National fall forecast calls for modest increase in housing demand

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If interest rates fall, it remains a question whether the supply of homes in Canada will rise to the occasion, a new national report suggests.

Yet in Calgary, low supply amid rising demand has been a struggle for the last several months, including over the summer — traditionally a sleepy time for the market.

“Calgary is a bit of an anomaly because we’re had really low inventory levels for quite some time now,” says Doug Coop, broker/owner of Re/Max Realty Professionals in Calgary.

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Although inventory picked up over the summer, year over year, as sales dropped year over year from an exceptionally busy summer in 2023, supply of affordable homes — the most active part of the market — remains low.

“In the $900,000 to $1 million end of the market, we have 12 months of supply, but it’s very different for affordable housing, where it’s real tight here,” Coop adds.

Supply could get even tighter come fall, according to the Re/Max Fall Housing Market Outlook.

It found among would-be homebuyers, 25 per cent say they are close to buying a home, while 16 per cent said they will wait until spring hoping for a drop in borrowing costs of 100 basis points.

“As interest rates come down slowly — by another 25 basis points — there will be more activity in the fall market,” says Kingsley Ma, regional vice-president for Re/Max.

“A lot of the concern is that prices will pick up significantly, but our prediction is that prices will actually increase slowly, anywhere between one and six per cent depending on the market.”

In Calgary, the report forecasts the average price will rise about three per cent to reach $621,000. That’s despite sales remaining flat this fall, year over year.

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Demand around the $500,000 mark for single-family detached homes will continue to be very high even as supply is near historical lows. Koop points to recent market data showing supply at less than one month for these types of home in the lower price range.

“Basically, at this level, anything coming onto the market in that price range sells by month’s end,” he says, noting demand actually exceeds what is available each month.

Most single-family detached homes are now out of reach for many first-time buyers, he adds.

“It’s really hard for buyers to find a $500,000 home in the area they want.”

Calgary Real Estate Board statistics from August show just how pricey the typical home has become. The benchmark price for a single-family detached home was $762,600, an increase of 9.5 per cent year over year. The price has increased over the last five years more than 47 per cent, or roughly $240,000.

Given the higher costs, with demand for single-family homes now coming from out-of-town buyers from more expensive markets like Toronto where average prices for single-family homes are about $1.3 million, most local first-time buyers are looking at less costly housing types.

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“The opportunity for first-time buyers has moved from detached homes to apartment style condos,” Koop says.

Townhomes and semi-detached homes are other options, but these have become expensive for buyers, he says.

CREB numbers show row homes’ benchmark was $461,700 last month, up nearly 13 per cent. Semi-detached homes’ benchmark was $681,200, up nearly 10 per cent.

Condos saw the largest price jump in the resale market up close to 16 per cent, but its benchmark remains affordable entry point at $346,500.

“Rental rates have been going up like crazy so it suddenly looks very attractive for investors,” Koop says.

That also makes condos attractive to renters looking to buy as rates fall, he adds.

“It’s a good thing (buying a condo) to do: Pay your mortgage down rather than somebody else’s.”

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