Behind the big rebound in Calgary real estate

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Rental market proves robust housing supply dynamics help people find homes

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from RBC Mortgages

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Calgary started 2022 on a strong note. However, the city’s rising popularity depends on a few factors

Calgary's reference price hit $496,767, a 15 percent jump year-over-year. Calgary’s reference price hit $496,767, a 15 percent jump year-over-year. Photo by Darren Makowichuk/Postmedia Files

A recovering energy industry, a recovering downtown commercial market, and a competitive tax environment — all at a more affordable price — have worked together to revitalize Calgary’s real estate market, according to industry observers.

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Alberta’s largest city started 2022 on a strong note, setting a record for home sales in the first quarter.

Home sales rose 58 percent from a year earlier, with 9,413 homes changing hands, according to the Calgary Real Estate Board’s Quarterly Home Update Report released last week. This surpassed a previous record of 8,286 from the first quarter of 2007, before the financial crisis. The city’s reference price also reached $496,767, up 15 percent year-on-year.

While gains still lagged behind those in Greater Toronto (18%), Greater Vancouver (20%) and Montreal (17%), Calgary’s recovery comes after years of home price declines after the financial crisis and again during the 2015 oil crisis.

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The city’s rising popularity depends on a few factors, one of the biggest being inter-provincial buyers from Ontario and British Columbia who have shifted to the Alberta market as a cheaper option for long-distance work or investment.

“We’re seeing Ontarians who can work from home and still want a pretty big city and like to be close to the mountains (saying, ‘I’m going to move to Calgary but keep my old job and the prices are half so because why not?’” Dan Eisner, founder and chief executive officer of Calgary-based True North Mortgage, told the Financial Post.

“Then of course we also see that oil prices have recovered significantly, and as much as we Calgarians want to expand our industries, oil is still a really, really big driver here,” Eisner added.

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Oil is still a really big engine here

Dan Eisner

CREB found that an increase in new registrations was one of the factors driving sales volume, with listings rising 32 percent year-over-year to 12,616 units. But even as more homes come onto the market, conditions remain tight by most standards.

“Conditions have not been this tight since 2006, which was also the last time we saw gains in excess of 15 percent,” the report said.

Michael Waters, chief executive officer of homebuilder Minto Group, told the Financial Post he has seen demand pick up as inventories remain low.

“Inventory levels (in Calgary) are very low,” Water said. “It’s definitely a seller’s market if you look at the sales to offers ratio and things like that. So, depending on how you look at it, Calgary has benefited from or been part of the same Canada-wide phenomenon in terms of dwindling inventories of homes for sale.”

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Waters added there was some debate as to whether home sales in Calgary would increase in tandem with the rest of the country.

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“In fact, we’ve seen a real strengthening in the housing market there,” Waters said. “So home sellers saw relatively less competing supply and when they bought something they had to search a lot harder to find something and prices were moving too.”

Jared Chamberlain, owner of Calgary-based Chamberlain Group, said this shift caught many in the industry unprepared.

“By mid-January 2022, we felt the change was happening quickly. We were getting 10-15 inquiries to our team from out of town every day at this point,” Jared told the Post in an email, adding that many were moving across the country to look for cheaper options. “It caught us off guard. We saw other buyers do the same in 2021, but the floodgates opened as the clock rolled over to 2022.”

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While energy is a strong driver of home prices in Calgary, Eisner noted that the oil market was less exuberant this time than during the 2006 boom, suggesting the downturn won’t be as severe now. The city has also been able to diversify its economy and create a larger buffer against market shocks.

“If I look downtown, there are a lot of IT companies opening in Calgary,” Eisner said. “And so Calgary has made some strides in diversifying its economy, and that will support some prices even if oil prices go down.”

• Email: [email protected] | Twitter: StephHughes95

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