Renters and Homebuyers Face Affordability Challenges in Calgary

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The largest city in the picturesque province of Alberta, Calgary, is a vibrant and prosperous community. The third-largest city in Canada was ranked alongside Zürich as the third most livable city in the world in 2022, highlighting Calgary’s safe, welcoming, and thriving environment. Calgary’s vibrant neighbourhoods, stunning natural landscapes, and urban amenities make the city attractive for homeowners and renters. With its bustling real estate market, houses for sale in Calgary cater to its residents’ many preferences and budgets.

What makes Calgary so attractive to homeowners?

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Calgary is synonymous with the energy sector in Canada and contributes significantly to Alberta’s economic prosperity. The city has many sectors, including finance, technology, transportation, manufacturing, and tourism. This diverse economic base helps to create employment opportunities and attract migrants from across the globe.

While Edmonton is a more affordable alternative, Calgary’s higher incomes, more significant economic opportunities, and diverse amenities make it a compelling option for those willing to invest in real estate. Despite the higher price point, Calgary’s stability, economic strength, and ongoing growth make it a solid bet for homebuyers and renters looking for long-term value and prosperity.

The Calgary housing market is buoyed by interprovincial migration toward Alberta. In addition, the federal government’s plan to bring in 2 million new immigrants to Canada further reinforces the continued migration towards Alberta, particularly Calgary, upping the demand for housing.

It is no wonder that Calgary real estate is experiencing a significant upswing, with new price upticks causing concerns for homeowners and property investors alike. A combination of factors, including a shortage of homes and the expectation of lower mortgage rates, has propelled Calgary home prices to reach new record highs. In May 2023, Calgary witnessed a notable increase in sales, reflecting the growing demand for housing.

Calgary Real Estate Prices

Alberta Real Estate Association (AREA) reports price increases in various housing segments across the province, particularly Calgary. In May 2023, the average price of detached homes in Calgary surged by 10.9% year-over-year, reaching an average of $732,000.

Similarly, semi-detached homes experienced an 11.0% increase, with an average price of $602,000. Townhouses also saw a notable rise, with an 11.7% increase, placing their average price at $406,000. Even the condo apartment market has soared, as prices have risen 6.5% year-over-year, averaging $307,000.

Calgary condos are increasingly popular, with the number of sold apartments increasing by 36% year-over-year to 858 units. The inventory for apartment homes is 1.3 months of sales, indicating a high demand for this property type. The shift towards condos reflects a change in buyer preferences and increased affordability compared to detached houses for sale in Calgary.

Should you invest in Calgary Real Estate?

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For first-time home buyers in Alberta, the First-Time Home Buyer Incentive (FTHBI) provides interest-free loans that reduce monthly mortgage payments, easing the financial burden of homeownership. The Alberta PEAK Program also offers down payment assistance grants, making it easier for first-time buyers. For buyers with limited funds, the Attainable Homes Calgary (AHC) Program offers down payment assistance grants to afford a Calgary home with a minimal initial investment.

In addition to these initiatives, Calgary and Alberta generally boast higher incomes and wages than other parts of Canada. Despite the relatively higher price point, the city’s stability, economic strength, and continued growth make it a solid choice for real estate investment. Calgary offers diverse amenities and promises long-term value for both homebuyers and renters.

The real estate market in Alberta, including Calgary, has demonstrated resilience by avoiding a housing bubble and maintaining affordability even during peak periods. Investing in real estate in Calgary and Alberta remains a wise decision with this stability, favourable economic conditions, and an affordable housing market.

While Calgary offers a prosperous environment for homeowners, the city’s rental market poses affordability challenges for tenants. As home prices increase, many individuals and families turn to renting as a more accessible housing option. However, rising demand and limited rental inventory have led to escalating rental prices in Calgary.

The Calgary rental market has experienced significant tightening, with low vacancy rates and increasing rental costs. According to the Canada Mortgage and Housing Corporation (CMHC), Calgary’s rental vacancy rate was just 1.9% in October 2022, marking a decline from the previous year. The lack of available rental units has resulted in increased competition among renters, pushing rental prices higher.

The average monthly rent for a two-bedroom apartment in Calgary has been steadily increasing. As of May 2023, the average rent for a two-bedroom unit reached approximately $1,500 per month. This upward trend in rental prices can pose challenges for individuals and families with limited budgets, especially those in lower-income brackets.

To address these affordability concerns, the City of Calgary has implemented initiatives to increase the supply of affordable housing. The Calgary Housing Company (CHC) offers various affordable rental programs and subsidies to assist eligible individuals and families in securing affordable housing options. Additionally, non-profit organizations and private developers collaborate to provide affordable housing solutions for low-income residents.

Demographic Factors in Calgary’s Housing Market

Calgary’s housing market is influenced by various demographic factors. The city attracts a diverse range of individuals, including young professionals, families, and newcomers seeking employment opportunities and a high quality of life.

Young professionals are drawn to Calgary’s thriving job market and career prospects. The city’s strong economic sectors, such as oil and gas, technology, and finance, offer promising employment opportunities for individuals starting their careers.

Calgary’s demographics also reflect the impact of international migration. The city has seen a significant influx of newcomers from different parts of the world, including immigrants and international students. This multicultural diversity contributes to Calgary’s vibrant social fabric and fosters a welcoming and inclusive community.

The city’s demographics also highlight the importance of family-friendly neighborhoods and amenities. Calgary offers numerous parks, recreational facilities, and schools, making it an attractive destination for families looking to settle and provide their children with a high-quality education and a safe environment.

Conclusion

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Calgary, a bustling city in Alberta, Canada, presents an attractive real estate market for homeowners and investors. The city’s economic strength, diverse amenities, and promising job opportunities make it an appealing choice for those seeking long-term value and prosperity.

However, Calgary’s real estate market faces affordability challenges for renters, as rising demand and limited rental inventory lead to increased rental prices. The city’s rental market poses difficulties for individuals and families with limited budgets, highlighting the need for affordable housing initiatives and programs.

Despite these challenges, investing in Calgary’s real estate market remains an enticing option due to the city’s stability, favourable economic conditions, and the potential for long-term value. Calgary’s demographic factors, such as a diverse population and family-oriented neighborhoods, further contribute to its desirability as a place to live and invest in real estate.

As Calgary continues to grow and evolve, finding a balance between housing affordability and maintaining a prosperous real estate market remains a priority. Through collaborative efforts between government, organizations, and stakeholders, Calgary can strive to address affordability concerns and ensure a sustainable housing market for both renters and homeowners.