In the early months of the pandemic, the Calgary economy was struggling, and the real estate market was struggling alongside it. Yet, renewed confidence and more control over the COVID-19 outbreak has led more people to dip their toes into real estate once again. Although the COVID-19 outbreak persists, people continue to see the value of property in Calgary.
Here’s a closer look at the recovery of the Calgary real estate market:
Calgary Home Prices
Calgary has long offered first-time homebuyers a more affordable option compared to other large Canadian cities like Vancouver or Toronto. In August 2020, Calgary’s average price for a single-family home was $466,000 while for an apartment it was $248,500. This is significantly less than average prices in Vancouver for single-family homes ($1,501,900) and apartments ($685,800). Notably, Toronto prices were not much less than Vancouver, sitting at $592,900 for apartments and $999,200 for single-family homes.
As an increasing number of people across other provinces migrate further away from dense urban sprawl in search of more square footage, Calgary is a prime choice for a balanced lifestyle at the right price. Residents can enjoy proximity to greenspace along with views of the mountains and a city-feel; this prairie city provides residents with the best of everything.
The Impact of Unemployment on Calgary’s Recovery
Earlier in the pandemic, one of the key factors affecting real estate in Calgary was the record-high unemployment rate. Calgary’s energy sector had faced devastating losses. Many believed the challenges posed to this sector may have lingering effects on the job market’s ability to fully bounce back.
Without enough financial power it was difficult for people in this city to invest in real estate thus slowing down market activity. Ultimately, mounting household debt also sidelined more potential homebuyers. Since the highest paying industries were hurt, this caused recovery to start with more affordable housing versus high-end housing.
Over the past few months, we’ve seen some jobs come back to the market which is helping to boost the economy and as a result, helping people purchase real estate. Calgary has seen marked improvements compared to the record lows experienced during the mandated COVID-19 isolation period, but economists say this city is still early in its journey to recovery.
Low Interest Rates
The Bank of Canada has lowered the benchmark interest rate to 0.25%. This is the lowest the rate has ever been and could encourage more people to take advantage in order to purchase homes. The government made this decision to bolster the economy, and within market like Calgary’s, the rate drop has been beneficial. For those who have had issues securing the mortgage funds they need at an affordable rate, this may be the right time to leap into the Calgary real estate market.
The Calgary Housing Market Activity is Gaining Momentum
A recent upward trend in the Calgary real estate market includes rising home sales and new supply. According to the Calgary Real Estate Board here’s how each property type performed in the market in September, giving us a general idea of current market activity:
In the month of September, sales were the highest they’ve been since 2014. With sales figures improving, this is driving prices up slightly. It’s also important to note that the recent gains in this property segment are driven by the affordable end of the market, not necessarily the luxury end.
Sales for townhomes have also significantly increased compared to the year prior. Homebuyers may be attracted by the 7 per cent reduction in sale prices in this segment of the market year-over-year and also the fact that prices are 17 per cent lower compared to previous highs. Considering the apparent affordability, this may be an opportune time to purchase in this end of the market.
With new listings coming to market, sales have improved for this property type, but slower than row houses and single-detached houses. Inventory levels overall are 21 per cent lower than last year, helping to reduce downward pressure on pricing. That being said, prices for semi-detached homes are starting to improve within certain districts in the city, including South, South East and East Calgary.
Unlike other types of properties, demand in the apartment condominium segment of the market is declining. Interestingly, this market segment is not experiencing the year over year gains like its counterparts. In September, year-to-date sales decreased by 16 per cent even with new inventory of condos entering the market.
This shift could be changing attitudes due to COVID-19. As people pivoted to work from home arrangements and home schooling their children in a city environment, this has fueled the desire for more living space. Being cooped up in condos during isolation without access to a lot of greenspace may explain the mounting demand for properties with larger floorplans and ample-sized backyards.
A closer look at the Calgary real estate market shows us that despite the COVID-19 pandemic and job loss, affordability continues to drive the market. This market is early in its recovery but is showing promising signs of maintaining this momentum as we move towards 2021.