Real estate prices in most markets (including Calgary and area) are the product of supply and demand forces at work.  The current home owners and builders represent the supply side of the equation, while home purchasers represent the demand side of the equation.  Influencing both of the sides are "intangible" aspects like seasons, and mortgage rates, and general feelings about the state of the economy, job security, and that kind of thing.  For this discussion, let us assume that intangible factors are not at play, just because we want to simplify things.  In the real world of course, those factors and more definitely influence the real estate market in Calgary.

A balanced, sustainable market is generally considered to be when the supply of purchasable homes is roughly equal to the demand for the same homes. In that kind of scenario, we see between 5% and 12% increases year-over-year in terms of prices for homes, simply based on normal inflation and growth trends.  This is the best possible scenario for the average home buyer interested in Calgary and area real estate, because when they decide to invest in a home, it will probably be affordable, and it will gain increasing amounts of value as they make their mortgage payments.

Similarly, a balanced market needs to have enough homes to fill the demand over a period of time, and enough demand to remove homes from the market over a period of time.  In Calgary, the number of homes on the market should be about 1.5 months worth of inventory.  With this number, buyers can generally find the right kind of home in their price range in a reasonable amount of time, while home sellers can generally receive fair value for their homes in a reasonable amount of time, as long as their home is priced appropriately.

One kind of unbalanced, unsustainable market is what happened in 2006-2007, when demand for homes increased substantially, while supply was increasing only marginally.  Most homes were gaining 10% per month in market value, for a period of several months, and while this sounds great if you were a home owner during that period, it was a nightmare scenario if you were trying to purchase but didn't have a large chunk of money for a downpayment, or only had a meagre income to support your mortgage payments.  The market rapidly escalated out of control, and more than a few home buyers had to pay more than a sensible amount for their home purchase.

Another kind of unbalanced, unsustainable market is what happened in 2008-2009, when the supply of available homes far outstripped the demand for those homes.  The law of supply and demand kicked in, and home prices were reduced, as sellers hoped that lower prices would get their home sold faster.

In both scenarios, there was a lag time between when the economic parameters changed, and when home prices rose and fell.  While no one can tell the future, savvy home owners stay in touch with their favorite real estate agent to keep tabs on the market trends.