Calgary’s real estate market is currently in a positive trend regarding overall property purchase numbers, with record setting sales amounts and prices filling a strong first quarter of 2014. Multiple factors can be attributed to the high demand, low supply market, although the key three factors driving the trend are economic stability, high migration rates to the city, and high median incomes.
Economic stability is one of the primary factors that drive the decision towards owning property. As Calgary has one of Canada’s lowest unemployment rates at (March 2014 current) 4.5%, the affluence of the city cannot be ignored. Those that are ready to buy into the real estate market are those that have a significant level of savings or credit, ready to put in a purchase offer on a condominium or house. Since the affluence of the city outpaces the available residences by a large margin, it generates a naturally high demand, low supply market.
Add to that the fact that Calgary is a migrant city. As the business center of the oil and gas industry in Alberta, Calgary has jobs for nearly every skillset, from welding journeyman to information technology specialist and beyond. Naturally, the city attracts migrants from across Canada, who come into Calgary ready to rent or own, and to secure their future in the city.
One of the main reasons that migrants come to Calgary, against cities such as Edmonton, Red Deer, etc, is that the median income in Calgary is higher than the average Canadian income, with single family income averages approaching $100,000 per year. This generates a population that has the money to spend on housing, in a market with little to no available new or previously owned housing.
When a house is available, there is currently high pressure in the $300,000 to $700,000 section of the market. This demand is driven by the large number of first time buyers, looking to either secure an investment property to supplement their income, or experience their first home ownership. Such is the demand in that specific range (average sale price of $482,000) that the pressure has overflowed into both lower and higher price sectors.
Condominium ownership is sharply on the rise, with nearly 20% of new residence purchased so far in 2014 being a townhouse or condominium purchase, with average prices in the $300,000 to $330,000 range. As well, luxury residences and executive rental has seen a steady increase year to year since 2007, with the current rate of executive rentals over $3000 per month growing at nearly 10% per year, and luxury residence purchases approaching 2.5 sales per day of residences over the $1 million mark.
Calgary is definitely a sellers’ market at the moment, with the seller able to obtain list or higher than list on their sale. Any listing with value is almost guaranteed to spark a bidding war, and it is not uncommon to see property sell above asking list price, something unthinkable even 20 years ago in the city. And, with Calgary continuing to grow in population year over year, there are no signs of the market pressure decreasing anytime soon.