Earlier this month, the Canada Mortgage and Housing Corporation released their biannual Housing Supply Report, which highlighted Calgary as the Canadian city with the highest percentage growth of housing starts in 2021. The report reflects a newly revitalized housing market in the city after years of slowdown and positive sentiments about the future of the city. But, why is new development picking up now, and what might it mean for the future of Calgary?
To help understand the explosion in new developments in Calgary, we spoke to Jesse Davies, a top local realtor from the Calgary area, who has experience working with new builds and developments. Overall, he paints the picture of a housing market that is now getting the recognition it deserves after being overshadowed by other markets in recent years. The increased attention directed towards Calgary has come with a higher demand for homes, which has reinvigorated developers’ efforts to meet this demand.
“As positive sentiment starts to snowball for the Calgary market, more development has followed. Some of the larger projects may take years to plan, approve and fund, so they can lag a bit behind the positive sentiment of the market. Now they are starting to catch up. Factors such as oil and gas prices escalating and holding strong will drive even more investment in development to try to meet the demand of migration to the city.”
One of the biggest reasons Calgary has seen such rapid growth in housing starts is in previous years. The city simply wasn’t building at the same pace as its’ major peers. The 62.% increase in development for Calgary represents around 15,000 new homes and the highest growth in half a decade. Meanwhile, in Edmonton, over 12,000 new homes represented just a 9% growth from the previous year.
While cities like Vancouver and Toronto have had relatively stable levels of development in proportion to their populations, Calgary has seen peaks and troughs as the city reacted to economic conditions, largely to oil and gas market conditions. This, paired with slowed development during the COVID pandemic, made Calgary lag behind in the housing boom compared to other cities.
Calgary’s lag in housing development made the city stand out to investors looking for a market with unappreciated growth potential. Beyond just affordable home prices, the strong oil and gas market and an increasingly diversifying local economy are making the future look bright for the city. Meanwhile, cities like Toronto are beginning to correct from incredibly overinflated prices. All of this is driving both migration and investment demand in the city.
Now, builders are working overtime to keep up with a sudden influx of buyers from across the country. According to Davies, there is a huge interest in Calgary's new builds.
“Right now, investors and buyers are hedging their bets that Calgary prices are very affordable and have a very high likelihood to appreciate in the future,” said Davies, citing low supply as a major issue driving the Calgary market.
“Supply across all sectors is a major concern that we feel will continue to drive prices up. At the moment, the supply of Condos is around three months of inventory, some of the lowest levels we have seen in 5+ years. The detached market has 1.75 months of supply, suggesting a strong seller's market continuing for the month of May.”
The question now is just how long the rapid expansion of development in the city will go on. For the time being, the demand for new homes is high, even as supply chain constraints slow the process. With a lot of room on the periphery to expand detached homes, and a lot of renewed interest in the condo, semi-detached, and row markets towards the inner city, it seems Calgary has a lot of steam left to drive development into the future.
For buyers looking to invest in a new build in Calgary, Davies stresses the importance of working with experienced agents to help you have the best chance of closing a deal and getting the best value for your money.
“It’s important to speak to a local real estate agent that knows the builder, the community, local prices, rental rates, and more. They can help to ensure you are paying fair market value and that the investment makes sense financially.”
Jesse Davies and his team have over 15 years of Calgary real estate experience, including experience working with new home builders and developers. Davies has helped countless buyers and investors to buy in Calgary and realize their real estate goals. Visit https://jdrealestatecalgary.ca/ to contact Jesse Davies and begin your buying journey today.
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