Demand is falling, yet housing stills faces tight supply – Calgary Herald

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A new report suggests ongoing low supply in Canada’s housing market — Calgary included among them — may be reaching a crisis point despite falling demand in recent months.

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“The bottom line is there is a real lack of supply,” says Elton Ash, executive vice-president of Re/Max Canada.

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“Although buyer demand has fallen off with softening prices, the lack of inventory — rentals included — is likely to continue because, no matter what the economy does, Canada’s growing population still needs housing.”

Ash pointed to the recent Re/Max Canada 2022 Housing Inventory Report as evidence, finding supply levels in seven of eight major markets are currently below the 10-year average.

That includes Calgary, where active listings in July were 26 per cent below average levels for the month from 2013 to 2022.

Ash says low supply, coupled with low interest rates, have driven the housing market for several years, but the pandemic exacerbated the situation, sending demand into overdrive.

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Today, even with higher borrowing costs and sales down significantly from their peak in early spring, supply levels remain historically low.

“In other words, we don’t anticipate there to be much downward pressure on housing,” Ash says.

“If anything, Canadians will become re-accustomed to more normal interest rates, and sales will likely pick up again in the spring.”

Combined with population growth, driven by more than 1.3 million newcomers forecast to migrate to Canada by 2023, the nation’s housing shortage could reach crisis levels, he says.

Calgary is unlikely to be spared, with the report finding that the 7,069 active listings in July were significantly less than the 10-year average of more than 9,500 listings.

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Compounding the supply crunch is the fact that Calgary has seen among the highest population growth of major cities over the last 15 years, an increase of about 37 per cent.

At the same time, the city has among the highest one-person households — accounting for almost four in 10 of all homes — further contributing to supply challenges, the report highlights.

For Calgary buyers, selection among listings is unlikely to get better over the next several months, a local realtor says.
If anything, supply is likely to decrease much like it has already from July, says Richard Fleming, broker/owner of Re/Max Real Estate Mountain View.

“There are now about 4,000 active listings,” he says, referring to resale inventory as of Sept. 19.

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By comparison, the city had more than 5,500 listings at the same time last year, he adds.

“If you think supply will get better this fall — a busier season than summer — it’s not likely going to happen.”

One reason is that even though more people may house-hunt in fall compared with summer, sellers are generally not as motivated to list.

“If anything, listings come down because people don’t want to move during the winter or with their kids in school.”

Still, current market conditions do offer upside for buyers. Among them is buyers now face less competition than they are likely to face in six months, Fleming says.

As well, with prices down 20 per cent from the peak in March, based on September benchmark price data from the Calgary Real Estate Board, buyers now have a window of opportunity.

“I call it ‘a sale on real estate,’ ” Fleming says. “You’re not having to compete and you can get prices down on offers.”