'Even though migration levels have come off, our population growth is still positive': Lurie

Key Concepts

• Apartment Condo Sector: A segment of the housing market currently experiencing significant supply-demand imbalances.
• Housing Starts: The number of new residential construction projects that have begun during a specific period.
• Interprovincial Migration: The movement of people between provinces within Canada, which continues to support Calgary’s housing demand.
• Resale Market: The market for existing homes, which is currently being influenced by competition from new construction.
• Inventory Levels: The total number of homes available for sale; a key indicator of market tightness.

---

1. Overview of Calgary Home Sales (May Data)

Ann-Marie Lurie, Chief Economist at the Calgary Real Estate Board (CREB), reports that Calgary’s housing market is experiencing a cooling phase. While overall sales activity has declined by approximately 15%, Lurie emphasizes that this is not a crash but a normalization. The current market activity is returning to levels consistent with long-term historical trends, contrasting with the hyper-active periods seen in recent years.

2. Sector-Specific Performance

• Apartment Condo Sector: This segment is under significant pressure, with sales falling by over 20%. The sector is struggling due to a combination of slowing migration and a surge in new supply.
• Detached Home Sector: This segment remains relatively stable, with sales down only 5% year-over-year. The market remains "tighter" than the condo sector, favoring sellers in many areas because inventory levels have not seen the same dramatic increase.

3. Impact of Migration and Housing Starts

A critical factor in the current market shift is the change in migration patterns.

• Migration Slowdown: After a period of record-high migration, the flow of new residents has moderated. This has directly impacted the rental market, leading to higher vacancy rates and reduced investment activity in the condo sector.
• Record Housing Starts: Calgary has seen three consecutive years of record-high housing starts. These units are now reaching completion, creating an "excess supply" of apartment condos.
• Market Substitution: Because new construction is being completed just as migration slows, buyers and renters have more choices. Renters are opting to stay in rentals longer due to stabilizing rental rates, and prospective buyers are increasingly substituting resale homes for brand-new units.

4. Economic Context and First-Time Homebuyers

• Demand Resilience: Despite the cooling, Calgary’s population growth remains positive, supported by interprovincial migration. This prevents the market from falling into the deep struggles seen during the 2016–2019 pre-COVID period.
• First-Time Homebuyers: The "sense of urgency" has diminished. First-time buyers are no longer facing the extreme pressure of rapidly rising rents or limited inventory. While activity has slowed, it has not ceased; buyers now benefit from more options in both the new and resale markets.

5. Key Arguments and Perspectives

• Normalization vs. Downturn: Lurie argues that the current 15% drop in sales should be viewed as a return to "normal" rather than a significant downturn, with the notable exception of the condo sector.
• Inventory Dynamics: The lack of price adjustments in the detached sector is attributed to the lack of new construction starts in that category, which has kept inventory levels low and demand relatively strong.
• Price Adjustments: While prices are down slightly from the peak reached last year, the market has not experienced a sharp correction, as demand remains supported by ongoing population growth.

6. Synthesis and Conclusion

The Calgary housing market is currently undergoing a transition from a period of high-intensity growth to a more sustainable, long-term trend. The primary takeaway is the divergence between market segments: the apartment condo sector is facing an oversupply issue due to the convergence of record-high completions and cooling migration, while the detached home market remains resilient due to limited inventory. For buyers, the current environment offers more choice and less urgency, representing a healthier, more balanced market compared to the recent past.