Scores of out-of-province buyers appear to be turning their sights to the city
Calgary’s housing market is continuing to hit new heights, with home sales climbing by double digits in July over the same time last year.
The city’s real estate board said this week that 2,647 properties changed hands in July, an 18% year-over-year jump and a record level for the month.
That booming market is continuing despite a concerted effort by the Bank of Canada to cool the economy, with two rapid-fire interest rate hikes seeing borrowing costs and mortgage rates soar once again in recent months.
Year-to-date sales are still well below the same point last year – falling by a sizeable 19% – but while inventory levels are hovering near the record low for the month, new listings have seen a slight uptick compared with July 2022, rising by 2%.
Plenty of participants in the Calgary market are coming from out of province, according to a broker based in the city, who told Canadian Mortgage Professional that prospective buyers frozen out of pricier markets are turning their attention towards Alberta.
Among the most prominent cohorts in those out-of-province buyers, according to TMG The Mortgage Group’s Max Singh, are police officers and government employees reliant on fixed income whose ability to meet the down payment in places like Mississauga and Brampton is ever dwindling.
What’s more, the growing unaffordability of red-hot markets like Toronto and Vancouver is also pushing new immigrants towards Calgary, he said.
“We’re getting not just the young folks [from other cities], but brand-new immigrants who usually stop over in Toronto or Vancouver, but they realize that the whole [homeownership] dream there is untenable,” he explained.
“It’s very much out of reach or the timeframe in which is required to acquire gainful employment and save up to that downpayment is more elongated in those respective jurisdictions than it is here in Alberta.”
Canadian Home Builders' Association warns of slower home starts due to rising construction costs from recent rate hikes. Chief Executive Kevin Lee calls for government action to offset the impact.https://t.co/UhRksMGfRd#mortgagenews #mortgageindustry #ratehike #interestrates
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 24, 2023
How many Canadians from other provinces are migrating to Alberta – and to Calgary?
If 10 new calls arrive a day on leads, at least four to six of those are from out of province, Singh added, or from Canadians who have moved into Calgary and are still using their old provincial phone numbers.
The latter cohort have usually already moved to the province and decided to rent before purchasing a place, Singh said. What’s more, most newcomers are able to keep their prior job and work remotely from Calgary, with few additional requirements to maintain that arrangement.
“It’s simply just a letter of employment with verbal verification and all the other tensions that come along with the mortgage application, stating that [it’s accepted] to work from home,” he said.
“We’re seeing a lot of folks in customer service that have work-from-home arrangements now, and professionals – for instance, senior accounts out of Toronto and their requirement is only to fly in for meetings once every two weeks.
“So they’ve obtained arrangements just to work from home. I would absolutely agree the work-from-home shifts in the employment market certainly benefited Calgary’s real estate market – they can work remotely wherever they need to be, and wanting the advantage based on purchase price here.”
What challenges are buyers facing in the Calgary real estate market?
While more inventory has impacted Calgary’s real estate market over the past month, competition in the city is unsurprisingly intense, with brokers “doing twice the amount of work with half the amount of results,” according to Singh.
“It is a serious challenge with inventory being as low as it is with the demand being so high,” he said. “Then also, the nature of the inventory that’s coming onto the market now is items in the lower-class segments of the purchase price range, which is the apartment sector.
“There’s a challenge here both in the rental market supply – very low vacancy, especially for homes with families or accommodating pets, as an example, which is driving people into purchasing. And yet there’s an imbalance, incredibly, to demand [versus supply] and I think it’s really challenging for a lot of folks right now.”
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