Home prices up drastically in past year across Alberta

A new report from CalgaryHomes.ca is putting the spotlight on rapidly increasing home prices in municipalities across Alberta.

The report analyzed house sales data from the Alberta Real Estate Association (AREA) and the Canadian Real Estate Association (CREA) from February 2023 to February 2024.

In Red Deer, the price of an average home valued at $312,031 a year ago spiked nine per cent, or about $28,000 to $340,114.

“There are a number of factors that could account for the significant increase in house prices in Alberta. One reason is the issue of the supply and demand imbalance: there’s a limited supply of housing, especially in desirable urban areas like Calgary, and the high demand is driven by factors like population growth, immigration, and investment. This has led to increased competition for available properties, driving prices up,” a spokesperson for CalgaryHomes.ca says.

“Another reason is the low interest rates. The low interest rates set by the Bank of Canada have made borrowing more affordable, fueling demand for mortgages and encouraging buyers to enter the market, thereby driving up prices.”

Calgary went up 15.1 per cent, while Medicine Hat jumped 14.2 per cent, Edmonton increased 10.3 per cent, and Lethbridge is up 7.1 per cent. Grande Prairie is also up 4.1 per cent, while Fort McMurray saw a more modest hike of 2.5 per cent.

Interestingly, Deputy Prime Minister Chrystia Freeland announced last week, ahead of this week’s Budget 2024 unveiling, that first-time home buyers will now be able to pay off their mortgage over 30 years instead of 25.

As well, Budget 2024 proposes to increase the amount one can withdraw using the Home Buyers’ Plan, the mechanism which allows Canadians to use their RRSP to make a down payment. That will go from $35,000 to $60,000 if approved

“Anything helps but we have to keep in mind that the things announced for first-time home buyers is for new homes only. With drawing RRSP money, I don’t know that too many first-time home-buyers have a ton of money in their RRSPs to pull out,” says Allan Melbourne, chair, Central Alberta Realtors Association.

“It’s a start but I think what would’ve been more helpful is if they would have said this applies to any home purchase rather than just new homes. We’ll have to wait and see before we know whether it’s good, bad or indifferent.”

Melbourne says central Alberta continues to be a desirable place to live, judging by the supply and demand situation.

“We’ve seen over the past 18 months, folks moving here from all parts of B.C., from Ontario, we have some from Calgary and Edmonton. It’s a lot of retirees or family situations,” he says.

“We’re running at about a 1.7 months’ supply [of homes available to purchase], which is drastically low. Normally, it’s three or four months, so builders right now can’t build fast enough to satisfy the demand. Some people, if they want to upsize or downsize, are thinking, ‘If we sell our house, where are going to go?’ because there’s such low inventory.”

He agrees build-outs of new areas like Red Deer’s Evergreen is positive, but that’s a prime example of the overall market still not being able to keep up with actual demand.

Melbourne does believe, however, that availability is a bit better in Red Deer than it is elsewhere in Alberta.

The CARA, he adds, has advocacy committees, and is currently working with all levels of government to implement more measures that will help in all aspects of the housing crunch.