By Rebecca Wissink

If you click on the Globe and Mail’s real estate page what you primarily see are articles detailing a housing market gone mad. Multiple headlines from various communities state this home has sold over list, attracted multiple bids, sold with no conditions, or sold on the first day. Perhaps the most ludicrous headline reads “This midtown Toronto home sold for $505,192 over asking despite busy street” (March 17, 2022). But wait, I can beat that with a Facebook status from a Kingston, Ontario Realtor® on March 21, 2022: “A house in Kingston sold today for $550,000 over the asking price of $800,000.” In Calgary, a home sold in February 2022 after four days on the market for two hundred thousand dollars over list. Ross Pavl reports one home that was listed for $1,725,000 sold for just over 2 million dollars. I wrote for Ross Pavl on March 6, 2022 that the Parliamentary Budget Officer (PBO) has condemned the over-inflated house prices in some real estate markets, some of which are more than 50% above the average household’s capacity to pay for such a mortgage. I also noted the report suggested “average house prices were at, or below, affordable levels in … Calgary at the end of 2021.” That was then. 

Since the PBO released their report, house prices in Calgary have ramped up. According to Zolo, in the first two months of the year, there has been a $71,000 increase in average price. I stated in my March article that we are starting to see signs that are reminiscent of the frenzied housing market that ballooned in 2006-07 before it popped in 2007-08. And that another year of 20% increases in home prices will erode affordability in Calgary, making the market vulnerable to corrections. In late February I wrote for Ross Pavl that this area was only forecast to see a 5% increase in prices this year. In January 2022, the average total home price in Calgary was $533,660. According to Zolo, the following month that had risen to $545,863. It’s too soon to know what March will bring, although the Zolo trend is showing a downward slope for prices this month.

In the meantime, media reports stating that the house of cards is shaky for Canadian real estate aren’t hard to find. On March 18, 2022, the website Better Dwelling reported that Oxford Economics, a leading global forecaster specializing in real estate, is anticipating a 24% “correction” as a best-case scenario for Canadian home prices following “unstainable” growth. The 24% finding is based on the government both implementing higher interest rates and policies against speculative home buying, in order to reign in home prices. If these measures aren’t implemented or fail, and prices continue to rise, a “crash of 40% and a financial crisis is expected.” The downslide in prices is anticipated to begin this fall, and will take until mid-2024 to find a new bottom. However, given so many markets saw such massive increases in home valuations since 2020, this correction will not roll prices back to 2019 levels. Rather, prices will fall to about 15% higher than 2019. This period is forecast to be followed by five years of stagnation as housing supply and incomes catch up to the still elevated prices. Affordability in Canada will return around mid-2028. In the less likely scenario, a crash of 40% could create “long-term economic damage” in which economies are stifled. Yet, this is a national forecast by Oxford Economics and there is no monolith real estate market.

Each location has its own rhythms and stressors that impact the housing market, which are somewhat evident in Table 1 below. In Calgary, the anticipated 24% price correction could see the actual benchmark price of a single-family home drop $105,000 from $549,100 (February 2022) to $443,800, which was actually the February 2019 average price. Ironically, Calgary’s single-family home has increased 24% in the last two years, so a 24% correction now, without any further increases, simply resets the market back a few years. However, because each real estate market is unique, in Calgary circa 2019, the benchmark price for a single-family dwelling was actually $20,000 lower than in February 2017. And Oxford Economics expects the correction to stop its fall about 15% higher than 2019, suggesting a single-family home in Calgary will be worth around $510,370, which is only a $39,000 difference from February 2022. Therefore, the full 24% correction would not hit Calgary. My point here is that, as I suggested in my Boom or Bust article on, Calgary’s real estate market was not only late to the party of ridiculous home price runs up, but because it was late it hasn’t shot up the $6-700,000 or 42-88% over the last two years the way some markets have. And there are some good reasons for home prices to have been pressured in Calgary lately that could sustain these higher prices. Lastly, if March is offering a levelling or even a slight decline in prices, in the long run, that could also help shelter Calgary from a full-blown housing market correction. I think Calgary's market will level off this year, but I think it will fare better than other markets once the correction starts. 

The Kingston realtor quoted above reports “It’s not sustainable, of course. The centre cannot hold. But we don’t see the end of this madness coming this year.” I agree the madness in many Canadian markets cannot continue, but as an ex-Vancouver area resident, I’ve been thinking this since 2015! It is possible that local investors, foreign buyers, cheap debt, immigration, and the generational wealth of the Baby Boomers will keep this madness going. Forecasting is an imperfect science, proven by the fact that basically no economist saw the 20-2021 COVID housing market madness coming. So, if nothing else, this article will make a great time capsule to look back on in a few years.

Speak to an experienced Ross Pavl ELITE Real Estate Group Realtor® regarding any questions you have about the Calgary area real estate market.

Table 1. MLS Home Price Index Tool for Calgary Single Family Home (Source - The Canadian Real Estate Association)


Image via creative commons courtesy of qthomasbower

Posted by Ross PAVL ELITE Real Estate Group on


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