How Do Calgary House Prices Compare to Other Cities?
Calgary has always been one of the best places in Canada for people to live and work. For three consecutive years, Calgary ranked as the fifth best city to live in the whole world, according to a survey by The Economist. In fact, in the April 2015 issue of MoneySense, Calgary was ranked the #2 city in Canada to buy real estate based on value, momentum, economic strength and rental income potential.
But is Calgary real estate still affordable?
The Royal Bank of Canada (RBC) recently issued their latest Housing Trends & Affordability report for major cities across Canada showing the percentage of pre-tax income required to acquire a home. Cities with a lower value had better affordability than cities with a higher one.
The Housing Affordability Measure (HAM) indicates the amount of median pre-tax household income required to service housing costs which include the mortgage payment, property taxes and utilities for an average priced, "standard" 1,200 sf detached bungalow. RBC also tracks 1,500 sf "standard" two-storey homes and 900 sf "standard" condominiums across the country. For more details and definitions on RBC's Housing Affordability Measures, visit RBC Economics Research - Housing Trends & Affordability.
For the first quarter of 2015, the RBC data showed a great variation in the housing affordability for the different regions in Canada. The Calgary HAM for a detached bungalow was 32.8% - a decline from 33.8% from the previous quarter. This is a sign of slightly better affordability for Calgarians with 32.8% of their gross income required for a home purchase. View the historical graph below to see what the Calgary HAM has been relative to other major Canadian cities since 1987.
The chief economist at Royal Bank of Canada (RBC), Craig Wright, stated that “Alberta’s housing affordability measures stood at fairly attractive levels compared to historical averages and compared to current values in other provinces, which will likely help limit the extent of any correction in the province. In fact, resale activity has stabilized more recently, suggesting that the worst may be over for Alberta’s housing market.”
He also commented that even with Calgary house prices being down only slightly, some buyers are still hesitant and waiting to buy their next Calgary home primarily because of the recent job losses in the oil sector and the uncertainty created by lower crude oil prices. Fortunately there is not an excess amount of housing inventory, making the market more balanced and not pushing home prices much further down than the peak Calgary Benchmark Price of $459,900 achieved in November 2014.
According to RBC, the HAM will continue to vary throughout Canada in the near term. Home prices in the oil & gas-driven cities of Calgary and Edmonton remain softened by the recent oil price drop and will benefit by having a lower HAM value. Theses markets have not seen panic selling or major price reductions by sellers. On the other hand, the cities of Toronto and Vancouver continue to have higher average home selling prices resulting in declining affordability. Currently the HAM for a Toronto bungalow is 57.3% and 85.6% in Vancouver. See the chart above for values in other major cities.
Exceptionally low interest rates also helped Calgary maintain its housing affordability. According to the president of the Calgary Real Estate Board (CREB®), Corinne Lyall, “Calgary has remained an affordable city for some time. We’re still one of the most affordable big cities next to Edmonton and that really hasn’t changed.”
The good news is that the Calgary housing market has not crashed and the recovering indicators confirm that overall, Calgary real estate is in good shape with a balanced market between buyers and sellers.
After all, Calgary is still an affordable place to live!
Contact Us Online or call 403-837-8100 today for a FREE Home Evaluation in today's ever changing market.
We're experts at Giving Your Home the Selling Advantage!
Count on Ross PAVL & Associates!
Superior Results with Premium Marketing and Distinguished Service.
Posted by Ross PAVL on
Leave A Comment