I am aware that Calgary has had MANY boom and bust cycles, long before I was a realtor (and before I was born too!). But I wanted to take a look back at the similarities and differences between the three big boom cycles I have been through in my own real estate career – 2007, 2014 and 2022.
Unfortunately, due to changes in the way that properties are categorized and the way that our statistics are compiled, it’s hard to look at an apples-to-apples comparison of certain stats.
The term “Benchmark Price”, which refers to the price for the same “benchmark” property in whichever geographic area and housing category you are looking at (i.e. detached, semi-detached, townhome or apartment) didn’t exist back in 2007. I can still pull stats on average and median prices from back then, but these are less accurate than the benchmark price.
We have also started separating properties into the four housing categories listed above, which are based on the style of construction, whereas in 2007, there were just two categories – single-family and condo, which refer to the style of ownership.
If you don’t mind me nerding out for a minute, the 2007 categories could be a bit misleading. For example, you can have a multi-million dollar detached home that has condominium-style ownership, such as the luxury neighbourhood Elbow Valley, which is technically a bare-land condominium and every property (even detached homes on large lots) owns shares in the condominium corporation and pays a monthly fee.
The style of ownership is registered on the land title but the style of construction is evident to anyone looking at the physical structure.
We can still compare some stats from 2007: single-family median prices peaked in June 2007 at $439,000. This was 14% higher than a year previous and a whopping 76% higher than two years previous. So if you bought a house in June 2005, you were a very lucky person!
By the time 2014 rolled around, we were using Benchmark Pricing. Detached benchmark prices peaked in October 2014 at $513,500. This was 10% higher than a year previous and just 19% higher than two years previous.
In 2022, detached (Benchmark) prices peaked in May at $648,500. This was 17% higher than a year previous and 30% higher than two years previous.
Three of the classic symptoms of a boom – low inventory (supply), high sales (demand) and low days on market (DOM) were present in all three of these booms. In early 2007, the amount of detached inventory dropped as low as 1.2 months. In 2014, the amount of detached inventory dropped to 1.4 months. In early 2022, it actually dropped below one month of inventory for four months in a row.
The average days on market to sell fell to 14 for a couple of months in 2006 but was in the 20-30 range during peak pricing in 2007. In 2014, the average DOM never dropped below 25, showing this was a more conservative boom and buyers were being slightly more cautious. In 2022, we had two months of 14 DOM average.
Please keep in mind that the DOM includes the time during a condition period (financing, inspection, etc) if there are conditions on the offer, so the DOM before receiving an offer would have actually been much lower than this.
The way that business was conducted in 2007 was quite different. We did have an online MLS system but offers were still written on paper contracts and oftentimes presented in person (i.e. the buyer’s realtor would physically give their offer to the seller’s realtor along with a little sales pitch as to why theirs should be selected).
One thing that accelerated the 2022 boom was the fact that nearly all realtors are now using electronic signatures so offers can be prepared and submitted quicker than ever. It was not uncommon to see houses selling in competing offers in less than 24 hours in 2022. If there were counter-offers or revisions to be made to an offer, these could also be drafted and signed in a matter of minutes, even if the buyer’s realtor was not physically with the buyers.
Common to all three booms was a sense of elation for sellers (who could generally achieve a fast sale for a great price) and a heightened sense of stress for buyers (who had to drop everything to see a house as soon as it was listed and often offer without conditions).
After a boom typically comes a bust. The factors at hand now compared to the end of the last two booms are quite different, with employment, net migration and the price of oil all still showing strength.
We will be in touch later in January once the Calgary Real Estate Board releases their 2023 forecast but I am anticipating a softer landing for our market compared to other real estate markets in Canada. We still have affordable homes and condos and a great quality of life here in Calgary, which is attracting people from throughout Canada and the world.