Will Real Estate Prices Drop in 2025? Economic Drivers to Watch in Alberta

Alberta's real estate market entered 2025 with optimism, but mounting economic uncertainties have forced a significant reassessment. While prices haven't collapsed, the story has shifted from robust growth to cautious stabilization—and in some cases, modest declines. Understanding the economic forces shaping this transition is essential for anyone buying, selling, or investing in Alberta real estate.

What CREB's Revised Forecast Reveals

The Calgary Real Estate Board initially projected strong performance for 2025, forecasting sales exceeding 26,000 units—more than 20% above long-term trends. However, spring market turbulence prompted a dramatic revision. CREB now expects sales to decline to approximately 23,000 units, roughly aligned with historical averages rather than the boom conditions of recent years.

Price growth projections have similarly moderated. CREB's January forecast anticipated a 3% citywide benchmark increase for 2025, down from 2024's 7% gain. By the spring update, expectations shifted to overall price stability, with detached homes holding steady while apartments and row homes face modest declines of 1% to 2%.

Recent data confirms this cooling trend. Calgary's benchmark price reached $572,800 in September 2025, representing a 4% year-over-year decline. The broader Calgary region benchmark sat at $613,900, down 2.8% annually. These aren't catastrophic drops, but they mark a clear departure from the aggressive appreciation of 2023-2024.

The Supply Surge Reshaping Markets

The primary factor tempering price growth is unprecedented housing supply. By the end of 2024, Calgary completed over 22,500 new homes—half of them apartments. This construction boom continues through 2025, with housing starts remaining at record levels.

The impact varies significantly by property type and location. Higher-density segments face the most pressure as new purpose-built rental buildings flood the market. This abundance gives renters more options, reducing urgency among potential buyers and indirectly increasing resale inventory as landlords struggle with higher vacancy rates.

Calgary's rental vacancy rate illustrates this shift dramatically. After bottoming at 1.4% in 2023, vacancies surged to 4.6% in 2024, with forecasts suggesting they could approach 6% in 2025. This fundamentally alters the investment calculus for multi-family properties and apartments.

Detached homes in established neighborhoods with limited development capacity show greater resilience. Lower-priced homes under $700,000 face persistent demand due to affordability constraints, supporting prices even as higher-end properties experience softer growth amid competition from new construction.

Economic Uncertainty: The Tariff Shadow

No discussion of Alberta's 2025 real estate market is complete without addressing the elephant in the room: trade policy uncertainty. Potential U.S. tariffs dominated economic discourse throughout early 2025, creating measurable impacts on consumer confidence and housing activity.

CREB's March data revealed sales declined 19% year-over-year, totaling just 2,159 units. While still stronger than the 2015-2020 downturn period, the pullback reflected widespread uncertainty about economic stability. Chief Economist Ann-Marie Lurie noted that easing demand combined with rising inventories pushed the market back toward balanced conditions after four consecutive seller-dominated years.

Alberta's economy faces lower exposure to tariffs than other provinces since energy products—the province's largest export—remain largely CUSMA-compliant and tariff-free. Most non-compliant energy products face only 10% tariffs, and Alberta has minimal exposure to tariffs on steel, aluminum, and automobiles that hammer Ontario and Quebec. Nonetheless, broader Canadian economic weakness and general uncertainty still impact consumer sentiment in Alberta.

Energy Sector: The Foundation Remains Solid

Despite headwinds, Alberta's energy sector continues performing strongly, providing crucial economic underpinning. Oil production reached record highs in 2025, with robust output supporting provincial GDP growth.

ATB Financial projects Alberta's GDP will grow 2.5% in 2025 and 2.3% in 2026, significantly outpacing national growth. This performance is fueled by strong energy sector performance, emerging sectors like technology and petrochemicals, and continued interprovincial migration.

Oil prices hovering around $80 per barrel provide substantial revenue for the province. Every $1 increase in oil prices delivers approximately $630,000 in benefits to Alberta's economy. The province recorded a $10.4 billion surplus for fiscal year 2023-2024, demonstrating fiscal strength that supports economic stability.

However, Alberta faces a concerning longer-term trend. Per capita GDP has declined approximately 10% since 2014's oil price crash and sits at levels comparable to 20 years ago. While total economic activity has grown due to population increases, individual Albertans haven't seen meaningful improvement in living standards for two decades—a reality that tempers housing market enthusiasm.

Population Growth: Slowing but Still Strong

Record interprovincial migration fueled Alberta's housing boom in 2023-2024, with more than 43,000 people arriving annually. The Calgary census metropolitan area recorded 5.8% population growth—the highest of any Canadian CMA in over 20 years.

This influx is now moderating. Alberta's population is forecast to grow 2.4% in the 2025 census year, down from 4.4% in 2024. Growth is expected to slow further to 1.3% in 2026 as federal immigration policies tighten and approximately 30,000 temporary residents leave the province.

This deceleration directly impacts housing demand. While 2025 still sees positive population growth supporting baseline demand, the dramatic slowdown from peak levels reduces urgency and competitive pressure that drove bidding wars in previous years.

Interest Rates: The Double-Edged Sword

Falling interest rates represent the primary bright spot for housing demand. Lower borrowing costs make homeownership more accessible, particularly for first-time buyers who faced affordability barriers during the high-rate environment.

However, rate cuts haven't sparked the demand surge many anticipated. Ongoing economic uncertainty and abundant supply have muted the typical stimulative effect of lower rates. Buyers have adopted a wait-and-see approach, confident that inventory availability gives them negotiating leverage rather than forcing rushed decisions.

For sellers, this creates challenging conditions. Properties sit longer on the market, and realistic pricing has become essential. The days of listing above market value and receiving multiple offers have largely disappeared outside specific high-demand pockets.

Regional Variations Matter

Not all Alberta markets face identical pressures. Communities like Cochrane continue showing resilience, with benchmark prices maintaining modest gains even as Calgary proper declines. Tight inventory in select locations continues supporting prices despite broader regional trends.

Conversely, areas with heavy new construction face greater downward pressure. Peripheral neighborhoods competing directly with new developments struggle most, particularly in higher-density segments where supply abundance is most pronounced.

What the Data Says About 2025

Will Alberta real estate prices drop in 2025? The answer is nuanced: some already have, while others remain stable or show marginal gains depending on location and property type.

The overarching trend points toward continued moderation through late 2025. Elevated inventory levels, slowing population growth, persistent economic uncertainty, and competition from new construction all weigh against significant price appreciation. However, Alberta's fundamental economic strengths—including energy sector performance, positive GDP growth, and ongoing interprovincial migration—provide a floor beneath prices.

For buyers, conditions are the most favorable in years, with improved selection and negotiating power. For sellers, success requires realistic pricing, patience, and recognition that the seller's market has definitively ended. For investors, careful location selection focusing on areas with limited new supply and strong fundamentals becomes critical.

The real estate market of 2025 looks dramatically different from the frenzy of recent years, but that's not inherently negative. After unsustainable growth, a period of stabilization and modest correction may ultimately create a healthier, more balanced market—even if it requires adjustment in the short term.