Single-family home sales to be hampered by rising prices, says CREB

Multi-family homes are on track to become more of the norm in Calgary. Last year marked the first time there were more multi-family sales.

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Many buyers in Calgary’s resale real estate market faced sticker-price shock in 2023 amid rising prices for single-family detached homes, and a new forecast is predicting that buyers will continue to face rising prices in 2024. Calgary Real Estate Board released its 2024 forecast last month predicting modest sales growth and moderately rising prices driven by continued strength in the economy and short housing supply that should slowly improve with more new homes constructed.

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Yet as the benchmark price of a home in the city grew six per cent last year over 2022 to reach $556,975, sales growth — especially for single-family homes — will be increasingly limited by affordability, a problem faced by larger cities over the past decade.

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“The difference in Calgary is we do have land available,” says Ann-Marie Lurie, chief economist with CREB, noting the city can still add new communities and, in turn, more homes.

Indeed, the forecast suggests as much, noting new home completions should ease the supply crunch in 2024. That said, the nature of housing is shifting away from the communities dominated by single-family detached homes.

“Definitely, we’re seeing a shift toward affordable product, and that tends to be higher density,” Lurie says. “This kind of just naturally happens as a city grows.”

The CREB report already notes a significant decline in the share of single-detached homes of all resale activity in the past three years.

In 2022, single-family homes made up 61.5 per cent of all resales and, in 2023, its share dropped to 46.4 per cent.

Higher prices paired with higher interest rates have been a headwind for single-family home sales. The CREB forecast notes that the benchmark price of a single-family detached home grew nearly eight per cent last year to reach $675,783, even as sales fell 19 per cent.

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In large part, price growth has been the result of tight supply, particularly for homes less than $500,000, Lurie says.

“The cost of construction has also increased, affecting prices,” she adds. “It’s now pretty hard to build new single-family detached homes in the lower price ranges.”

Canada Mortgage and Housing Corp. statistics show the average price of a new single-family home in Calgary grew almost $45,000 during 2023 to $783,962. CMHC numbers further reveal that most of the 23,473 starts last year were apartments, with single-family home starts accounting for less than 20 per cent of activity.

Despite rising prices, local realtor Tim Jones says Calgary’s real estate market is not like Toronto and Vancouver yet.

“Calgary and the surrounding area have a long way to go before we reach the levels of cost of home ownership seen in (those) centres,” says Jones, associate broker with Re/Max Complete Realty.

Prices in the city would need to rise about 40 per cent to match those seen in Canada’s largest cities, he adds.

Yet Toronto and Vancouver’s new and resale markets today may offer a view into Calgary’s market in a decade or more. New homes starts and resales in both cities skew toward multi-family with single-family detached home benchmark prices exceeding $1 million. Apartment resales in November in Toronto, for example, accounted for about 52 per cent of all activity, Toronto Regional Real Estate Board statistics show. In Vancouver, apartment sales made up nearly 54 per cent of all sales, Real Estate Board of Greater Vancouver numbers reveal.

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In Calgary, apartment sales are growing, too. Last year, resales rose 27 per cent from 2022 — the only housing segment showing growth due to its lower benchmark price and higher supply.

“The pullbacks in sales for the other property types had to do with a lack of supply choice,” Lurie says.

Even amid rising prices, single-family home demand remains high.

“The detached market saw sales improve in the upper end,” Lurie says, adding lower price ranges struggled only due to very limited supply.

“But we expect improvement with so many starts underway, though the challenge is how fast those homes get into the system.”

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