Have you been wondering why Alberta’s real estate market isn’t on a rapid decline like many other provinces? Or if now is a good time to buy or sell real estate in Alberta? There are five main factors to consider when looking at Alberta’s real estate market: Immigration, the fluidity of funds, livability, interest rates and the return of bidding wars.
If you are a buyer or seller who is on the fence about whether this is a good time to act, then this article is for you! Many buyers are waiting for interest rates to lower, while sellers are waiting for the right time to sell, usually so they can upsize or downsize. However, as the saying goes, “The early bird gets the worm” and if people wait to long, their desired home maybe gone due to the increase pressure on the market.
Immigration– According to Alberta.ca, the national immigration target for 2022 was 431,645. Year-to-date, Canada welcomed 437,180 immigrants: Alberta welcomed over 100,000 new residents in 2022, adding to the increased demand on the housing market. Not only are people immigrating to Alberta from outside the country, but Canadians within the country are migrating too. With inflated house prices in Ontario and British Columbia, many Canadians started to look elsewhere for opportunity. Alberta became a viable option for many people because of it’s affordable living and strong economy. (The image above depicts average home prices in different cities/provinces across Canada)
Livability– Alberta has become a very desirable province to live in for a variety of reasons. Even though housing prices in Alberta continue to increase, compared to other provinces, Alberta is still considered affordable. Taxes, health care, insurance (house/car) and education are also considered quite affordable when compared to provinces such as Ontario or British Columbia. Alberta’s diverse economy with a strong focus on oil and gas, agriculture, technology, and tourism, provides many jobs and business opportunities. With increased popularity, Alberta has become a multicultural province, with people from all over the world living here. This creates a rich cultural environment making it appealing to a wide range of individuals, especially new Canadians.
Fluidity Of Funds– When people move, so does their money…. Well, most of our money now a days probably won’t physically move, but where that money gets used will. When individuals and families started leaving Ontario and British Columbia, they brought their money with them to Alberta. Prices had become inflated and in many cases, people had made a profit on the sale of their homes. Even if people didn’t sell their home, many had accumulated enough equity to pull out of their current property and refinance it towards a different property in Alberta. With more people looking at real estate in Alberta and willing to pay above asking price to acquire a desired property, more pressure was created on the housing market, resulting in many home prices increasing especially in Calgary and the surrounding areas.
Interest Rates– After the pandemic years, the Canadian Government had to slow inflation and the economy down. This was achieved by raising interest rates seven consecutive times in 2022, increasing the benchmark lending rate by 4%. This forced many Canadians to pay thousands of dollars more on their mortgage payments. As interest rates were raised, some buyers started to become uneasy and wanted to wait until rates came back down before buying.
Unfortunately, due to the high demand for Albertan homes and the low inventory, prices stayed strong in many areas and as we make our way through the 2023 spring market, we are now seeing house prices increase even though interest rates have not lowered.
But if interest rates go down, will that be a good thing for buyers? Well, for people who already have a home and mortgage, lowering interest rates may result in lower monthly payments. Woohoo! But for active buyers, lower rates could actually be a bad thing. Lower interest rates will add more people into the buying pool, more buyers will further increase demand, resulting in more frequent bidding wars and ultimately higher prices. Meaning that even if you can afford a larger mortgage, you may still get out bid and out priced for the property you want.
Bidding Wars– Bidding wars have been a common occurrence in the Canadian real estate market in recent years, especially in cities such as Toronto, Vancouver, Ottawa and now Calgary and surrounding communities. This is due to a combination of factors, including low interest rates, high demand for housing, and a shortage of available properties.
In a bidding war, multiple buyers make competing offers on a property, driving up the price. This can create a stressful and competitive environment for home buyers, who may feel pressure to offer more than they can afford to secure a property. It is important to understand that the person who pays the highest for a property, set the new benchmark price for the next comparative property. Meaning for a lot of buyers, if they get out bid on a property, likely the next similar property that’s listed will surpass their budget. If you are a seller this can work in your favor to get top dollar for your property. However, not all property styles rise and fall in price at the same, wait too long and the property you were hoping to up or downsize to, may no longer be within your budget.
Conclusion- So what’s the takeaway from all of this? Well, Alberta has become a hot spot of activity. Thousands of people each month are moving to Alberta to call it home and to look for a new life. But, like many places around Canada, there is a very noticeable shortage in available properties to buy. The inventory shortage, combined with the massive demand for buyers is creating bidding wars and increase asking prices. What can you do? Don’t wait too long to buy your next home! I’m not saying you must buy right now today… But, if you are waiting for interest rates to come down, the perfect place to come to market or for the buying pressure to disappear, then it may become too late.
If you have questions about if this is the right time for you to buy or sell in Alberta please contact me HERE. If you are interested in what’s available for listings in Alberta click HERE.
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