Why This Canadian Real Estate Market Is Still So Hot

Three main factors support Calgary’s fiery streak, according to a top economist, and these are propping it far above other major real estate markets.

By Josh Sherman | 3 minute read

Calgary’s relative affordability versus other major Canadian real estate markets is one factor supporting higher home prices and sales.

Real estate markets in many Canadian cities remain quiet as potential homebuyers hold out for more rate cuts from the Bank of Canada, but one urban centre continues to be a housing hotspot. 

While home prices in Canada’s three largest cities — Toronto, Montreal, and Vancouver — are flat or declining on a year-over-year basis, Calgary home prices are soaring as sustained demand pushes them higher and higher. In fact, in May, the benchmark price of a Calgary home was $605,300, an increase of 10% from the same time last prior, according to the Canadian Real Estate Association.

“Among the major Canadian cities, it’s pretty much Calgary and then everyone else when it comes to home price trends,” writes BMO Senior Economist Robert Kavcic in a recent note to clients. 

The 3 Factors Heating the Calgary Housing Market

Three main factors are pushing sales and prices higher in Calgary while other major markets continue at a snail’s pace, suggests Kavcic. “The big drivers in Calgary’s outperformance have been even stronger population growth (juiced by interprovincial inflows), better affordability and valuations that might still make some sense for investors,” writes Kavcic. 

Here’s a breakdown of the three factors elevating home prices and sales in Calgary:

• Population growth: According to Statistics Canada, 2023 was a record-smashing year for interprovincial migration to Alberta. Between July 2022 and July 2023, some 56,245 more people moved to Alberta from another province than left it for elsewhere in Canada. It was the highest net interprovincial increase on record, with data going back to the early ‘70s.
  

• Affordability: With the benchmark price of a home in both Toronto and Vancouver north of $1 million, it’s easy to see why Calgary’s real estate market — where many homes can be purchased for less than half that amount — may entice some Canadians to change their home province. According to National Bank’s latest Housing Affordability Monitor report, housing affordability in Calgary improved slightly in the first quarter of this year. Mortgage payments on a median-priced home in Calgary would eat up 44.8% of a median-income-earning household’s pay, compared to 95.7% in Vancouver and 82.4% in Toronto.
• Investment: While investors have all but disappeared from the Toronto and Vancouver housing markets, there are signs that this type of buyer is increasingly active in Calgary. As of the first quarter, the share of homes in the metro Calgary area that were bought and then sold within six months reached 3.5%, up from 1.6% two years prior, when home-flipping activity began to climb, according to analysis from the Bank of Canada. Just 0.5% of Toronto homes and 1.7% of Vancouver homes are flipped within a six-month window. 

The Hottest Segment of the Hottest Canadian Housing Market

Homes with more affordable price tags are seeing the strongest demand in Calgary right now, suggests Royal LePage CEO Karen Yolevski. “Price points that are $500,000 and under — that’s the hottest market in Calgary right now,” she tells Wahi.

While $500,000 doesn’t go far in markets such as Toronto and Vancouver, in Calgary, recent Wahi analysis identified 40 neighbourhoods where the median selling price of a single-family home was below that threshold. Of these more affordably priced neighbourhoods, 65% were in overbidding territory, suggesting stronger demand.

Although Calgary’s market was hot before the Bank of Canada’s first rate cut in more than four years, Yolevski suggests increasingly lower rates could create affordability challenges for some buyers as demand drives prices up so high any savings from cheaper mortgage payments are erased.

“But, generally speaking, those that are looking at secondary markets for affordability, lower interest rates will help provided that price points remain somewhat stable or don’t increase to an extent that they erase the gains from those interest-rate decreases,” she adds.