By Rebecca Wissink

When I read anything that links Calgary’s current real estate market to the conditions of the market in 2006-07, alarm bells go off in my head. Rumours of bidding wars and offers over list price have come to Calgary. Inventory is tight and sales are up between 66-109% depending on the home type. The Calgary Real Estate Board (CREA) reported on March 1, 2022 “the benchmark price reached $596,400, which is nearly $50,000 higher than prices seen at the end of 2021 [a few months ago!] and over $90,000 higher than February 2021 prices.” I’ve written elsewhere for Ross Pavl that Calgary’s boom came later than most markets in Canada, not really taking flight until the winter of 2021. I remember what happened to real estate in Alberta in 2007-08 after the run up in 2006-07. In fact, what happened to the real estate bubble in the United States that set off a global financial meltdown. Are there reasons to be concerned that Calgary is entering a real estate bubble in an environment of inflation and rising borrowing costs? We’ll get to that.  

In late February 2022, the Parliamentary Budget Officer (PBO) released a troubling report on the state of house prices in Canada. The report provided an “assessment of house prices relative to a household’s capacity to borrow and pay for the purchase of a house.” Their primary current concern is that “rising mortgage lending rates are projected to offset the increase in average household incomes, resulting in declines in borrowing capacity over the medium term.” In short, what we think we can afford today, we might not be able to afford tomorrow. The PBO doesn’t use the language “bubble” or “meltdown,” but reading between the lines, their use of the term “financially vulnerable” reads foreclosures to me. Specifically, the PBO writes “in the context of mortgage debt, a financially vulnerable household is one that is required to devote a substantial portion of its income to service its debt. It faces greater exposure to shocks and is more likely to be delinquent in its mortgage payments.” Exposure to shocks include the current environment of inflation that is raising the cost of goods necessary for survival. It is worth noting that the PBO does not consider other debts in its calculations, only mortgages.

Who is the PBO and why are they messing with our utopian myth of home ownership for all? The role of the PBO is: “to provide independent, non-partisan analysis to Parliament … on matters of particular significance to the state of the finances or the economy of the country.” Affordable housing, and the decoupling of house prices to average wages and debt has been a mystery in this country since 2015, and politicians include platform promises to address the issues of affordability. Hence, the PBO report, which states that nationally, “at the end of 2021, the average house price … was $811,700 - an increase of 43 per cent from December 2019 ($565,800) and a 97 per cent increase compared to the average price in January 2015 ($413,000).” The PBO identifies four cities which are more than 50% above affordable levels, and another three that sit between 30 - 45% above affordable levels. Thankfully, the same report indicates that “based on household borrowing capacity, we estimate that average house prices were at, or below, affordable levels in … Calgary at the end of 2021.” And determining Calgary’s real estate soundness is our area of interest.

In Calgary, house prices and the resulting affordability have risen and fallen over the years. The city previously crossed into what the PBO considers risky territory in 2015, when the average house price sat 5-6 % above affordable levels. However, in the intervening years, and prior to the COVID related buying spree, “house prices in Calgary declined.” In fact, between 2015-19 “house prices in Calgary … remained close to affordable levels,” and the affordability gap decreased. CREA reports the benchmark price rose by nearly 6% in February 2022 alone and was 16% higher year-over-year. “Much of the growth has been driven by the detached segment of the market which has not seen conditions this tight in over 15 years” – that’s a reference to the run up before the crash of 2007-08. Further, this is the fourth consecutive month that the market has experienced tight conditions. To summarize my analysis of the potential strengths and weaknesses of Calgary’s current real estate boom, please see Table 1 below. I suggest we are not in any boom that will significantly correct or a bubble that will pop. Yet. There are many good reasons for the sudden increase in home prices in Calgary. As long as the forecast for Calgary holds and we don’t see another 20% year-over-year increase in prices, we should be safe from the vulnerability the rest of the country is facing in its housing markets. Speak to an experienced Ross Pavl ELITE Real Estate Group Realtor® today to help you understand your real estate options in this fast moving and tumultuous market.

Table 1. Potential pros and cons of the Calgary real estate market in light of the PBO’s report

Red Light

Yellow Light


Green Light


  •  Sales in Calgary surpassed the last record highs set in 2006
  • “Concerns over inflation and future rate increases supported another surge in demand       from buyers looking to get into the market before any rate changes took effect” - CREA
  • Sales in the condo market have increased a whopping 109% year-over-year - CREA
  • This is likely due to first-time homebuyers or investors purchasing condos
  • “Rising lending rates and higher home prices are expected to slow demand growth in 2022, bringing sales down from 2021’s record levels” – CREA
  • Home prices are increasing and we are in a seller’s market with very little inventory
  • Townhouse sales are up 107% year-over-year - CREA
  • People might be getting priced out of single-family homes
  • Housing prices have been flat or dipping for the past five years
  • Annual price growth is expected to slow to four per cent in 2022, but not before the spring market sees price gains due to tight conditions
  • The unemployment rate in Calgary in 2021 was 9.1%
  • Province wide the rate was 7.2% in January 2022 which exceeds the national rate
  • The outlook for Alberta’s economy is promising due to increased crude oil prices and growth prospects in the tech industry
  • “As we move through the economic recovery and job prospects improve, demand for resale housing will remain relatively strong” - CREA
  • In 2007-2008 house prices in Calgary raised above household borrowing capacity
  • Between 2007-08 the composite benchmark price in Calgary dropped $70,000
  •  We are close to crossing the household borrowing capacity threshold again in Calgary. See Figures 1 & 2 below
  • Since 2015, Canadians have been leaving Alberta for other parts of the country
  • In mid-late 2021 Alberta saw improved migration levels not seen since the fourth quarter of 2019
  • Several sources note more people are moving into Calgary than leaving this past year

PBO for Calgary past

Figure 1. House prices and borrowing capacity between 2000 and 2019 (Source: PBO)

Figure 2. House prices and borrowing capacity between 2015-2024 (forecasted) (Source: PBO)

Image credit via creative commons to Bernard Spragg

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