If one quote could describe Calgary's market for Investors; it would be Warren Buffet's; "Be greedy when others are fearful and fearful when others are greedy".
Contrary to what headlines will have you believe, Calgary house prices were minimally affected (approx 3% the last two years,, highly influenced by the higher end, non investor type property) by the worst recession to hit the city in three decades. If it hadn't been for the high incomes, thus higher savings/access to money, toys/assets bought with so many years of high disposable incomes etc, Calgary may not have fared as well. So now what for investors? What should we expect to see in the next couple of years from Calgary?
- ATB, RBC and many others are predicting Alberta to lead the country in growth, with estimates coming in over 2.1+% growth for 2017 and 3.3+% for 2018.
- Calgary's Affordability being a perfect 33.8% means compared to incomes, homes in Calgary haven't been this affordable since the 1980's.
- Continued in migration as well as the recovery of oil prices has helped landlords as we see vacancy going down, rental incentives being done away with and with the Residential Tenancies Act in Alberta allowing for increases/decreases that coincide with the market ups and downs, a recovery in the rental market is well on its way.
For the investor wanting to take advantage of a market on the rise, with retail sales and consumer confidence showing increased optimism, Calgary can be an amazing opportunity for the non emotional investor.
Heads up that this recovery is likely to be different from the usual Alberta typical fast up and down market with recovery being slower and more calculated, with less of the market being dependent on energy than ever before and consumer sentiment being optimistic yet cautiously so. Its imperative to work with a team that has been through the ups and downs not just as homeowners or Realtors, but as investors with properties themselves...they've learned the hard way what turns to gold and how to navigate this lucrative market. Learn from their mistakes not your own.
Why should I invest in Calgary?
Calgary is “The Heart of the New West” and of the six biggest cities in Canada Calgary lays claim to having the most productive and best-paid workforce, the highest personal incomes and a lower cost of living than either Toronto or Vancouver (CED). We also have a benchmark housing price that is 15% lower than the national average (CREA). As investors we know, a well paid workforce enables home prices to increase in the long term and tenants able to afford higher rents.
But isn't Calgary in a market free-fall with oil prices being low?
The fall of oil prices since 2014 has led many investors to be too quick to dismiss Calgary. Unlike many small centers Calgary is not as sensitive to economic shock as one might assume: In 2015 Calgary had over 21,000 net migrants with 47% of them coming in from other provinces. Since 2014 oil prices have fallen by over $65/barrel, yet to April 2015 Calgary housing prices have only decreased from their peak by 3.5%. This shows a resiliency to be envied by many investment markets and is testament to the low risk high return potential with Calgary real estate.
Calgary Market Facts (Summer/Fall 2016):
- 2016 Vacancy Rate: 4.33%
- Average MLS residential sale price: $474,321
- Average MLS Days on Market (DOM): 46
- Total Market Listings (MLS): 5900
- Average weekly earnings (Alberta): $1119
- Average 2 bedroom rent: $1270
- Unemployment Rate: 9%
In the 2011 census, the City of Calgary had a population of 1,096,833 and a metropolitan population of 1,214,839, making it the largest city in Alberta, and the third-largest municipality and fifth-largest census metropolitan area (CMA) in Canada.
The economy of Calgary includes activity in the energy, financial services, film and television, transportation and logistics, technology, manufacturing, aerospace, health and wellness, retail, and tourism sectors. The Calgary CMA is home to the second-highest number of corporate head offices in Canada among the country's 800 largest corporations.