In the wake of financial shockwaves that rocked the world economy in recent years, Canada is currently enjoying relative stability in a number of sectors including real estate. Accounting firm PriceWaterhouseCoopers is predicting that consistency across the country will continue throughout 2013. But the greatest degree of improvement in the real estate market will occur in Calgary. Here are five strong reasons why that will be the case.
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- First, the inventory of available homes in Calgary has shrunk considerably over the past year, creating a greater urgency among consumers to purchase what’s still available. The Canadian Real Estate Board reported only 3,609 homes and condominiums were on the market in November, a drop of more than 10 per cent from the same time last year. In fact, last November alone witnessed sales of 1,006 units, five per cent higher than in November, 2011. And with Alberta’s active energy sector attracting more workers from outside the province, demand will only get higher, for the smaller number of units on the market.
- Second, Calgary’s bustling economy spells ample employment opportunities and the influx of workers only bolsters the real estate market. With an unemployment rate of 4.7 per cent, considerably lower than the national average of 7.3 reported by the federal government in November, such strong job growth provides the incentive for consumers to invest in a home or property. But it’s not just energy spurring this migration. Given that Calgary has more corporate head offices than any other Canadian city outside Toronto, workers from outside the city are filling positions in other sectors as well.
- Third, lower availability of listed homes combined with a population increase not only creates more demand for a starter home, it also shortens the amount of time a house available for sale. And with few dwelling options available (considering the apartment vacancy rate is only 1.3 per cent), the need to buy as soon as possible cuts down the time it takes to sell a home. These days, the opportunity window to purchase a high-end home has shrunk from 50 days in 2011 to less than a month. In fact, some homes trade hands even before they reach the MLS system. Even luxury homes worth more than $1 million are selling well; the Calgary Real Estate Board reported 48 such homes were sold in November, a record for that month.
- Fourth, in Calgary, the percentage of foreclosures is only 3 per cent, half the rate in 2011. A robust economy with low unemployment has made the local economy less volatile. Furthermore, Statistics Canada reports that Calgary’s real estate market’s growth has been consistent since the 1990s, with no sharp fluctuations to make the sector a less predictable place to invest.
Finally, with the latest housing inventory at 4,000 units and the population growing by 1.5 per cent annually, chances are consumers will be placing their bids on the same homes. Increasing competition drives the price of a home even higher. However, most consumers don’t seem to be deterred by the increased price tag, even when the average price of a single family dwelling is almost $490,000. With an annual return on investment on real estate property being at around 20 percent the past two decades, many consumers of a Calgary dwelling consider that money well spent.