It has definitely been an ‘interesting’ year in the Calgary real estate market as it was predicted. For 2011, Calgary investors and homeowners can expect a variety of shifts, and it’s how we react and respond to these shifts that we can prepare ourselves for the year ahead.
1) The market is going to see a lot more listings coming on to the market (more than usual) due to the unintended consequences of the CREA/Competition Bureau agreement. This will hold down the average value longer than the underlying economic fundamentals would suggest we see. Expect this wave to end in 2012 as market realities kick in. This means that 2011 will still be a market that provides good deals to buyers. Do your homework, and find the good investment opportunities within.
2) Along with increasing listings for sale, vacancy rates will decrease slightly in the city (as more people choose to rent over owning) with average rents only slightly moving upwards. We will witness much better numbers in the rental market in 2012 as the country-leading economic growth forecast for Calgary starts to draw people from other regions in the country. Real Estate markets always follow economic growth by 12 – 18 months, whether it be rental or resale. Don’t expect miracles in 2011, but position yourself now to enjoy a strong 2012 – 2015 period.
3) Neighbourhoods that are more transit oriented (especially LRT) will outperform the rest of the city in average value increases (although will also be muted by the large number of listings coming onto market in spring). This is definitely true with the new LRT lines and the Transit-Oriented-Design priorities that the city leadership has stated. Here is a direct link to a full Calgary Transportation Report outlining which neighbourhoods will win and which ones will miss out.
Click Here for the Calgary Transportation Effect 2010/2011
4) A major ‘debate’ will start to arise across the city, at all levels, regarding Secondary Suite Approvals. In- migration will be strong again in 2011 but no more affordable housing units will come on the market which will make the use of Safe Secondary Suites even more important to the growth of the city’s overall economy. Most cities in the country have come to the conclusion that secondary suites are a vital part of the city’s housing infrastructure (this demand is increasing in Calgary due to price increases over the last 5 years, and rents have followed suit). The conclusion is always uncertain, but there is no questioning the need for affordable rental housing in the city – a solution has to be found as it has been in many other cities across Canada.
5) As Calgary is slated to lead the country in GDP growth, these are important numbers in real estate in the region. Sure investors look at housing market numbers, but sophisticated investors don’t make their decisions based on them because they understand that it is looking in the rear-view mirror. What they do know, and how they can seemingly predict the housing market future, is that it all boils down to a region’s economic performance.
Here’s the exact formula: GDP Growth leads to job growth; 12 months later this job growth leads to population growth (in-migration); in-migration immediately leads to rental demand; this leads to decreased vacancies and increased rents; these higher rental costs lead to property purchase demand (now about 18months out from GDP growth); this increase in demand leads to increased prices. This is a cycle that is not discussed and therefore, knowing it provides you with a long-term view of the market that others just don’t have. Here is a link to an exclusive interview with Economist Carl Gomez as he analyzes the winners and losers in the country. Use this info wisely and it will serve you well over the next 24 months.
Click Here for an interview with economist Carl Gomez to find out the real future of Alberta (and Canada’s) economy
These 5 reasons and more are why Calgary comes out as the #1 City for Investment in Canada 2011 – 2015. Here is a link to the Executive Summary outlining the economic fundamentals driving invest potential in the other 9 cities.
Click here for the Top Canadian Investment Towns Executive Summary