Real Estate Outlook 2023
Based on the Calgary Real Estate Board and Royal LePage forecast reports for 2023 it looks as though with the pandemic largely behind us, we are headed for a year of more typical real estate conditions and a pause on significant price gains following very healthy 10-12% sales volume growth in 2022.
According to the CREB report, largely authored by Economist, Ann-Marie Lurie, recently elevated lending rates are expected to weigh on sales in 2023, bringing levels down from the record high in 2022.
“Higher commodity prices, recent job growth, record high migration and relative affordability are expected to help offset some of the impacts higher lending rates are having on housing demand. At the same time, we are entering 2023 with low supply levels which are expected to prevent significant price declines in our market,” said Lurie.
Additionally, the Royal LePage forecast report offered more predictions for 2023. “As a result of low supply and a lack of new listings, home prices in Calgary continue to rise year-over-year, despite overall activity in the region having been lower in the fourth quarter of 2022 than the same time a year prior; a period of higher-than-normal activity. The increased cost of living and rising interest rates has dampened demand somewhat, but a steady flow of buyers remain active in the market. Demand from out-of-province buyers has been consistent, as those searching for affordability in a city where their dollars will stretch further, and can afford them a larger property, continue to flock to the region.
Corinne Lyall of Royal LePage further goes on to predict the following. “I believe a brisk spring market is on the horizon. Many sidelined buyers have grown tired of waiting, and will return to the market at the first sign of stabilization in lending rates. Once demand picks up, sellers will feel more confident to list their homes, bringing some much-needed inventory on the market.” Actually, I have heard from a few agents in our brokerage that there are already signs of product selling quickly and competing offers because of the current low inventory levels!
Comments above from Lurie and Lyall are largely directed towards the Calgary market but I feel do have relevance to the country market as well. Certainly the smaller rural towns such as Okotoks, Black Diamond, Turner Valley and even Longview are experiencing growth and plenty of new home development.
As far as the acreage and agricultural markets, compared to last year it looks as though there is less inventory coming on the market so far in 2023, but as spring approaches inventory should improve in the country. I also suspect after the significant increase in acreage and rural town demand through the pandemic years among people wanting more space and the flexibility to work at home afforded during the COVID era, more people will hang on to their acreages. Demand for this lifestyle should remain healthy, fuelled by the ring road completion offering great access to the city from many country properties.
Of note, and based on 2021/2022 sales and several calls I have had for evaluations, I feel that there will be a growing trend towards downsizing among the aging country property owners selling properties with older homes and structures again this year. This sector bring their own challenges as older country home properties are not necessarily as attractive to the younger acreage buyers who will likely want to renovate with sometimes costly budgets required to update.
For those wanting to build new in the country there are a couple of challenges going into 2023. Firstly, finding suitable lots, as there is not an abundance of outstanding country lots and for those lots that are on the market they are not inexpensive. That along with increased building costs and delivery chain challenges for new builds and the cost of attractive newer type existing acreages means potential buyers will need strong purchasing power.
In actuality no-one really knows for sure how 2023 will turn out but the opinions and predictions given in the forecasts are useful to consider as one plans for the year relative to potential overall real estate activity. One thing most opinion providers agree on, and I am of the same opinion, is that Calgary and region is a very attractive market nationally with strong migration here and has a bright future.
By Wayne Chaulk
