First-time, younger buyers driving Calgary homes market upward

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A recent affordability survey shows Calgary is among the most affordable real estate markets in Canada.

Combined with low interest rates, and growing demand for better living spaces amid the pandemic, the city’s relative affordability — caused by falling prices since 2015 — has sparked a housing boom fanned by demand from first-time and other young buyers.

“The affordability of the average detached home is amazing,” Doug Cabral, real estate agent at Royal LePage Benchmark in Calgary. “I would say that for a major city, it’s the best in Canada.”

More broadly, Royal LePage’s recent national survey found Canada’s market overall is driven by young buyers. Nearly half of Canadians aged 25 to 35 own a home, with one quarter purchasing since the onset of the pandemic. This trend is likely to continue as the survey also revealed 68 per cent of this demographic, who do not own a home, plan to buy a home in the next five years.

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In Alberta, the trend is even more pronounced with 56 per cent owning a home, about one-quarter also having purchased in the past year, and 71 per cent of those who don’t own are planning a purchase.

Among major cities, Calgary ranked the highest for ownership at 59 per cent among 25 to 35 year olds. (The survey did not provide city-specific data for the other metrics.)

The poll also asked respondents other housing preference-related questions, including whether their savings have grown in the pandemic — to which 40 per cent of Calgarians in this demographic responded to the affirmative.

Realtor Barb Richardson with Sotheby’s International Realty in Calgary says the city’s condominium segment is particularly attractive to first-timers. Along with with 50-year lows for fixed rate, five-year mortgages, many young adults renting have been considering buying.

“Often the mortgage, taxes, condo fees and utilities are less than they are paying for rent — especially if they are renting in one of the high-amenity, purpose-built rental buildings in Calgary,” she says.

Canada Mortgage and Housing Corp. statistics for the city show average rent was $1,195 a month in 2020, while the carrying cost for a median condominium apartment was $1,343 a month, the tightest spread in the past four years.

Richardson adds existing condo owners in this demographic are then jumping into the townhome and single-family home markets. The key driver is more space. That’s a trend overall among gainfully employed Canadians, who are increasingly working from home due to pandemic safety protocols, the poll revealed.

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Here in Calgary, four in 10 stated they desire to move to a less dense area. And almost one in two indicated moving between 15 minutes to two hours further away.

This demand has driven activity in outer markets, like Airdrie, that typically feature single-family homes at a lower cost, Cabral notes.

“Buyers are looking at a lifestyle change,” he says, adding younger demographics started this shift. “The early story has been bottom pressure feeding the market in Calgary.”

In turn, demand triggered more activity among the move-up market, which recently took off leading to higher prices in the mid-range as supply dropped steeply in recent weeks, he adds.

Even with rising demand, Cabral contends the city still offers good value for buyers, first-timers included.

“If someone has savings in the bank because their income wasn’t disrupted, they’re sitting pretty.”

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