It's no secret that buying a house can be a daunting task, especially in today's real estate market. With escalating mortgage costs and fluctuating interest rates, finding an affordable home seems nearly impossible. However, there's one city in Canada that's defying the odds and experiencing a real estate boom despite these challenges - Calgary.
The Calgary Real Estate Market: A Surprising Resilience
According to the Calgary Real Estate Board, the average home price in Calgary has reached a staggering $539,461, a significant jump of almost 10% compared to the previous year. This unexpected surge has left experts puzzled and intrigued as to what sets Calgary apart from other cities.
Chief economist for the Calgary Real Estate Board, Ann-Marie Lurie, believes that one of the key factors contributing to Calgary's success is its comparative pricing. Even with rising interest rates, the cost difference between Calgary and other major cities remains stark. While places like Toronto and Vancouver have seen a decline in prices, they still remain considerably higher than Calgary.
This distinction has caught the attention of buyers from these expensive markets. Homebuyers from cities like Toronto, where the average price for a detached home can exceed $1 million, find Calgary's more affordable prices enticing. It seems that potential buyers from these cities are less deterred by higher interest rates when they see the opportunity to purchase a similar home in Calgary for hundreds of thousands of dollars less.
"Like the Gold Rush": The Calgary Real Estate Frenzy
For many people struggling to afford homes in expensive markets, Calgary's real estate market has become a beacon of hope. Nadine Faule, a realtor specializing in helping clients relocate to Calgary, describes the current market as "like the gold rush." The demand for homes in Calgary is exceptionally high, and the supply is struggling to keep up.
Faule explains that the scarcity of available properties is a significant challenge for buyers. Even though prices may be lower than other Canadian cities, the market moves quickly, and sellers hold the upper hand. Alejandro Decker, a prospective buyer, expresses his frustration with the lack of choices and the difficulty he encounters while searching for a home for his family of four.
The housing shortage is not solely driven by locals. Newcomers are also a contributing factor. Calgary's population is steadily growing due to an influx of migrants from other provinces and countries. Chief economist with the National Bank of Canada, Stéfane Marion, highlights that the low level of housing starts in Calgary fails to keep up with the rising demand resulting from this population surge.
As demand outpaces supply, prices naturally increase. Marion suggests that if it weren't for the higher interest rates, the Calgary market would be even hotter than it is now. The combination of population growth and a shortage of available housing is driving up prices and creating a highly competitive market.
Calgary vs. Other Alberta Cities: What Sets It Apart?
While Alberta is experiencing an overall increase in population, Calgary stands out as the top choice for migrants and newcomers. The Calgary Real Estate Board's Ann-Marie Lurie explains that compared to Edmonton, Calgary attracts a higher number of people. She emphasizes that Edmonton's higher inventory of available properties in recent months has eased pressure on the supply, resulting in a calmer real estate market.
Affordability Concerns on the Horizon
With the population expected to continue growing and the limited housing inventory, the affordability issues prevalent in markets like Toronto and Vancouver may soon transfer to the Calgary region. The National Bank's Marion warns that Calgary will likely face an affordability issue in the near future.
However, economists also note that Alberta remains relatively affordable compared to other Canadian regions. Rishi Sondhi, an economist with TD Bank, reminds us that before the pandemic, housing prices in Alberta were actually falling. The current increase is essentially a catch-up game, and despite the deteriorating affordability, Alberta still offers reasonably priced housing compared to historical standards.
Calgary properties like the one at Nadine Faule's open house are 'like the gold rush' for people struggling to afford homes in more expensive markets.
Alejandro Decker has been looking to purchase a home in Calgary for more than a month — but finds a lack of supply to be a problem.
Stéfane Marion, chief economist with the National Bank of Canada, warns that there aren't enough houses being built in Calgary to match the number of people migrating to the city.
Rishi Sondhi, an economist with TD Bank, points out that housing prices in Alberta were falling prior to the pandemic.
Despite the challenges posed by increasing interest rates, Calgary's real estate market continues to thrive. Aspiring homeowners from expensive markets flock to this city of opportunities, attracted by more affordable prices and a chance to secure a home for their families. The housing shortage and population growth have created a highly competitive market, where buyers must act swiftly to secure their dream homes. While affordability concerns may loom on the horizon, Calgary remains a comparatively affordable option for those seeking a new place to call home.
