had 3,120 sales and June 3,146, each the highest ever for its month. Inventory went the other way: the 3,458 homes for sale in June were the lowest June level in nearly two decades.
Why higher-priced homes sold so well
CREB’s main surprise was strong demand in the higher price ranges even with higher lending rates. Lurie linked it to migrants from Ontario and British Columbia: Calgary’s relative affordability means many of them are less sensitive to rates. She added that a strong labour market is supporting demand across all property types.
Why supply did not catch up
The report says inventory stayed low across the resale, new home and rental markets. New home starts were relatively strong, but not strong enough given the number of people moving to the city. Resale supply also faced an unexpected challenge: higher rates and limited choice deterred many existing owners from making a move. An owner with a low-rate mortgage who cannot find the next home has little reason to list.
What CREB expects for the second half
Lurie said home prices have exceeded CREB’s expectations because supply challenges lasted through the spring market. She expects the pace of monthly gains to slow in the second half of the year, but limited supply should keep prices elevated. July data already showed a slower monthly gain, with the benchmark at $567,700.
Compared with the January forecast
In January, CREB expected the market to stabilize in 2023. It said low supply would prevent significant price declines, and that prices would follow different trends by property type and price range. The Q2 report shows that supply shortages and migration pushed prices up faster than that outlook suggested, including in the higher price ranges.
Practical takeaways
- Buyers: a fall price correction is unlikely; expect a slower pace of increases rather than lower prices.
- Sellers: prices are at records, but slower monthly gains mean waiting for more is no longer a sure thing.
- Owners staying put: if you plan to renew, compare your rate options early, because rates rose again in July.
The full Q2 2023 Calgary and Region Quarterly Update Report is available from CREB and covers each property type and the surrounding towns in more detail.
