MODERN, AND CALGARY, IN THE SAME SENTENCE?
For all those Canadians that know Calgary as “Cowtown” or think of it as full of oil barons: it’s time to get with the current reality. This is an image of Calgary’s Central Library, built over an LRT station. It was named as one of the best architectural designs of the decade (2010-2020) by Azure: https://www.azuremagazine.com/article/best-canadian-architecture-decade-2010/ and one of Time magazine’s greatest places for 2019: https://time.com/collection/worlds-greatest-places-2019/5654128/central-library-calgary-canada/. As much as Calgarians love to party during Stampede, there sure is a lot more to this vibrant city in 2023.
So what does that mean to real estate investors? This week’s post is about the January economic fundamentals for Calgary, and to some extent, surrounding areas.
- GDP: Depending on who is doing the talking, Canada’s GDP is predicted to be about 1.6% for 2023. The Alberta Treasury Branch (ATB) is forecasting Alberta’s real GDP growth of about 2.8%, possibly the highest in the country.
- Job Growth: Such a hot topic these days, so much variability between locations and job types. Canada’s unemployment sits around 5.1%, Alberta is 5.8%, and Calgary is 6.6%, with new numbers expected next week. But may we simply say that construction-related jobs are in incredibly high demand right now! And it was recently revealed by Avison Young that Calgary’s office vacancy is dramatically improving. This may or may not directly correlate to jobs, as some office towers are being converted into affordable housing, which is impacting “office vacancy.” ATB is predicting that provincial unemployment will remain largely unchanged over 2023.
- Population Growth: Calgary’s population grew 3.1% between July 2021 and July 2022. The Alberta population grew 8.3% from July 2016 to July 2022. For perspective, Alberta inter-provincial migration hasn’t been this high since Q3 of 1980!! Alberta City Population growth was strongest in Airdrie 25.3% increase, Calgary showed a 10.5% increase, and Cochrane was the fastest growing town at 29.2% (between 2016 and 2022, according to ATB). An important side note from ATB is that they are predicting a growing trend to urban centres in Alberta, with a forecast for 80% of Albertans living in the Calgary-Edmonton corridor by 2046. Location-location-location.
- Rental Demand/Vacancy/Price: The recent stats released by CMHC show that Calgary has a 2.7% vacancy for purpose built rentals, and 1.8% for condo-style apartments. Here’s a mind-blowing stat: Calgary 2 bedroom rental rates went up 5% month-month, between December 2022 and January 2023, according to Rentals.ca! Wow! That’s a lot of demand to carry into what is traditionally the worst time to try to rent out a property in Alberta! Raising rents in January is usually taboo!
- Real Estate Demand/Pricing: With Canada’s real estate at its worst affordability ever, Calgary and Alberta are different. https://royal-bank-of-canada-2124.docs.contently.com/v/homebuyer-blues-dreadful-affordability-gets-worse-in-canada According to RBC, it only takes 41.6% of household income to afford a home in Calgary. This compares to 95.8% in Vancouver, and 85.2% in Toronto, but isn’t as good as Edmonton at 31.2%. The January real estate stats from the Calgary Real Estate Board reveal that Calgary now has the lowest level of new listings since the late 1990’s. Sales activity is slower, and buyers are preferring lower priced products. The current benchmark price is $520,900, which is up 5% year over year, but below the peak benchmark in May of 2022, $546,000.
Real estate investors have a lot of reasons for optimism in and around Calgary in 2023. In a world of chaos and unpredictability, Calgary is offering some stability, with strong potential for growth. Modern Calgary is the third most livable city in the world, according to the Economist Intelligence Unit: https://www.calgaryeconomicdevelopment.com/newsroom/calgary-ranked-worlds-third-most-livable-city-by-economist-intelligence-unit/ Why does this final tidbit matter? Because our customers who are Gen Z and Millennial value the quality of their life. And we all love happy rental housing customers!
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