As we step into a new year, the Calgary real estate market is at a crucial juncture, with various factors shaping its trajectory.
In this blog post, we bring you an in-depth analysis of the 2024 real estate outlook and how it might impact your decisions in the housing market.
The Current Landscape
After a prolonged period of interest rate hikes, there is anticipation that the housing market correction might conclude in 2024. The Bank of Canada’s policy rate is expected to play a pivotal role, potentially alleviating some pressure on prospective buyers. However, Ipsos polling reveals that a significant percentage of Canadians, particularly millennials and residents of British Columbia and Quebec, feel restrained by high interest rates, impacting their decision to buy or sell.
The Impact of Interest Rates
While higher borrowing costs may deter some from entering the market, they could prompt existing sellers to act if faced with increased mortgage payments at renewal. I predict a pickup in activity leading up to the spring market, but high borrowing costs may continue to suppress homebuying in the first half of 2024.
Market Expectations
We foresee a rebound in sales and prices in the second half of the year. If their projections hold, the aggregate price of a home in Canada could rise by 5.5% year-over-year in the fourth quarter, nearing pre-pandemic peaks.
Rental Market Dynamics
The rental market has experienced its own challenges, with spikes in rent affecting those outside the ownership market.
As borrowing costs ease, there is hope that this could bring relief not only to the ownership market but also to the rental sector as more units become available.
Affordability Concerns
Housing affordability reached its lowest levels in 41 years in Q3 2023, driven by rising borrowing costs and increasing home prices. While there are signs of improvement in some markets, Calgary has stood out as an exception. With its relatively accessible home prices and a robust economy, Calgary remains a beacon of affordability compared to the rest of Canada.
Supply and Construction
A key factor affecting affordability is the lack of supply. Construction activity, particularly in purpose-built rental apartments, will be closely monitored in 2024. The federal government’s efforts to stimulate construction are acknowledged, but experts’ express skepticism about its ability to keep pace with demand.
The Road Ahead
As we embark on 2024, the real estate landscape is dynamic and poised for change. With potential interest rate cuts and government initiatives, the market may see shifts in affordability and supply. As your trusted mortgage broker, we are committed to providing you with timely insights to navigate these changes successfully.
If you have any questions or are considering your options in the Calgary/Alberta real estate market, please always feel free to reach out. We’re happy to guide you every step of the way!
