Calgary market sets new records in August. But are we still affordable?
In this Calgary Real Estate Market Update we’re not only going to tell you what you probably already know – which is that Calgary continues to be a very hot seller’s market – but we’re also going to peel back the layers a little further and talk about the rental market a little bit, and we’ll also discuss what the numbers look like if you’re deciding between renting or buy this fall!
But first, we have something very special to announce. On the 23rd of September, for one day only, we will be hosting a LIVE event all about real estate investing here in Calgary. We’ll be joined by some long-time colleagues, the incredible real estate coaches Corey and Tiffany Young of Fearless Investors, as well as several other speakers in a landmark event designed to help YOU take advantage of the generational wealth-building opportunity we have in Calgary right now. Oh, and we should mention… we are doing the event in a movie theatre!
Yes, that’s right, you can recline in your seat, grab a bag of popcorn while you learn how to invest from the best. Tickets are selling fast so check in the comments below for a registration link and get your seat today.
Okay, so why would you want to learn about investing in real estate? Well ,simply because the Calgary market continues to build wealth for all that own property here. In August, we saw prices increase by about 7.4% from this time last year, with total sales up by nearly 28%. That’s really healthy growth, and about the same numbers we saw in July with about 2,600 homes changing hands.
Breaking things down a little further, Detached homes have pushed through the $700,000 barrier, with an average price of $709,000, an 11% increase from this time last year and up a cool $120K from August 2021. Wow!
Semi-detached properties grew at about the same rate, 11%, and now sit at an average price of $580,000, which is basically the Detached price from two years ago, which is also kind of a crazy thing to behold within our market.
But that’s not all folks! The Row townhouse market is also making huge gains – up 22% – twice the rate of growth as the free hold segments, to sit at $419,000. I’ve long felt that the Row townhouse segment was really great value here in Calgary and the word is getting out and we’re starting to see that sector catch up to attached pricing. My feeling is that it’s being driven by the activity within the Condo/Apartment segment, which is also posting double digit gains, up 15% from this time last year.
Okay, but here’s a little bit of expert insight for you – we are seeing more new listings across all segments when compared to last year, about 7% or so, with the Apartment condo sector showing a nearly 50% jump in available properties on the market. Why, you ask? Well, this is almost definitely the result of new construction units hitting the resale market as early stage pre-construction investors exit into our current boom, pocketing some cash after renting for a year or two.
Now, speaking about the rental market – housing affordability is one of the hottest topics in Canadian real estate, so I’m going to deliver a little bit of insight into this segment of the market for those that are wondering if they should keep renting or push to get into home ownership.
Now, before I dive in, I should note that the statistics I’m referring to here are from a private company, rentfaster.ca, and they are asking rents, so they aren’t based on actual leases. But since we also run a property management company here at Redline – check us out at greenleafpm.ca – we look after hundreds of properties around the city and we know that the asking rents are essentially the same as leased rents and most of the trends I’ll discuss next are substantiated by our own experience within the marketplace.
So, if you wanted to rent out a property in Calgary you would be looking at approximately $2,000 for a one bedroom condo, $2,500 for a two bedroom and $3,000 for a 3-bedroom house. If you are into suited properties, main floors were commanding just under $2,300 a month in August, and basements are fetching just over $1,600 per month. All of these rents are up significantly compared to last year, on average about $400 more in 2023 than in 2022.
So, with both rental rates and housing prices going up, should you rent or should you buy if you are planning on moving here? Well, housing affordability is one of the hottest topics of conversation around the country these days. Interest rates have increased, making loans more expensive and prices do not appear to be coming down. So, what exactly would your payments look like if you decided to buy, and how do they stack up against the rents for the same asset class?
Well, I took a look at the contrast between the two approaches to housing, and I’ll walk you through it for the overall markets for both rental and purchase scenarios. If you’d like to see what the numbers look like for each of the market segments – so Detached, Semi detached Row townhouse and Apartment condo – just wait till the end of this update and we’ll post those numbers.
So, with respect to interest rates, the Globe & Mail had an article recently where they showed the lowest available interest rates across various products like 3-year fixed or variable, 5-year fixed or variable and so forth. For our study I’m going to go with the 5-year variable option because I feel it’s more likely that rates will be lower five years from now, and I also really hate the payout penalties associated with fixed rate loans. Our rate for the study will be 5.25%, and we will use an amortization length of 30 years.
So, using an ‘average’ Calgary sale price for August of $525,000 we’re going to run two sets of numbers – the first one for a first time home buyer using only 5% down, and a second scenario at 25% down which would be the lowest you could use if you were investing in real estate or if you just wanted to avoid CMHC insurance premiums which are getting pretty hefty as loan prices go up more and more each year.
So, a 5% down payment on $525,000 would be $26,250, and your monthly payment would be just over $2,700.
At 20% down, you’d need $105,000 in cash and your payment would be $2,300. Both of these numbers are very close to the ‘average’ rent rate in Calgary right now, which is $2,368, so we are pretty close, but all of them are indeed quite expensive when compared to a few years ago.
But expensive is a relative term.
Calgary’s prices are still way, way cheaper than Vancouver’s or Toronto’s, each more than DOUBLE the average sale price that buyers would pay here in Cowtown, and considerably more than the average rental rates in those two cities. So, by that measure, we have it pretty good here in Calgary.
Which is why you should consider taking a bigger piece of our market and learn all about investing in Calgary at our LIVE event on September 23rd!
We will have experts there explaining how to enter the world of real estate investing, and I will be there to share the kind of money-making intel about the market that we don’t put up on YouTube! Here’s the registration link:
And here, to finish things off, are the asset class specific Rent vs. Own analyses…
If you are in need of some help for your specific situation just drop us a comment, or email at firstname.lastname@example.org so we can hook you up with a specialist from our group of over 90 agents in the region!