July 2023 Banff Real Estate Market Update

By Robin Tuck
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It’s that time again when we talk real estate markets in the Bow Valley! We’ve just hit the middle of August 2023, so it’s time to take a look back at what happened in our July real estate market here in Banff. Once we’ve taken a quick spin through the month’s statistics, we’ll dive into why the markets are moving the way they are, as well as a few macro economic (or looking at the big picture in Canada) news updates that might be affecting house prices this month.

First things first, let’s take a look at Banff, Alberta’s July 2023 real estate stats:

Market trends in Banff, July 2023

Overall Home Sales in Banff

Overall home sales are currently almost exactly the same as this time last year, with a total of 5 sales in Banff in July. This is currently slightly down (3%) for the year so far, compared to last. So all in all, markets aren’t vastly different to last year, and slightly down on our 10 year average for July.

With that being said, Banff is really really starving for new listings. We are currently at 50 new listings in July, which is down 20% compared to this time last year, and 23% year to date. People just aren’t listing their properties for sale right now.

Why is that? Because unless you’re selling your home and moving out of town, there are very few options for people looking to sell and then buy. Banff has a huge housing crisis right now so, particularly with condos, if you sell something in this market, chances are low that you will be able to find something else quickly. So people are holding on to what they have.

There is an abundance of renters looking for somewhere to live right now, so owners are holding on tight while they can charge exorbitant rents.

Total residential prices in Banff

The total residential price in Banff has fallen by 11.3% in Banff this month. But wait, don’t pop the champagne just yet. There’s a very simple explanation for this, and the explanation is that the vast majority of properties that are selling right now are in the lower price range (condos or townhouses). We have plenty of detached houses for sale, but the lack of sales in that group is massively dragging down the average price. So take this statistic with a pinch of salt.

Condos in Banff in July 2023

Average prices of condos sold in Banff this month was around $519k, which is slightly down on last month, but about average for the year so far. Condo prices seem to be staying relatively flat in Banff in 2023 for the most part.

The average days on Market for condos is currently 22 days, which means condos are selling quite quickly. With a current inventory of 6 condos, we have around 3 months of inventory. So things are moving, but not moving extremely quickly.

On average, the benchmark price is still creeping up, and this is absolutely to do with the lack of housing available right now.

Detached home prices in Banff July 2023

With such a small pool of detached homes that sell each month, it’s quite challenging to gain any useful insights into the detached market in Banff. With that being said, we’ve definitely seen a slow creep up of inventory over the last 3 months, that means we have 8 detached homes on the market right now, and about 4 months of inventory.

Banff is a tricky market, with limited buyers that are able to move here. Once prices rise above a certain threshold (which is most detached homes at this point – generally above $1.5m), there is an absolutely microscopic pool of potential buyers that can jump through all the hoops; i.e. meet the need to reside requirements in town and qualify for a large mortgage). With interest rates at their current levels, it’s really squeezing the amount that buyers can qualify for, and resulting in fewer potential buyers in the market.

With all that being said, our statistics suggest the average home price in Banff in July 2023 is $1,512,500. This is slightly below the average for the year so far.

In general, we are looking at an average year though, and typically we see inventory creep up as we approach the fall, and then drop off in the last quarter.

Townhome prices in Banff July 2023

Townhomes in Banff have also been creeping up in price this year, however it does feel like they are starting to reach a peak price point in the low 800’s, high 700’s range. Beyond this price, properties are taking a bit longer to sell.

The average townhome sale price this month was $820k (down about 13% on last year), which brings the average for the year to about $794k. So we’re definitely not seeing the same kind of astronomical price increases we were seeing at this time last year. Anecdotally, we’re really getting to a point where people just aren’t seeing the value in 2 or 3 bed townhomes listed in the 800 range.

The jump in price from a 2 bed condo to a 2 or 3 bed townhome is so large now that it’s preventing a lot of people from upgrading. As a result, we’re seeing a lot of townhomes sit on the market. We’re also seeing a knock on effect into the condo market. Normally condo owners might be selling to upgrade and move to a townhome, but the gap is so large now that would-be sellers are stuck in their condos.

Local factors affecting Banff property prices

Staffing issues in Banff

There are plenty of local factors that are affecting housing prices in Banff right now. The biggest challenge facing the town right now is a lack of accommodation across the board. This is really limiting the number of condos on the market, because owners, particularly businesses are holding on to their properties tightly, and there are also plenty of other businesses in town that are being forced to buy condos to house their staff. They really don’t have a choice, because if they can’t offer accommodation, they can’t successfully hire staff.

As a result, many of the good units get snapped up by businesses, meaning there is more demand than usual for smaller condos. This is causing prices to creep up slowly, and all the good units disappear very quickly.

This is also affecting the demand for beaten up old houses with lots of bedrooms. While luxury homes tend to sit on the market for quite a while, homes that could be a great option for businesses and their staff are selling very quickly.

BnB licences and Heritage homes in Banff

New factors coming in to play in Banff, are possible new regulations surrounding heritage homes and Bnb licences. This isn’t set in stone yet, but the town is proposing removing all surplus bnb business licences, and giving them to people that designate their homes as heritage homes. This could create a sizeable shift in demand in Banff for a completely different kind of property. It will be interesting to see what happens if/when this comes into play.

Federal grants promoting development in Banff

The town is also supposedly applying for a federal grant that incentivises development. If Banff is given this grant, it will encourage them to rapidly address restrictions on housing, and there could be a whole swathe of bylaw changes towards the end of the year. This could mean smaller setbacks on properties, smaller parking requirements, higher buildings and more.

This could create a large increase in property value for owners that are holding property that allows for redevelopment, so we could see a lot more sales of older properties on large lots. This is by no means a certainty, but it’s definitely on the cards.

Federal influences on Banff housing prices

Alberta’s population keeps increasing

It was recently mentioned that Calgary received over 100k new inhabitants in the last 4 years, and is projected to grow by another 100k in the next 4 years. Many of these new residents will no doubt choose to move to the mountains or will spend more time here, so it’s likely that there will be increased demand for work and property here in the near future. Increased demand is likely to keep pushing up prices.

High interest rates

On a national level interest rates remain extremely high (hovering around 6% for fixed, and 5.25% for variable) as the government tries to tackle inflation, and this is likely to be causing downward pressure on prices and affordability. This, as mentioned above, is likely keeping a lot of would-be sellers from upgrading to bigger homes, leaving a lot of demand for smaller/cheaper homes, and less demand for more expensive homes. This is further exaggerated in Banff, where the majority of jobs are lower paid and the majority of homes are not considered affordable.

Reduced access to HELOC’s

Over the past two years, banks have been allowing combined mortgages and HELOC’s, where money paid into a mortgage is immediately accessible as a home equity line of credit. Currently rules allow home owners to withdraw up to 80% of their mortgage, but this will soon be changed to 65%. This will spell bad news for home owners that have been relying on their HELOC to get by, and could put pressure on many to sell. This could cause a rise in home sales or foreclosures in the coming 5 months.

Overall for Banff in July 2023

Overall, things are continuing to tick over in Banff, with the market remaining fairly stable for the time being. It will be certainly interesting to see how local and federal changes in policy affect housing demand in the coming months.

If you have any questions about the market, or any thoughts to add about the market, I’d love to hear from you.

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