Migration is expected to slow in 2024, but will Calgary’s real estate market?
It’s no secret one of the leading stories in the Calgary real estate market in 2023 was the record-setting levels of interprovincial and international migration.
Over 30,000 people per quarter moved to Calgary from within the country and abroad over five consecutive quarters. This historically high level of population growth combined with low levels of housing supply contributed to strong price growth and a red-hot market throughout all of 2023.
However, according to the Calgary Real Estate Board’s (CREB) recently released yearly outlook report, migration to Calgary is expected to slow slightly this year, with overall population growth forecasted to drop from 4.7% in 2023 to 3.6% in 2024.
If migration slows as projected, how will this decrease in migration rates affect demand? And will slower migration rates mean easing pressure on the market in 2024?
Here, we examine some key points in the CREB report and explain how migration rates could impact the market this year.
Strong price growth is expected to continue
While theoretically, a decrease in migration can ease pressure on housing markets, overall, this year’s CREB report expects demand to remain robust enough to sustain strong sales in the Calgary market.
Although conditions are not expected to be as tight in 2023, “a seller’s market is projected to persist through the spring of 2024.” With conditions remaining particularly tight for lower-priced properties, such as semi-detached homes, row houses, and condominiums.
Indeed, what we are already seeing at the start of 2024 confirms much of what the CREB report anticipates — with upward pressure on pricing as there is less inventory in January 2024 compared to January 2023 combined with more sales.
All of this is expected to drive continued price growth, especially in the lower-priced segments of the market, well into 2024.
If migration is expected to slow, why is demand projected to remain high?
Great question.
While migration affects demand, the relationship between the two isn’t perfectly equal.
Firstly, when looking at migration statistics, it’s essential to look at net migration. Part of what made Calgary’s 2023 migration rates exceptional was net migration — so many people moved here, and so few people left.
Not only do high levels of net migration affect supply (fewer people leaving means fewer houses for sale), but it’s also likely to affect future demand. Consider that many people who moved here in 2022/23 are still looking for houses or have not yet entered the marketplace.
As the CREB report states, “While migration is expected to slow, gains in both interprovincial and international migration made throughout 2022 – 2023 are expected to support higher housing demand levels into 2024.”
Affordable housing may become even more unaffordable
When looking more closely at migration, it’s also essential to consider how different migration types impact different housing market segments.
For 2024, much of the projected decline in migration is expected to occur at the interprovincial level. Typically, interprovincial migration — think buyers from higher-priced markets in Toronto and Vancouver — has supported sales growth in the higher-priced detached markets, where buyers take advantage of Calgary’s relative affordability when compared to other major cities.
On the other hand, international migration tends to fuel demand at lower price points by driving up rental prices, increasing purchases from property investors and overall demand for more affordable housing options.
So, while the CREB report speculates that the price for higher-priced properties will decelerate, it expects demand and price gains for lower-priced properties to remain strong and highly competitive.
The interest rate debate
When looking at overall demand, let’s not forget about interest rates.
With inflation stabilizing, CREB’s report indicates the Bank of Canada will likely initiate a rate reduction in the latter part of 2024.
On the supply side, this could lead to new listings as sellers who decided not to enter the market in 2022/23 to avoid higher rate changes contemplate reentering the market to capitalize on strong home prices.
Yet simultaneously, CREB expects that a wave of potential buyers waiting on the sidelines for interest rates to come down will flood the market as lending rates ease and listings improve, possibly eroding any substantial gains in housing supply.
Given the persistent strong demand driven by recent migration and a healthy job market, decreased rates will likely mean that supply levels take even more time to rise sufficiently to restore balance to the market.
Other factors to factor in
While increased demand has been a hot topic in Calgary real estate the past year, we must not forget the many other factors, such as employment rates, policy changes, and relative affordability (for details, see the full report here), that can affect market conditions and housing prices.
Also always at play are local and world economic realities and global affairs.
While the CREB forecasts some weakening consumer activity, should declines be more profound and broader than expected or unanticipated political events occur, this could result in lower commodity prices and impact confidence in our market.
In summary
Based on information from the CREB report, it seems sufficient to say that although conditions might not be as tight as last year, demand will likely remain strong, and a seller’s market will likely persist through 2024, especially among lower-priced properties.
But it’s important to remember that every forecast — even the most well-researched — is speculative and always subject to change depending on how actual numbers and events end up compared to forecasted ones.
If you’re interested in getting more information or discussing how the CREB report pertains to your particular situation or property type, don’t hesitate to reach out to our team for support!
