Steve McKenna



Several dominating themes emerged in 2022 that had a significant impact on the Canadian housing market. We will dive into these core themes - detail how they impacted us in 2022 and suggest how their trajectories will steer us in 2023.


The initial story for 2022 was the easing of Covid restrictions which dominated headlines the previous 2 years, coupled with the end of Covid benefits and ensuing inflation and mortgage rate hikes to counter. There was a total of 7 interest rate hikes in 2022 bringing up the bank prime rate from record lows of 0.5% to 4.25% in one year - some of the fastest and most consistent hikes since the early 80’s. These interest hikes helped to slow sales in the latter half of 2022 but it wasn’t enough to offset the gains earlier in the year and Calgary finished the year with a record number of sales and prices up over 12% year-over-year (For the record we will in this article always look at year-over-year numbers to give us a better impression of a trend - rather than fluctuating month-over-month numbers). A consideration when discussing the impact of interest rates is the delayed nature of the effect of these rate increases. As we discussed from the previous years outlook, with up to 120-day rate holds available from lenders, it sometimes takes half a year for these rate increases to be felt in the market and even longer before influencing pricing trends. With core inflation finally starting to decrease to more natural and comfortable levels, we can anticipate a gradual softening towards the end of 2023 to the Central Banks increases and at least some competition amongst banks to offer some competitive rates as their lending volumes decrease. 
As it relates to average prices, it is also important to note that the raising of interest rates has changed the product mix of homes being sold. With fewer luxury homes selling and more affordable homes selling through the year – which skew the figures. The average price change in Calgary for 2022 saw a 12% increase year-over-year. Condos had 50% more sales than the previous year, however, increased in price at the slowest pace by only 9%. Row homes led the charge with a 15% increase followed by detached at 14% and semi-detached by 12%. 


Its not getting any cheaper to build new. The supply chain disruptions over the past few years and the war in Ukraine have driven up material and labour costs on most materials and labour involved with building or renovating. Although many of these prices have edged off their peak don’t expect them to come down to pre-pandemic levels – what does this mean – that the cost involved to build or renovate has risen – and this will inevitably be passed on to the consumer. As inflationary measures begin to gain traction and core inflation decreases, to think that this will be reflected in the end value of your new home or renovation project is a stretch. Both the value of land to increase the volume of new homes and increase the density has increased, so to has the materials to construct these homes – we anticipate new inventory pricing to remain above levels seen last year.


An underlying theme effecting markets, supply chains and immigration that in turn directly and indirectly effects pricing and inflation was the war in Ukraine. In 2023 we expect this ongoing conflict will impact the Canadian housing markets through increased immigration and policy decisions aimed at further isolating Russia and bolstering a more protectionist domestic supply chain.


Immigration - both interprovincial and international immigration into Alberta were at record breaking levels in 2022. For the third quarter of 2022 (latest data that is available) Alberta led all Canadian provinces with a positive net interprovincial migration of 19,285 people – strongest gain in 40 years. Another record was set by the international immigration to Alberta where we saw over 35,000 new Canadians come to Alberta. That brings the total net increase of 52,582 in the third quarter alone. Many of these trends with immigration are predicted to continue with the Federal Government releasing its plan from 2023-2025 with targets of 465,000 in 2023 ,485,500 in 2024 and 500,000 in 2025. TO put this into contrast 2022 saw 431,000. 


The unemployment rate in Alberta finished the year at 5.6% - the lowest year end figure since 2015. The province continues to add jobs and diversify into technology both within clean energy and agriculture, film and tourism. These trends will continue and help the province be less dependent on the volatile oil and gas markets. Combined with strong oil and gas sector performance in 2023 and a barrel of oil holding above $70, Alberta will be well positioned to weather the economic headwinds and recession that are forecasted.


Foreign buyer’s never made up a notable percentage of investors in Calgary and although this may take some additional wind out of the sails it is not expected to have any considerable impact in the resale housing market in Calgary. New high rise condo projects may feel an additional pinch if they traditionally had an out of country investor base. The anti-flipping tax is also not considered to have any substantial impact in the markets in Calgary.


Inventory and in migration will be the deciding factor for how much prices rise in Calgary. Unlike most other metropolitan markets in Canada, there is an anticipation for an upward price trend in the city. The Calgary Real Estate Board is predicting flat price growth that will vary by price bracket with inventory constraints placing the most pressure on buyers and leading to larger gains in the lower price points (under 500k) - while move-up properties and the luxury segment will experience low or no price gains. Sales are still expected to outpace pre-pandemic levels.


With a bit of foresight and boots on the ground as we write this mid to late January - it feels as if Calgary’s typical Spring market is beginning early again (as it did in 2022) with bidding wars and fast sales above list price. Our intuition lends to a more bullish market outlook in Calgary with the strongest price growth anticipated in the townhome and detached sectors. Calgary is starting the year off strongly in Sellers market territory with a little over a month of inventory in most segment categories (buyer territory 5+ months of inventory).
Condo will still perform well however I think we will start to see increasing inventory levels in this segment that will restrict price growth. In the condo sector, prices are almost edging back to peak levels in 2014 - meaning that for the first time in almost 10 years there is a chance to sell - and potentially with only a small loss. This will bring more condo sellers to market that have been sitting on the sidelines for years. This speaks to both investors who bought in pre sales during previous booms and haven’t wanted to unload inventory at a substantial loss - also the move up buyers whose only option was to become a landlord rather that selling at a deficit. The rental market is incredibly tight and that should continue to entice investors. The downtown sector is still undervalued in my opinion and hasn’t seen the same gains as suburban condos. Having seen various cycles to date - I would caution suburban condo investors To be prudent and not overpay.
The luxury segment I am also bullish on - in contract to the boards predictions. I don’t think it will be as slow as they are predicting and will also see price increases and bidding wars. Inflation has driven up the cost to build a luxury home and is making the resale market attractive. Combined with very limited building lot inventory.
Calgary has a large segment of oil and gas sector workers - many with stock options and bonuses. There is a strong likelihood that those investment accounts are performing very well since 2020 as there is a strong tendency for oil and gas investment in the city - so unlike tech stock which have taken a dive - the commodity sector has performed very well in this last cycle.
Townhomes will continue to perform well this year as there is limited inventory in the product category and many single family or duplex buyers may find themselves in this category due to increasing prices and rates.
Semi-detached homes in the 700-900k range will in our prediction have the slowest price increases. More options and less demand could leave this category flat in 2023. The pandemic mindset still has people wanting detached and more space. Again, this is very dependent on product type, neighbourhood and location within that neighbourhood. If you would like an accurate indication and strategy for your specific situation please reach out directly or fill out the home evaluation form: Home Valuation


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