When markets started to really explode in Toronto in 2020, many investors from the area began looking elsewhere for investment opportunities. One popular location was Calgary which was previously overlooked by many. Now, as the Toronto market begins to turn around amid rising interest rates, the Calgary market is still on course and the demand from out of province investors is just as steady.
We spoke to Mark Verzyl, a top local realtor and investor based out of Calgary, about why so many investors from the GTA are attracted to Calgary and how the future of the market may look in the coming year.
In the last month, prices have started to decrease in Toronto though the city still remains largely unaffordable. Calgary, on the other hand, is still far more affordable and has yet to see a similar downturn. Part of what makes Calgary different is the very different path it took to where it is now. While Toronto and Vancouver have expanded far beyond what seems realistic, Calgary has found to be much more in line with fundamentals, if even somewhat undervalued, with a lot of room to grow yet.
“Right now, there's a little bit of a correction happening in Ontario, which had to happen at some point,” said Verzyl. “ In Calgary, corrections have already happened over a four or five year period and now we still have 25-30% to go if we're going to hit our natural placement for real estate values among other major cities.”
“We went through a recessionary period in real estate terms that lasted from about 2015 to 2019. At that time, Ontario and Vancouver continued to trend upward while we were trending downward. Calgary was at the same level as Toronto in terms of values and higher-priced than Ottawa back in 2007 and 2008. Calgary had a bit of a decline and then kind of flatlined by 2019. Then, after the first lockdown, we finally saw migration start rolling and continued to trend upwards to numbers unseen since the height of the last boom as people were eager to get out of Canadian cities that were out of reach and finally into homeownership. There was a kind of psychological effect there with COVID, low-interest rates and the unaffordable markets in places around Toronto. Ottawa had already gone through years of price increases, along with Montreal, so Calgary became the next best option for major Canadian cities. When the realization came that you could work from home in Calgary and pay 40% of the price of Ontario, I think that’s when it really started.”
The great deal that Calgary presents for homebuyers does not come at the expense of amenities. The city offers all of the modern conveniences of any major city and has some distinct lifestyle benefits over Toronto to boot.
“One of the positive differences is that there is far less traffic,” explained Verzyl. “So, you're not sitting in traffic. It's much faster to get from the suburbs of Calgary to downtown. With less traffic, people are a little more easygoing. There’s less road rage and that massive stress level of trying to get where you're going in Toronto or Vancouver. The city's been set up very well in a grid that makes it easy to get around and there are bike paths that run through the city as well as tons of parks. And, it’s really easy to get outside of the city so you can go to Banff, or go camping, or go to a cabin, and do the things that Canadians love to do, literally in minutes.”
For investors specifically, Calgary offers some great benefits such as low taxes, great cash flow potential, no rent control, and tenancy laws that are favourable to property owners. This, in combination with affordable prices and great growth potential, makes it no wonder that investors continue to come in from out of province.
“Three years ago, investors from Toronto were almost nonexistent except for the very savvy ones that saw the potential. Then, at the bottom of our market, you started to see announcements of major companies coming here and buying up apartment buildings and building massive purpose-built rentals because they saw the need as well. Then, it started to catch on about two and a half years ago, little by little. Now, the mass majority of investors are coming from Ontario and to a lesser extent, British Columbia. Calgary literally went viral and It has been absolutely insane."
Toronto is also pushing more people out with its unattainable prices, Verzyl says, and that Calgary offers properties for all kinds of investors looking to get started or grow their portfolio.
“There's something for everyone. We get a lot of big investors, people with a lot of money, and then we have the guys that are just starting out. They can't afford to get an investment property in Ontario because it's just gotten out of reach for them. Now they're looking at Calgary because it's a really good bet and low risk. I think from an investment standpoint, we're going to keep seeing real estate prices on an upward trend. We've had quite a big jump in the last year and it needed to happen because we were so incredibly cheap for a major Canadian city, but even after a bump in price, Calgary is still half of the GTA, so expect prices to continually increase, even if Ontario is correcting, and you will still have great cash flow potential because again, we have less purpose-built rentals here than anywhere in North America. Over the long-term, it's a safe bet because we've only just passed where we should have been in 2015 and 2016. We still have a long way to go and you definitely haven't missed out yet. In a few years, you might just look back and think: oh my God, I wish I had done that.”
Interested in investing in Calgary real estate? Get in touch with Mark Verzyl through his website for more information on why it may be right for you, as well as to see local listings and tips for buyers.
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