Agnieska and Maciej Gorczyca at a park with their children Nel and Maciej. They are struggling to find a place that suits both their needs and budget in Calgary.Todd Korol/The Globe and Mail
As house prices continue to drop across the country, Calgary remains an outlier. In February, RBC characterized the prairie city as “the tightest market in Western Canada.”
Driven by record population growth in Alberta, the number of listings in Calgary’s resale inventory has been falling for almost a year, RBC estimates.
Last month, the Calgary Real Estate Board recorded 1,852 new listings, the lowest level of new listings in that month since the late nineties, a trend that has been particularly strong in the detached segment.
“We’re seeing some of the inventory decline because people aren’t listing,” says Ann-Marie Lurie, chief economist at CREB, pointing at the significant supply discrepancies between both ends of the market.
“While we’re having growth in the upper end, it’s not enough to offset the pullbacks that are happening at the lower end of the market.”
In January, the median listed price for detached homes in Calgary reached $599,000, but finding a unit below this price-point is a growing challenge.
Since September, Agnieska and Maciej Gorczyca have been actively looking to buy their first home in Calgary.
'Our main struggle would be bidding wars on the houses,' Mr. Gorczyca says.Todd Korol/The Globe and Mail
With a budget of $500,000, the Gorczycas were nudged by the potential sale of the two-bedroom condo they’ve rented since 2020 in Mahogany, a suburban neighbourhood in the city’s southeast, and the newcomer couple embarked on what would become a Sisyphean quest.
“Our main struggle would be bidding wars on the houses,” Mr. Gorczyca says, noting that the past two houses they had wanted to bid on sold for $50,000 over the listed price.
“We ended up not putting in the offers because of the amount of people viewing the houses, plus our realtor told us how many offers they already had,” Ms. Gorczyca says.
“What we’ve learned so far is, if there’s many people [bidding], we know that we’re not going to get it.”
According to CREB data, in January roughly one in three active listings in the detached segment were priced between $400,000 and $599,000, yet more than 44 per cent of sales were concentrated in this price range.
As a result, eight out of 10 units listed in January sold – a rate roughly two times higher than prior to the pandemic.
One of the causes of this, Ms. Lurie explains, is that “the higher interest rate environment has pushed people towards more affordable product. So we’re seeing a shift towards more apartment style product, more row product, more semis and anything that’s more affordable than detached.”
But for the Gorczycas, a family of four, options are limited.
“We’re looking for something just over 1,000 square-feet,” Mr. Gorczyca says, emphasizing the importance of having a yard for their two small children, 3 and 4 years old.
“We’re pretty outdoorsy, so we would love to be near the Fish Creek area or the Bow River.”
Realistic about what their budget can buy, the Gorczycas have focused their search on older-builds located in Shawnessy, Woodbine and Queensland, neighbourhoods in southeast Calgary where the benchmark price is $506,900, below the city’s median.
But competition is fierce for the small number of listings that suit both their needs and budget.
“We’ve missed out on two houses we couldn’t even view because they were just half a day on the market,” Mr. Gorczyca says. “You pretty much have to be available every single day to be able to view a house, and you have to make a decision on the spot.”
By the second week of February, the number of active listings in the detached segment was roughly 1-per-cent higher than a year prior, but the number of new listings shrank by half.
For this downward trend to shift, Ms. Lurie says, “demand has to pull back enough that inventory can rise.”
Calgary’s limited resale inventory not only affects first-time buyers like the Gorczycas, but also move-up buyers, who might withhold from listing their property until they find a suitable unit to purchase.
“While new home starts have improved, especially on the detached side, they’re not coming at that lower price point,” Ms. Lurie says, impacting the capacity of move-up buyers to list their properties.
According to Jared Chamberlain, a Calgary realtor and broker, buyers in the current market should be “prepared to fight,” as local residents compete against more affluent buyers from outside Alberta.
“We have two different types of buyers in Calgary right now,” Mr. Chamberlain says. “The people not from here have a lot more cash than people who are from here … because they’re able to pull out half a million dollars from their place out there.”
Moreover, out-of-province buyers are also more likely to put in unconditional offers, Mr. Chamberlain says.
However, this possibility is untenable for many first time buyers in Calgary who, like the Gorczycas, can’t bear the risk of forgoing pre-purchase inspections.
Although Calgary’s market is expected to shift towards balanced conditions in 2023, sales are likely to remain high, and a seller’s market could persist in some segments.
“What I’m seeing happen, is that conditions are still really tight for all the affordable product,” Ms. Lurie says. “You’re in a strong seller’s market for homes that are priced under $500,000.”
If these conditions persist, the Gorczycas are likely to find themselves in a conundrum.
“We don’t want to get caught into that whirlpool, that we have to buy now because rents are going up,” Ms. Gorczyca says. “But if we don’t buy now, it might even get worse, [costs] will keep going up and up for both house prices and rent.”