At first glance, the national housing price story is, well, kinda boring.

The latest housing price data released on Tuesday show a national market that has been moving sideways since early 2024. Benchmark national home prices* have barely budged over the past year (+0.2% year-over-year…yawn).

That’s the national trend. But anyone who follows this industry knows that housing is local, not national. And this is where it gets interesting.

Less expensive Canadian housing markets see larger price gains

Higher-priced markets like Vancouver and Toronto have seen almost no change over the past year, while lower-priced markets like Edmonton, Fredericton, and Saskatoon have witnessed large gains. In other words, huge variation across markets, all washing out to very little movement in the national number (see the chart below).

*Benchmark prices are generated by the MLS® Home Price Index model. The prices cited in this article have been seasonally adjusted.

What’s going on here? We have long argued that Canadians are chasing affordability amid extremely high prices in certain parts of the country (the Vancouver benchmark price is $1.2M) and lower-cost housing in other places (Edmonton sits at $421K). An additional affordability squeeze came from higher mortgage rates with the Bank of Canada hiking its policy rate in early 2022.

As we have found, Alberta’s housing affordability advantage has, in large part, explained record interprovincial migration flows into Alberta, particularly inflows from B.C. and Ontario.

A tale of Alberta’s two largest cities

What about inside Alberta? For an interesting case study, let’s look at Alberta’s two largest cities: Calgary and Edmonton. If it’s true that people are seeking lower-cost housing, what happens when Calgary gets expensive and Edmonton remains relatively cheap?

Calgary’s housing market remained resilient following the Bank of Canada interest rate hikes. It was the only metro area in Canada with a population of 1 million+ where prices continued to increase year-over-year even as rates moved higher. This outperformance corresponded to breath-taking population growth, with more than 190,000 people added to the CMA in the last two years alone, putting pressure on housing.

Edmonton meanwhile saw a modest correction in home prices, and population growth (while strong) lagged Calgary.

The result? The price gap between the two cities hit a record $191,200 in May 2024.

But then the pattern shifted.

Benchmark home prices have been growing faster in Edmonton than in Calgary for six straight months on a year-over-year (y/y) basis. Last month, Edmonton’s benchmark home price jumped 3.8% over December, the largest month-over-month increase since the housing boom of 2006. Meanwhile, the price in Calgary dipped 0.4%.

Now that Calgary-Edmonton price gap has closed to $163,300.

The sales-to-listings ratio is another barometer. Calgary is still in sellers territory at 0.64, but Edmonton now sits even higher at 0.80. The national ratio is 0.49.

We are seeing a similar divergence in asking rents, though rental increases in both markets have cooled.

The good news for would-be home buyers is that housing supply has responded, with record housing starts in both Calgary and Edmonton last year. This is helping ease some of the price pressure.

The shift towards Edmonton is much more apparent in the housing data, than in the population stats. Edmonton’s population growth has accelerated, but still lags Calgary’s. However, we saw for the first time since 2008, net intraprovincial outflows from Calgary to other parts of the province in 2024, and inflows into Edmonton.

Our view is that the chasing affordability theme has partly moved from provincial to local.  That is, local housing price gaps are closing in response to the appetite for households to find lower cost options within the province.

We suspect the rising share of remote workers, with more flexibility to separate place of work and residency decisions, is playing into this ‘chasing affordability’ trend.

With households across Canada still squeezed by elevated prices, softer labour markets, and higher interest rates than before, we think this theme will continue to unfold this year. It is one of the reasons why we think interprovincial migration will continue into Alberta. Afterall, even with some convergence in markets, home prices in Alberta remain well below the national average. And with wide price gaps within the province and international immigration set to slow (mostly hitting major centres), we expect that population growth rates will become more balanced across the province.

Answer to the previous trivia question: A standard Major League Baseball home plate has an area of about 216 square inches.

Today’s trivia question: What is the French company Mistral AI’s new assistant called?