Calgary Real Estate Market Update

Calgary housing market sees shifts

Housing activity continues to move away from the extreme sellers’ market conditions experienced throughout the spring. Easing sales, combined with gains in supply, pushed the months of supply above two months in August, a level not seen since the end of 2022.

“As expected, rising new home construction and gains in new listings are starting to support a better-supplied housing market,” said Ann-Marie Lurie, Chief Economist at CREB®. “This trend is expected to continue throughout the remainder of the year, but it’s important to note that supply levels remain low, especially for lower-priced properties. It will take time for supply levels to return to those that support more balanced conditions.”

Inventory levels in August reached 4,487 units, 37 per cent higher than last August but nearly 25 per cent lower than long-term trends for the month. Higher-priced properties mostly drove the supply gains, as the most affordable homes in each property type continued to report supply declines.

The supply gains were made possible by both an increase in new listings in August and a pullback in sales activity. There were 2,186 sales in August, representing a 20 per cent decline from last year's record high but still 17 per cent higher than long-term averages for the month. The sales declines were driven by homes priced below $600,000.

Following stronger-than-expected gains earlier in the year, the pace of price growth is starting to slow. In August, the total unadjusted residential benchmark price was $601,800, six per cent higher than last year and just slightly lower than last month. Year-to-date, the average benchmark price rose by nine per cent.

Special Holidays - September

Upcoming Events in Calgary

There is always PLENTY to do in Calgary each month. Below is a short list of the many cool things to see and do:

• Kensington Night Market - September 5

• WWE Monday Night Raw - September 9

• Halloweekends at Calaway Park - September 7,8, 14, 15, 20, 21, 28, 29

• RBC Race for the Kids - September 8

• Monster Jam - September 14-15

• Curling Canada Pointsbet Invitational - September 25-29

• Fahr October Fest - September 20-21

• Calgary’s Taste of Italy - September 8

• All My Relations Healing Pow Wow - September 28

• Calgary Fall Home and Garden Show - September 27-29

• Airdrie Fest - September 7

• Chinatown Lantern Festival - September 13

• Heritage Park Railway Days - September 14-15

• Beakerhead - September 20-21

• Spruce Meadows Masters - September 4-8

• 4th Street Night Market - September 4

• Calgary International Film Festival - September 19-29

• The Great Cochrane Outhouse Races - September 22

YouTube Videos

Every month I have conversations with a variety of local business owners, industry experts or general real estate educational topics. Below are the latest and greatest of the previous month.

Article of the Month

Understanding Interest Rates: The Basics

Interest rates play a crucial role in our economy, impacting everything from borrowing costs to consumer spending and overall economic growth. This article will explore the origin and purpose of interest rates, the frequency of meetings held by the Bank of Canada to discuss them, and the various factors that influence these rates.

What Are Interest Rates?

Interest rates are the cost of borrowing money or the return on investments. When you take out a loan, the interest rate determines how much you’ll pay back in addition to the principal amount. Conversely, when you deposit money in a savings account, the interest rate indicates how much you’ll earn on your deposit.

Where Do Interest Rates Come From?

In Canada, interest rates are primarily set by the Bank of Canada, our country’s central bank. The Bank of Canada’s role is to implement monetary policy aimed at stabilizing the economy and keeping inflation within a target range.

The key policy rate, often referred to as the overnight rate, is the main tool used by the Bank of Canada to influence borrowing costs throughout the economy. This overnight rate is the rate at which banks lend money to each other for one day. When the Bank of Canada adjusts the overnight rate, it indirectly influences the interest rates that consumers see on loans, mortgages, and savings.

Frequency of Meetings

The Bank of Canada holds scheduled meetings eight times a year, typically conducted every six weeks. During these meetings, the Governing Council reviews economic indicators such as inflation, employment, economic growth, and global economic conditions. Based on this analysis, the council decides whether to raise, lower, or maintain the key policy rate.

In addition to these scheduled meetings, the Bank will issue statements or make a press release if urgent economic conditions arise that necessitate a more immediate change in rates. The next meeting is set for September 4.

Purpose of Interest Rates

The primary purpose of interest rates is to control inflation and stabilize the economy. Here’s how it works:

Controlling Inflation: By adjusting interest rates, the Bank of Canada aims to keep inflation within a target range (usually around 2%). Lowering interest rates can stimulate spending, as borrowing becomes cheaper. Conversely, raising rates can help cool off an overheating economy.

Balancing Economic Growth: Interest rates can influence consumer behavior. Lower rates encourage spending and investment, while higher rates promote saving and can temper economic growth. The Bank of Canada seeks to find a balance that supports sustainable economic growth.

What Affects Interest Rates?

Several factors can influence interest rates, including:

Economic Indicators: Key indicators such as GDP growth, unemployment rates, and inflation levels are closely monitored. Strong economic performance may lead to higher interest rates, while signs of economic weakness may result in rate cuts.

Market Conditions: Supply and demand for credit in the lending market can affect interest rates. If there’s high demand for loans, lenders may increase rates. Conversely, a surplus of funds available for lending may drive rates down.

Global Economic Factors: Events and trends in the global economy can impact domestic interest rates. For example, if other central banks raise their rates, the Bank of Canada may follow suit to keep the Canadian dollar stable.

Government Policies: Fiscal policies and government spending can also play a role. Significant government borrowing can lead to higher interest rates, as it increases overall demand for credit.

Inflation Expectations: If consumers and businesses expect inflation to rise, they may demand higher interest rates to compensate for increased costs in the future.

Understanding interest rates and their implications is essential for anyone engaged in borrowing or investing. By influencing rates, the Bank of Canada aims to create a stable economic environment, promoting growth while keeping inflation in check. As economic conditions change, staying informed about interest rates and the factors that influence them can help individuals and businesses make better financial decisions. With ongoing fluctuations in the economy, keeping an eye on these changes will remain critical for anyone looking to navigate the financial landscape effectively.

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