The Alberta Housing Market Report, according to CMHC

Alberta Market Snapshot

Drawing from the comprehensive research and data presented by the Canada Mortgage and Housing Corporation (CMHC), Alberta, with its expansive landscapes and abundant natural resources, stands as a pivotal contributor to Canada's housing dynamics. In alignment with the Housing Market Outlook's findings, we delve into a detailed snapshot of Alberta's housing market, capturing the prevailing trends and projections for 2023:

• Average Sale Price Trend: The Alberta housing landscape has experienced shifts in the average sale prices over recent times. As of August 2023, the average home price in Alberta stood at $445,190, marking a 4% year-over-year increase. This is a contrast from the previous figures you mentioned, indicating a dynamic market.
• Affordability Concerns: For potential homeowners in Alberta, affordability remains a topic of concern. The average home price for August 2023 was $445,190, which is a 4% increase compared to the previous year. This rise in housing prices suggests that potential homeowners might need to reassess their budgets and expectations in light of the current market conditions.
• Rental Market Dynamics: The rental landscape in Alberta is witnessing significant changes. While the specific vacancy rates for apartments in 2020 and 2022 were not provided in the link, the overall housing market dynamics indicate a tightening supply with a 37% year-over-year decrease in months of supply. This could imply a potential increase in demand for rental properties in the region.
• Market Insights: The Alberta housing market experienced some volatility in 2022. Prices peaked in the first quarter and then saw adjustments in the subsequent quarters. Factors such as economic conditions, interest rate fluctuations, and housing policies played a role in these market dynamics.
• Regional Highlights: While the data provided does not specify regional breakdowns within Alberta, cities like Calgary and Edmonton, known for their economic significance in the province, likely played a pivotal role in driving these trends. It would be essential to delve deeper into these cities for a more granular understanding of the Alberta housing market.

Key Market Drivers in Alberta

Alberta's housing market is influenced by a myriad of factors, both economic and social. Here's a closer look at some of the key drivers that have been shaping the province's real estate landscape:

• Economic Fluctuations and Price Levels: The Alberta housing market is not immune to broader economic uncertainties, which can introduce more pronounced risks to housing projections. The looming threat of sustained inflation might usher in extended periods of elevated interest rates, potentially stalling the resurgence of housing demand. As a result, housing starts, MLS sales, and average MLS prices could potentially deviate from their predicted trajectories. For instance, the average home price in Alberta for August 2023 was $445,190, reflecting a 4% year-over-year increase.
• Challenges in Construction Resources: Developers in Alberta have voiced concerns regarding the availability of construction materials and skilled labor. Such deficits can adversely impact housing starts, potentially causing them to undershoot projections. The tightening housing supply, with a 37% year-over-year decrease in months of supply, underscores these challenges.
• Mortgage Expenditure Insights: In Calgary, a key urban center in Alberta, there's a discernible trend in mortgage payments vis-à-vis average earnings. The average home price in Calgary for August 2023 was $522,548, marking an 8% annual increase. This rise, juxtaposed with wage growth, can strain potential homeowners, emphasizing the financial challenges in the face of escalating real estate values.
• Shifts in Economic Focus: Traditionally anchored in the oil and gas industry, Alberta's economic landscape is witnessing diversification. Emerging sectors, such as technology and green energy, are drawing a younger, digitally-oriented populace to urban hubs like Calgary and Edmonton. This demographic shift is recalibrating housing demand dynamics in these metropolitan areas.
• Migration Dynamics: Inter-provincial migration patterns, especially from regions like British Columbia and Ontario, are becoming more pronounced due to housing affordability challenges in those provinces. With its comparatively more accessible housing prices, Alberta is emerging as a preferred relocation destination for numerous Canadian households.
• Government Policies: Provincial and federal government policies related to housing, taxation, and interest rates play a crucial role in shaping the housing market. Any changes or introductions of new policies can have immediate and long-term effects on housing demand and supply.

Regional Deep Dive

Calgary:

Average Sale Price Trend:

• Calgary's housing market has experienced fluctuations over the past few years. The data indicates that in the first quarter of 2022, the new mortgage payments' portion of the monthly average wage for a single detached home was 53%. This percentage increased to 60% in the second quarter of 2022, further rising to 63% in the third quarter, and reaching 64% by the fourth quarter of 2022. This suggests that while the average wage remained relatively stable, the portion of it needed to cover mortgage payments for single detached homes increased.

