Building boom

The data are in for the last month of 2024 and Alberta came close to setting a record for annual housing starts.*  

December housing starts totalled 44,364 (annualized, seasonally adjusted). That’s a decline from November’s record high but the 17th straight month above the 40,000 mark.

At 47,827, the number of housing starts last year was the fourth highest on record and 33% higher than in 2023.

The strong showing came as home builders played catch-up with rapid population growth. Over the first nine months of 2024, Alberta added 139,725 new residents (data for the final three months are not yet available).

Alberta stood out among the other provinces last year. Excluding Alberta, housing starts declined by 3% in the rest of Canada due to pullbacks in Ontario, B.C. and Saskatchewan. Annual starts in Alberta, meanwhile, jumped by 33% and posted the largest absolute increase of any province.

According to our latest forecast, even though population growth in the province is expected to slow this year, we expect that the ongoing gap between supply and demand will keep starts elevated at 45,600.

*A housing start is defined as the beginning of construction work on the building where the dwelling unit will be located. This can be described in two ways: 1) the stage when the concrete has been poured for the whole of the footing around the structure; or 2) an equivalent stage where a basement will not be part of the structure.

Resale home prices also strong in 2024

We also just got data on resale home prices for December and they show that Calgary and Edmonton posted significant increases last year.

Edmonton, in fact, led all six of Canada’s metro areas of over one million residents with the price of a benchmark home** up by 7.8% in December on a year-over-year basis. Montreal was second on the list at +7.2% followed by Calgary at +4.4%. Toronto posted the lowest growth at just 0.3%, but it was not much higher in Vancouver at +0.5%.

Nonetheless, there is still a massive price gap between the benchmark price in Edmonton and Calgary on the one hand and more expensive markets like Toronto and Vancouver on the other. This gives the Alberta markets a significant cost advantage and helps explain the strong net inflow of residents from B.C. and Ontario into Alberta as Canadians ‘chase affordability’. The Alberta benchmark price was $516.2K in December compared to $723.6K nationally.

Tight supply, strong population growth and relative affordability (compared to markets like Toronto and Vancouver - see the chart below) kept upward pressure on prices in Calgary and Edmonton.

Edmonton remains a less expensive market than Calgary, with benchmark prices $180K lower. But the gap has been getting narrower in recent months after hitting a record high in May last year. As we’ve explored before, Edmonton’s affordability advantage over Calgary helps explain its faster price growth as buyers seek out less expensive markets. 

Although new construction is expected to remain robust and population growth to slow, tight supply and ongoing gains from interprovincial migration will keep upward pressure on resale home prices in Alberta in 2025.

**The Canadian Real Estate Association calculates the average price of benchmark homes in various markets (including Alberta, Calgary and Edmonton) using the MLS® Home Price Index (HPI). The HPI is based on the value home buyers assign to various housing attributes, which tend to evolve gradually over time. It therefore provides an “apples to apples” comparison of home prices across the entire country. Each month, the HPI uses more than 15 years of MLS® System data and sophisticated statistical models to define a “typical” home based on the features of homes that have been bought and sold. These benchmark homes are tracked across Canadian neighbourhoods and different types of houses.

Answer to the previous trivia question: We accidentally left out yesterday’s trivia question in the email version of The Twenty-Four. Sorry about that! The question was: In what year was the University of Calgary founded as a separate institution from the University of Alberta? The answer is 1966.

Today’s trivia question: In what year did the University of Lethbridge open?