2025 Alberta Forecast Strength remains in Calgary home market

The pace of growth in Calgary’s housing sector continues at breakneck speed, but 2025 may give the market a bit of a breather and bring it back to more balanced grounds.

Economists predict that Alberta housing markets will continue to outperform the rest of the country in terms of demand and price appreciation over the long term. But there are signs of a slowdown for 2025, particularly for Calgary says Ben Rabidoux of Edge Realty Analytics.

“2025 will be a transition year for Calgary specifically. While Edmonton and other markets will perform better next year,” he says during his remarks at the BILD Alberta conference in Jasper last October.

Start it up

Calgary has enjoyed a huge jump in housing starts over the past few years. According to the Canada Mortgage and Housing Corporation (CMHC), both the city of Calgary and the Calgary Metropolitan Area will continue to see strong housing start and completion activity.

In 2023, the CMHC says the city of Calgary recorded 16,679 housing starts. From January 1, 2024, to October 31, 2024, the city of Calgary has recorded 16,583 year-to-date (YTD) housing starts, nearly surpassing the prior record-breaking year with two months to go.

Similar strong performances occurred across the entire Calgary Metropolitan Area, which also includes Airdrie, Chestermere, Cochrane, Foothills County, High River, Rockyview County, Okotoks and Strathmore. CMHC data shows a 24 per cent YTD increase in the area over 2023 in housing starts and nearly a 60 per cent YTD increase over 2023 in housing completions.

Alberta still tops

Alberta housing starts continue to soar, rising to 37,971 as of October 2024, a 34 per cent increase over the same period last year.

CMHC data reinforces that Alberta continues to show strong success in increasing its housing supply, which will help stabilize costs and improve the housing outlook for Albertans across the province.

Edmonton’s housing starts were up 47 per cent to 14,976, while Calgary rose 24 per cent to 20,104. The cities of Red Deer and Lethbridge also saw significant increases, with the former going up 93 percent and the later up a remarkable 209 per cent.

“Alberta is seeing remarkable numbers of new housing starts as our province continues to grow,” says Jason Nixon, Minister of Seniors, Community and Social Services.

“These homes are an investment in Alberta’s future, and we will continue to work with our partners to make sure we continue to increase Alberta’s supply and strengthen our communities for years to come.”

“The 34 per cent increase in housing starts highlights the strength of Alberta’s housing market and the positive impact of ongoing efforts to reduce construction barriers,” says Scott Fash, CEO, Building Industry and Land Development Association (BILD) Alberta.

“With continued collaboration between industry and government, we’re building the homes Albertans need to thrive. BILD Alberta remains committed to supporting this growth and ensuring a strong, sustainable housing future for the province,” he adds.

Rising population

The rising housing starts though may be hard pressed to keep up with the swelling population in the province. Although new federal regulations are being put in place to stem migration to the country, Alberta will still be a prime destination for newcomers in 2025.

According to Statistics Canada population estimates for the second quarter of 2024, Alberta was the fastest-growing province or territory during this period, increasing by 46,200 residents for a rate of 0.9 per cent.

In Calgary, BILD Calgary CEO, Brian Hahn, says it is imperative to work together with the municipal government to meet the challenges of the coming year.

“It is encouraging to see The City of Calgary move forward with the consideration of growth applications as part of the updates to the City of Calgary service plan and budgets.” He adds that this is a crucial step in unlocking needed land supply, as this strong performance in housing starts and completions has created demand for new fully serviced lot supply.

“Growth contributes significantly to Calgary’s finances. In the case of new community development, developers cover all the costs for on-site infrastructure and 100 percent of their share in off-site infrastructure. Both new community development and redevelopment generate revenue for The City through increased property taxes, utility rates, franchise fees, and other fees.”

Falling interest rates spur demand

What may likely heat up the market further in 2025 is the falling interest rates. On Oct. 23, the Bank of Canada cut its key overnight lending rate to 3.75 per cent — dropping the figure by 50 basis points from the previous 4.25 per cent. Experts say even deeper interest rate cuts can be expected.

The favourable lending rates – which once stood at 5 per cent – give new homebuyers impetus in finding a lower mortgage and make the dream of owning their own home more attainable.

Not only are the interest rate cuts working in favour of the homebuyer, but the recently announced 30-year mortgage option that the federal government is making available to first-time homebuyers is going to spur homebuying in in 2025, particularly in Edmonton.

In late July, the federal government announced it would allow “30 year mortgages for first-time buyers of new builds”. This significant change to mortgage rules would allow an additional five years to pay off a mortgage, which is anticipated to help create more opportunities for the younger generations.

Edmonton gains strength, Calgary to plateau

Clay Jarvis of finance advice website NerdWallet Canada, says Edmonton is poised for a better year, than the other major Alberta city to the south.

“I think Edmonton’s poised for a bigger year. Prices haven’t flared up to the same degree they have in Calgary, so there’s more room for growth. There’s also more upside for investors, who I think will devour as many properties as they can — in Edmonton and elsewhere — now that rates are coming down,” he tells NextHome.

“Calgary’s harder to read. On the one hand, prices there are getting awfully high. The average price for detached homes is already over $750,000 and could easily top $800,000 by this time next year if the market stays warm. That could knock many buyers out of the market or push them into the condo/townhouse segment.”

He does note that if rising prices spur “FOMO” (fear-of-missing-out) among the city’s buyers “they might charge into the market and start a real run on properties. If that’s the case, sales will rise, inventory will evaporate, and prices will spike across the board.”

Alberta remains the place to be

Rabidoux of Edge Realty Analytics says Alberta markets remains well-positioned to perform well over the long term, as fundamentals are still very favourable. The robust market will be abetted by falling interest rates, which he thinks will fall further. Alberta will also continue to lead the country in population growth, but total population growth is set to slow sharply.

“Calgary is transitioning to a more balanced real estate market, but Edmonton and other markets will stay hot in 2025,” he says.