If only we had a crystal ball for 2024! We’d all be millionaires, right?
Well, we kind of already have an idea of what things may come in 2024 for the real estate market here in Calgary.
But before we get into it. I’d like to just take a moment, from my family to yours, and wish you an absolutely wonderful 2024 ahead. We hope it's filled with lots of joy and prosperity for you all.
Now let’s take a look at how we did in December.
ABSORPTION RATE – ALL CALGARY SEGMENTS
In December, we saw the Absorption Rate (ABS Rate) increase slightly to 60%. This is an increase of 3% from the previous month and is 11% higher than the previous year at the same time.
This increase in the ABS Rate can be attributed to a steeper decline in listings in December coupled with a lesser decline in sales. In December, the number of active listings declined by 27% from the previous month to 2,289 listings while the number of sales declined 24% from the previous month to 1,370.
Compared to the previous year, listings are down 5% while sales are up 12%, leading to further declines in the inventory.
In each of the last three years, we have seen the ABS Rate come near or slightly higher than a balanced market and then take off in the first quarter of each year.
Pricing is continuing to tell us the story of affordability in our market.
In December, we saw two segments fall in median pricing, while two others increase. Detached and Attached homes both saw declines of 1 and 7%, respectively. At the same time, Townhomes and Apartments increased by 4 and 1%, respectively.
This continues the story of affordability in our market and how the impacts of today’s buyer’s purchasing power have been changing.
Townhome condos are now back to pricing that was last seen in August of 2023. While detached and attached homes have been relatively steady throughout the year, apartment and townhome condos have both seen significant increases as the year progressed.
But what can we expect as we head into the first quarter of 2024?
In the last three years, we have seen the markets take off in the first part of the year yet. Last year, albeit when rates were at their highest, we saw the ABS Rates skyrocket to rates as high as 91% in the second quarter of last year.
Is this something we can expect this year?
We have to take a look at what would drive this immense increase in activity to gain an understanding of if this would happen.
There are two parts to the equation for this activity.
Buyer and sales activity
Seller and active listings available
We all know we have a significant pent-up demand for buyers in the market today. This is due to several different factors. These will include:
Higher rents in the city
Migration to Calgary from other more expensive provinces
Increased interprovincial investment in Calgary and Alberta
Immigration from other countries who have now made Calgary their hub for newly landed immigrants to Canada
First-time buyers that have significantly more cash now than before with higher paying jobs and extra side incomes
And this list continues.
These are all great reasons for buyers to want to enter the market. However, their selection will continue to be hindered by supply shortages.
Some of these shortages can be attributed to the following:
Builder’s ability to bring on new housing for ownership
Incentives to builders for rental housing rather than ownership housing
Higher rates drive up higher renewal rates – keeping buyers in their homes with lower mortgage amounts than comparable homes currently for sale.
Sellers locked into their homes for 5 years with lower rates from 2021 and 2022.
And this list also continues.
As more and more buyers increase, and the number of reasons to sell decreases, the ABS Rate will continue to rise, we can expect more price increases.
And all of this is before the consideration of buyers having some relief with lower rates in 2024, as most economists are predicting.
This effect will drive up their purchasing power amounts, allowing them to buy (borrow) more, leading to further price increases.
So can we expect an increase in the activity in 2024? I believe so.
In my own business, I have been speaking to significantly more buyers and sellers in the first part of this year than in previous years.
Most are trying to get ahead of the market before the frenzy increases with lower rates.
If this is you, shoot me an email at firstname.lastname@example.org and let’s chat. We want to make sure you are properly prepared for the market that will come this year.
If you are considering a sale also (and yes there are sellers every day despite the list above), let's also speak. We want to make sure your home is ready for the spring market.
As always, thank you so much for your time and for reviewing this breakdown. I truly appreciate the opportunity to be your real estate resource.
Please don’t hesitate to reach out at any time with questions. I’d also love it if you could share this with your friends and family. You never know, it might be answering some of their questions also.
Thank you again!