The supply of available residential real estate is not matching an increased demand in the Calgary market, creating tight conditions for those looking to buy and sell their homes, according to the city’s real estate board.
“It’s caused some fairly significant price gains over the first part of this year,” said Calgary Real Estate Board Chief Economist Ann-Marie Lurie.
“Supply is starting to catch up in the market, it’s just taking some time.”
Lurie said Calgary is currently experiencing seller’s market conditions, which is one reason why the topic of real estate has been front of mind for many in the city lately.
Global News received a number of inquiries from viewers and readers on the topic, and we posed a few of them to a number of experts in the field.
Q: As a young adult, what steps should I take in order to make a proper investment in owning a home?
Real estate can seem exciting, but a purchase has to make sense “from a lifestyle and financial perspective,” according to mortgage broker and author Sean Cooper.
“If you’re just getting started in your career and you don’t know if you’re going to be staying in the same city or industry, then it probably doesn’t make sense to buy a property,” said Cooper, who wrote the financial literacy book Burn Your Mortgage.
If you come to the conclusion that it is time to buy, Cooper said it’s important to set a clear goal for the type of property you want to pursue and the timeline you want to buy it in. After you come up with a savings plan, the next step is to get pre-approved for a mortgage, before looking at a property.
“There are actually people that go out there and they end up making an offer on property and they haven’t even spoke with a mortgage professional at all,” Cooper said.
“They may get lucky and buy a property in the price range that they qualify for, but what if they don’t? Unless they have the bank of mom and dad to bail them out, then they’re in serious trouble. You can’t just walk away from a purchase agreement if it’s a firm offer.”
It’s also important for homebuyers to have an emergency fund consisting of three to six months of base living expenses before buying a home, according to Laurel Wyton, a counsellor with Money Mentors.
“That’s not what you use for your down payment, that’s not what you use for some things you’re going to have to buy because now you bought a place,” said Wyton.
“If you have your emergency fund that is not the down payment fund and is not the outfitting fund, you should be good to go.”
Q: How should renters approach Calgary’s current real estate market?
In the current climate, renters still have the ability to shop around and compare offers, according to Jackson Cornelius with Urban Analytics, a real estate research firm.
“If we spin the clock back two years, a project down on MacLeod Trail, outside of the downtown area would not be considered a competing project with those in the Beltline,” Cornelius explained.
“Now, since working in the downtown core isn’t as necessary as it was before, these projects are now ultimately competing with each other and that’s where we’re seeing that aggressiveness in the incentives.”
However, Cornelius did say rental prices could rise in the near future, as university students return to campus for in-person classes this fall and more people are drawn to Calgary to pursue jobs in emerging sectors like technology.
“As that happens, there might be a bit of an upward pressure on prices, but we’re still at the standard where we are affordable,” Cornelius said.
“As things begin to get a bit more competitive, we might continue to see incentives, but I could see them potentially becoming less aggressive.”
Q: What has caused housing rates to rise in Canada over the past 20 years?
When you look at the Canadian market, the national state of housing prices is largely driven by what’s happening in the Toronto and Vancouver regions, explained Lurie. She added that in general, population growth is one of the key drivers behind rising housing costs in Canadian cities.
“When you look at markets like Toronto and Vancouver, they still have people moving into their cities, they’re still growing, but it’s a lot harder to increase the supply in some of those markets,” Lurie said.
“In Calgary, we tend to go through highs and lows, because when there isn’t a lot of supply, we see the reaction from the new home builders … other markets don’t necessarily have that same ability to increase their supply.”
When it comes to recent rise in Calgary real estate, veteran realtor Len T. Wong said he’s seeing large demand in single detached homes and many people are competing for the same property, which drives up prices.
“A lot of times a new product comes on and then usually nine out of 10 times it was selling in the first day or even hours,” Wong said.
“People lose out and that causes a bit of a frenzy in the marketplace.”
His advice to prospective homeowners is to have their finances in order and mortgages approved.
“When you get into a compete situation, the less conditions you have, the better chance you’re going to get that property.”