On Wednesday, the Bank of Canada lowered its interest rate by 0.25% to 3%, marking the sixth consecutive cut since June. This follows a trend of rate reductions to help manage economic conditions.

This rate cut comes at a time when U.S. President Donald Trump has threatened to impose a 25% tariff on all Canadian imports, which could begin as early as February 1st.

Here’s a quick look at the recent rate changes:

• March 12, 2025 (next announcement): ???

• January 29, 2025: 3.00% (-0.25%)

• December 11, 2024: 3.25% (-0.50%)

• October 23, 2024: 3.75% (-0.50%)

• September 4, 2024: 4.25% (-0.25%)

• July 24, 2024: 4.50% (-0.25%)

• June 5, 2024: 4.75% (-0.25%)

• April 10, 2024: 5.00% (no change)

This rate cut follows larger reductions in October and December, where the Bank lowered rates by 0.50% each time. The goal? To keep inflation near its 2% target and to help support the economy.

Stay tuned as things continue to evolve!

1. New Home Starts: The pace of new home starts is expected to slow from the record-high levels of 2024 as the market moves toward rebalancing, but demand will remain strong due to lower interest rates supporting both move-up and first-time buyers.

2. Increased Supply: The increased supply of new homes, including a large number of apartments, is expected to help ease pressure on resale home prices in 2025, as more consumers have more options available.

3. Market Rebalancing: The gap between housing construction and household formation is narrowing, leading to a rebalancing of the market. While new home starts will slow, the supply increase will help stabilize market conditions.

4. Resale Market Influence: The additional supply from new homes is likely to influence the resale market, particularly for certain segments. This could result in less upward price pressure in the resale market.

5. Regional Distribution: New home starts in Calgary are distributed across various regions, with the largest share (23%) in the Northwest, followed by the Southeast (17%) and Southwest (15%). Apartments make up the majority of new construction (48%).

(Source: CREB 2025 forecast Calgary & Region Yearly Outlook Report)

• Economic Growth: Alberta’s economy is expected to grow in 2025, with energy prices, exchange rates, and increased production supporting growth. However, risks like potential U.S. tariffs may limit growth expectations.

• Energy Sector Strength: The energy sector remains robust, benefiting from the TMX pipeline’s opening and strong global energy markets. This growth, combined with easing lending rates, will support Alberta’s economy.

• Slower Population Growth: Population growth in Alberta, especially in Calgary, is projected to slow in 2025. However, international and interprovincial migration will still contribute to economic growth, although at a reduced pace.

• New Home Supply: There is a shift toward more new home construction, particularly apartments, which will help ease pressure on resale home prices. New home starts are expected to slow in 2025 but remain strong.

• Job Growth: Employment in Alberta is expected to grow by 2% in 2025, driven by sectors like construction, healthcare, and education. This will help stabilize the job market as migration levels ease.

• Market Balance and Price Growth: The Calgary housing market is expected to remain balanced, with price growth slowing to around 3% in 2025. Variations in price growth will be seen across property types and price ranges, with more affordable homes seeing stronger price growth.

(Source: CREB 2025 forecast Calgary & Region Yearly Outlook Report)

1. Economic Risks: The primary risk to the forecast is potential tariffs imposed by Canada's largest trading partner (the U.S.), which could affect Alberta's economy. Projections range from severe tariffs (25%) to no tariffs at all, with most assuming moderate tariffs that avoid a recession but still impact the economy.

2. Tariff Impact on Housing: If broad tariffs are imposed, Alberta could face a recession, leading to reduced investment, employment, and consumer confidence, which would decrease housing demand. However, if tariffs are limited or exempt from the energy sector, economic conditions could remain strong, supporting the housing market.

3. Federal Election Risk: A federal election and any potential policy changes regarding the energy sector could create economic uncertainty, potentially affecting the housing market. This uncertainty could lead to delays in housing decisions and impact market conditions.

4. Upside Risk: If tariffs are avoided or reduced, economic growth in Alberta could accelerate, attracting more interprovincial migration and stimulating housing demand and price growth. This scenario would support stronger-than-expected housing activity.

5. Uncertainty and Housing Activity: Prolonged economic uncertainty, even without tariffs, could dampen consumer confidence and housing activity, especially in the early part of the year. Lower lending rates might counterbalance this, helping to support stronger-than-expected housing sales.

(Source: CREB 2025 forecast Calgary & Region Yearly Outlook Report)

• Housing Demand: Demand for housing in Calgary is expected to stay above long-term trends due to population and employment growth, easing lending rates, and better supply options. However, factors like slowing migration and increased competition from new homes may limit growth in resale activity.

• Sales Projections: The forecast predicts over 26,000 unit sales, reflecting a strong housing market, with activity 20% higher than long-term trends.

• Market Shifts: The distribution of sales may change in 2025. While overall sales are stable, the easing of rental rates and slower international migration will impact the condominium market, while lower lending rates and continued migration from other provinces will support growth in detached home sales.

• Supply and Price Growth: High levels of new construction will increase housing supply, which will help balance the market and slow price growth to 3% annually.

• Price Growth Variations: Price growth will vary by market segment. Lower-priced homes are expected to see stronger growth due to steady demand and limited supply, while higher-priced homes may experience slower price growth due to increased competition from new higher-priced units

(Source: CREB 2025 forecast Calgary & Region Yearly Outlook Report)

1. Higher-Priced Homes Are Leading the Way: Most of the new listings coming on the market are for higher-priced homes, while there are still fewer options available for lower-priced properties.
   

2. Sales Took a Dip in September: Sales were down by 17% compared to last year’s record, with 2,003 homes sold. But the numbers are still 16% higher than what we usually see in September.
   

3. More Homes Available: September saw 3,687 new listings, the most since 2008. This has helped boost the total number of homes available, which is almost double what we had in the spring, but still a bit below what we usually see for this time of year.
   

4. Market Becoming More Balanced: The market is slowly balancing out, with 2.5 months of supply available. It’s still a seller's market, but not as extreme as earlier this year.
   

5. Price Growth Slowing Down: Home prices have leveled off a bit. The benchmark price in September was $596,900, slightly lower than last month but still up over 5% from last year. Detached homes and condos have seen even bigger price jumps.

Click here to view the full City of Calgary monthly stats package.

Whether you’re buying, selling, or just want to stay informed, I’m here to help you to navigate this changing market. Reach out to me for a detailed breakdown of the current trends or if you have any questions about your next move!

Contact me today if you want personalized advice or would like to know more about how these trends could impact your plans.