Demographics helping to distinguish Calgary market as Canada’s leader
Calgarians need not be defensive about their hometown’s place amongst Canada’s preeminent cities, at least not when it comes to the world of real estate.
Having seen a rise in sales and prices, Calgary’s housing market has been experiencing the same prosperity seen in Vancouver and Toronto – a trio billed as the “hot three” in a recent report from BMO Capital Markets.
There are, however, conditions that separate our city from the housing hot spots to the east and west.
“Toronto and Vancouver have been quite active, but in Calgary I think what’s really brought housing demand up [has been] the record levels of net migration and continued positive employment growth, which is bringing more and more people into the region,” said Canada Mortgage and Housing Corp. (CMHC) senior market analyst Felicia Mutheardy.
Lured by an economy that saw the province add 58,500 jobs between October 2013 and October 2014 and average paycheques ranking as the very best in Canada, Alberta’s population increased by 2.8 per cent between 2013 and 2014. In Calgary, the population increase was even more pronounced, with the BMO report showing the number of Calgarians aged 15 and older increasing by 4.1 per cent year-over-year in 2014 compared to just 1.8 per cent in Toronto and 2.0 per cent in Vancouver.
Digging deeper into what separates Calgary, the number of Calgarians in the “prime homebuying cohort” places the city tops amongst their big three, according to BMO.
“Calgary’s population share of 25-to-44 year olds (33.8 per cent in mid-2013) towers over other cities, while Vancouver and Toronto’s shares are more than two points above the national norm (27.1 per cent),” said BMO Capital Markets senior economist Sal Guatieri. “By contrast, cities with weak housing markets, such as Saint John and Victoria, tend to have older populations.”
Despite a rise in average house prices that according to BMO, also ranks as the highest in Canada (9.8 per cent year-over-year as of August), Calgary’s relative affordability remains as another distinguishing factor. While Calgary remains in the affordable category, requiring 23 per cent of household income to service the mortgage costs on a benchmark home, the typical Toronto family would need to spend 42 per cent of their gross income to buy a home. In Vancouver, the cost climbs to 62 per cent.
Also helping to separate Calgary from the pack is the number of homes up for sale in the city. Calgary has seen a marked percentage increase in the number of newly listed homes in Calgary, exceeding increases Greater Toronto. By contrast, the number of newly listed homes in Greater Vancouver has declined compared to its spike in new listings toward the end of 2013.
“Demographics, for one [have been] the biggest underlying fundamental factor that separates Calgary’s from Greater Toronto’s & Greater Vancouver’s housing markets,” said Canadian Real Estate Association. chief economist Gregory Klump. “The increase in demand has exceeded the rise in supply in Calgary more acutely than has been the case in either Greater Toronto or Greater Vancouver’s housing markets.”
Helping to pick up the slack, Calgary’s new homes market has also seen larger percentage increase than other markets. According to CMHC, the number of new homes under construction through the first 10 months of 2014 has jumped by 52 per cent in Calgary compared to the same period last year. In comparison, starts in Toronto have increased by just two per cent while starts in Vancouver have fallen by 11 per cent.