Calgary real estate resembled a more vibrant market in 2012 with a good kick start in the early months of spring and finished the year with strong, yet cautious momentum. This sales trend was most noticed in the Luxury home category which picked up dramatically in the spring and has recently coasted into a bit of a lull. The mid and lower end home market gained traction and has calmed in recent months but remains the bread winner. A drop in the number of available MLS listings in this low/mid category has kept the supply in check and prices relatively firm. Condo apartment prices crept up 3% year to date and the recent influx of new condo builds is maintaining a good supply of product and holding the prices competitive.
This year Calgary bucked a national trend of declining prices, and a consensus of forecasts call for more of the same performance for 2013. Some media have reported the Calgary market overheated, so lets take a look at the claims. A new and more accurate data point developed by REALTORS is the MLS HPI (Home Price Index) which tracks the sale price of specific types of homes in specific communities. Since 2005 the MLS HPI Composite for Calgary increased 180%, while Toronto and Vancouver increased 150% and 159% respectively. If we agree that our cousins in Toronto and Vancouver are in an overheated market then many would conclude that Calgary must be overheated as well, and that we are ripe for a correction.
The difference in these markets lies in the affordability of homes or the ratio of income to the cost of home ownership in each center. RBC calculates an Affordability Index for Q2 2012. Lets compare these Affordability Indexes for these major centers:
Calgary (bungalow 37%):
Toronto (bungalow 54%):
Vancouver (bungalow 91%):
So while the average home in Calgary increased 20—29% more than Toronto/Vancouver since 2005, the percentage of average income to own a home in Calgary is less than half of that required in Vancouver and 17% less than Toronto. Calgary’s unemployment rate is dropping and job growth along with net in-migration is forecast to end 2012 at over 23,000 net new in-migrants along with a further 15,000+ net in-migrants coming to Calgary next year. This is one of the main differences that sets Calgary ahead from other centers in the Canadian (and the North American) real estate markets. Coupled with a vibrant business, arts and social scene and it’s no wonder that Calgary’s real estate market is poised to continue to out-perform the nation for the near term.
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