Affordability Concerns:

• The affordability of homes in Calgary has been a topic of concern. For apartments/condos, the new mortgage payments' portion of the monthly average wage was 28% in the first quarter of 2022. This increased to 31% in the second quarter, 35% in the third quarter, and 36% by the fourth quarter of 2022. This indicates a rising concern for potential homeowners looking to invest in apartments or condos in Calgary.

Market Insights:

• The Calgary housing market has seen a steady increase in the portion of the average wage needed to cover mortgage payments, especially for single detached homes. This could be attributed to various factors, including economic conditions, interest rate fluctuations, and housing policies in the region.

Edmonton:

Population Growth and Value of Major Projects:

• Edmonton's population growth has been influenced by various factors such as natural increase, international migration, interprovincial migration, and intraprovincial migration. For instance, in 2022, the natural increase was 6,248, international migration was 21,921, interprovincial migration was 5,686, and intraprovincial migration was 2,705. Additionally, the value of major projects in the Edmonton CMA was $33.2 billion in 2022.

Market Insights:

• Edmonton's housing market and population growth are closely tied to its economic conditions, major projects, and migration patterns. The value of major projects in the region and the influx of international migrants play a significant role in shaping the housing demand and supply in the area.

In conclusion, both Calgary and Edmonton have their unique market dynamics influenced by various economic, migratory, and policy factors. It's essential for potential homeowners and investors to be aware of these trends and insights to make informed decisions in the Alberta housing market.

Alberta Future Predictions and Market Expectations

Drawing insights from the Canada Mortgage and Housing Corporation's (CMHC) Housing Market Outlook for Spring 2023, Alberta's housing landscape is set to undergo notable transformations in the coming years. Here's a comprehensive look into the anticipated shifts:

Land Availability Concerns

One of the pressing challenges for Alberta's housing market is the anticipated limited land availability for residential construction by 2025. With a growing demand, especially in major cities like Calgary and Edmonton, there might be a significant delay in the development of ready-to-build lots. This could further strain housing availability across the province.

Tightening of the Rental Market

Alberta's rental market is predicted to tighten, with vacancy rates potentially reaching historic lows by 2025. As mortgage costs rise in 2023, more families might lean towards rentals, further driving up demand and reducing vacancy rates. This trend suggests that the average rent for a 2-bedroom apartment could see a significant increase, making affordability a prime concern for many.

Economic Growth and Migration

Alberta's economic fundamentals are strengthening, and with an anticipated rise in international migration, the demand for housing, especially rentals, is expected to remain robust. This combination of economic growth and population influx will likely keep the housing market active and competitive.

Housing Starts and Construction

Housing starts in Alberta are set to experience fluctuations. A potential decline is anticipated in 2023, especially in the apartment sector, due to factors like high financing and construction costs. However, by 2024 and 2025, a resurgence in housing starts is expected, driven by improved economic conditions, a shortage of available units, and continued population growth.

Sales Dynamics in Major Cities

After witnessing a surge during the pandemic, housing sales in cities like Calgary and Edmonton experienced a slowdown. This trend might persist into 2023, influenced by high property prices and increasing mortgage rates. However, as the Alberta economy shows signs of recovery and if mortgage rates stabilize or decrease in the subsequent years, we might see a revival in sales and a potential uptick in housing prices.

Navigating Alberta's Housing Landscape with Pine

As Alberta's housing market continues to evolve, understanding its intricacies becomes paramount for potential homeowners and investors. The province's unique blend of economic growth, demographic shifts, and housing trends presents both challenges and opportunities. Amidst these dynamics, Pine emerges as a beacon of guidance. 

As a premier direct mortgage company in Canada, Pine offers more than just financial solutions; we provide clarity, expertise, and a tailored approach to each individual's housing aspirations. Whether you're looking to buy your first home in Calgary, invest in Edmonton's rental market, or simply seeking advice on Alberta's housing trajectory, Pine is here to guide you through every twist and turn. Your housing journey in Alberta, enriched and simplified, begins with Pine.