CALGARY – Last month’s record floods are driving up demand for homes as both displaced millionaires from posh neighbourhoods that were flooded and former renters jump into the market, Calgary realtors say.
“What I’ve been seeing is a crazy amount of activity, as far as buyers go,” said Thomas Keeper of Tink International Real Estate.
Wealthy neighbourhoods along the Elbow River were among the areas hardest hit by the flooding, prompting some homeowners, whose properties will take at least several months to repair, to buy homes elsewhere in the meantime.
As a result, multimillion dollar homes that would ordinarily take a year to sell are being snapped up for about 10 per cent more than they normally would within a matter of weeks, Keeper said.
And Keeper said that’s had a ripple effect throughout the city, as buyers have been forced to look further afield to find properties in their price range.
“What it does is it bumps buyers down,” he said, adding a newly listed home in the far reaches of Calgary’s southern suburbs garnered three offers over the weekend.
Although the values of homes in flood-hit areas will likely drop, Keeper said he expects prices across the city to rise and stay high for the foreseeable future.
Re/Max associate Mike Hornby said July is usually a quiet month — but not this year.
“I have just been steady the entire time,” he said. “It’s been relentless.”
He said another house in Calgary’s southern suburbs had 19 showings in eight days something that is normally unheard of in July.
Hornby said Calgarians who would ordinarily be looking to rent are being pushed into buying.
“The rental market is a huge concern. Our vacancy rate was already quite tight to begin with and now it’s literally non-existent,” he said.
“People have been panicking. I definitely think it’s spurred people on to make a decision quicker.”
Calgarians are eager to buy property not necessarily because they’ve been directly displaced by the flooding themselves, but because they foresee a tighter market ahead generally, Hornby added.
Mike Leibel, associate broker at CIR Realty, said he’s been seeing some transactions delayed because of the flooding, as appraisers take stock of the disaster.
Leibel said he expects the flood to have a relatively short-term impact on property values in flood-affected zones.
He recalled it took a relatively short time to return to normal after condo building on the west side of downtown beside the Bow River flooded a few years ago.
“That didn’t seem to affect the property values in that particular building. The unit holders were inconvenienced for a couple of weeks before they had a chance to pump out the parkades,” he said.
“It seems if the buyers want the location, which is downtown, they’re willing to take the risk for the most part.”
Ann-Marie Lurie, chief economist at the Calgary Real Estate Board, said whether home values in flooded areas drop may depend on whether the city builds berms or dikes to keep the water out next time the rivers spill their banks.
“In a lot of those centres when they have done this type of work, valuation has fully recovered,” she said of past cases involving flood prone cities.
Lurie said the housing market was tight before the floods — both for renters and buyers. Now, interest may be piqued in bedroom communities outside of Calgary, such as Airdrie to the north.
“They’re going to have to start considering other areas, where they may not have considered renting before. They’ll have to see what other things they can rent,” she said.
“Some of those renters are going to consider ownership. Otherwise, they’re going to consider what’s available to rent in the suburbs.”