Calgary's housing inventory reaches near historic levels as younger demographic shrinks
CMHC sees evidence of overbuilding in Calgary as number of unsold homes nears 19-year high
A decline in the number of younger adults in Calgary is having a dampening effect on housing demand, helping to push the number of unsold homes to near historic levels, according to a report from the Canada Mortgage and Housing Corporation.
The state of the housing market in Calgary contrasts sharply with most other cities in Canada, with the price of new homes nationwide last month jumping by the biggest amount in more than three years, Statistics Canada says.
In Calgary, the unabsorbed stock of single detached units reached 627 at the end of the second quarter of 2020, up nine per cent from the same period in 2019, says the CMHC's Housing Market Assessment report for the third quarter of 2020, released Monday.
The Housing Market Assessment is its analytical framework for detecting current or emerging imbalances across Canada. The HMA considers four key factors: overheating, price acceleration, overvaluation and overbuilding.
CMHC says it's seeing moderate evidence of overbuilding in Calgary as the number of completed and unsold homes per 10,000 population approaches a historic high set in the first quarter of 2001.
In the semi-detached and row unit category, the unsold tally reached 738 — lower than a high of 801 in 2019, but still trending higher, the report said.
"In the Prairies, Edmonton and Calgary's recent economic woes due to oil price softness were further aggravated by the COVID-19 pandemic and the oil price decline it inspired," the report said.
As a result, the report says, the city is seeing slower population growth, as fewer people in their 20s and 30s — a key demographic for purchasing real estate — are making Calgary their home.
"Although the overall population is still growing, the share of the 25-34 age cohort continues to shrink. As they are more likely to be first time home buyers, this continued change in demographic profile has dampened housing demand," the report said.
Calgary's 2019 census, released last September, revealed that the city's 25- to 34-year-old demographic had shrank by 4.2 per cent since the 2016. The census was cancelled this year due to the COVID-19 pandemic.
Mayor Naheed Nenshi said at the time it's clear the city will need to work increasingly hard to attract young, working-age, child-bearing age, people to the city — and stem their flow away to other jurisdictions with better job prospects.
Calgary market contrasts sharply with most of Canada
The latest figures from Statistics Canada show the state of the housing market in Calgary contrasts sharply with most other cities in Canada.
The price of new homes in Canada as a whole jumped by the biggest amount in more than three years last month, partly because of rising costs for building materials during the pandemic.
Statistics Canada reported Monday that its New Housing Price Index, which tracks the price of newly built homes, rose by 0.5 per cent in August and is up by 2.1 per cent for the year.
Prices for a new home in Ottawa skyrocketed by 11.6 per cent in August, and in Montreal they rose by 6.5 per cent. Toronto saw a more modest increase of 1.4 per cent.
But in Calgary, the average price dropped by 1.2 per cent this quarter, Statistics Canada says. The average price was $423,311 in the second quarter of 2020, down four per cent from the same period in 2019, the CMHC report says.
CMHC's economist for the Calgary area, Michael Mak, says there are several factors at play.
"One of them is, of course, the influence of the oil markets or the energy sector," he said. "Oil prices are below the highs in 2014. And Calgary's home prices do reflect that."
Edmonton saw a decline of 0.7 per cent. And in Regina, where the economy has also suffered amid an oil and gas downturn, prices dropped 4.2 per cent on average, Statistics Canada says.