Could the Bank of Canada's latest moves see interprovincial migration boom?
Eyewatering home prices and squeezed affordability across many Canadian housing markets have seen plenty of hopeful buyers look to Alberta in recent years to achieve their dream of homeownership – and it’s a trend that isn’t fading.
Calgary and Edmonton were two of the markets where activity defied the overall national slowdown in 2023, continuing to gather pace even as the likes of Toronto and Vancouver saw buyers step to the sidelines.
Two interest rate cuts by the Bank of Canada in June and July have reignited many Canadians’ determination to purchase a home – and Tara Borle (pictured top), a broker with Mortgage Architects in Edmonton, said plenty of interest is still coming in from outside the province.
That trend has marked a welcome shift from days gone by, according to Borle. “I’ve been doing this for so long and usually people are always thinking about moving to BC where it’s warmer, or Ontario,” Borle told Canadian Mortgage Professional.
“And now people are talking about relocating and they’re phoning from Ontario and BC to come here – which I think is really exciting.”
A mix of homebuyers are coming to Alberta from other provinces, according to Borle. Some are first-time entrants frozen out of their own local housing markets, purchasing in a less pricey environment to get their foot in the door.
Others, meanwhile, are investors buying with the intention of renting their property out – “wanting to invest in real estate and be a homeowner, even if it isn’t where they live.”
Chris Allard from Smart Debt Mortgages observed that falling rates are allowing some buyers to afford pricier homes but cautions that waiting for further rate cuts could result in higher home prices and increased competition.
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 20, 2024
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Alberta buyers continue to enjoy strong housing affordability
Even despite rapid upward movement in home prices across Alberta in recent years, purchasing a property there remains far more affordable than in Toronto or Vancouver, where average prices continue to hover well above the $1 million mark.
By and large, buyers are still getting by in Edmonton despite that price appreciation. “I don’t think anyone nowadays is qualifying with ease, but there’s always something on every deal,” Borle said. “[Buyers] seem to be OK with the price point that we tell them before they start shopping.
“You could still buy a really nice house in Edmonton or Alberta for $450,000 easily. So I think that first-time homebuyers are able to find something in their budget here.”
Securing a mortgage for a client moving into the province from elsewhere isn’t radically different to dealing with borrowers who are already based in Alberta, according to Borle. “[It’s] just making sure if they’re relocating with their job that they’re going to have a job here,” she said, “and if they’re in BC and they’re buying a rental here, then we would just need their income in BC.
“So similar to any other mortgage application, you need to make sure their income is there and that they pay their debts on time – all that good stuff.”
What’s in store for the rest of the year?
The Bank of Canada is clearly in a mood to cut interest rates further, with Tuesday data showing inflation slid to 2.5% last month appearing to seal the deal for a September rate drop.
Its moves to date have seen the Bank’s policy rate, which directly affects variable mortgage rates, dip by 50 basis points over the summer – falling from its highest level for over two decades.
That’s set to contribute to a busy rest of the year, according to Borle, who’s also closely watching to see how a new rule offering 30-year amortizations to first-time buyers of newly-built homes will impact the market. “I’m curious to see… if that’s going to get us any traction here,” she said.
“I’ve had a few clients already call in and talk about it, but it definitely does change what they’re preapproved for on a new home. I’m curious to see how that’s going to come into play and if a lot of people are going to be wanting to buy a new home versus a resale house – because they’re going to qualify [for] more if they buy a new house.”
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