Urban Analytics - Calgary

Photo: Justin Hu / Unsplash

Signs of economic recovery and a growing population are expected to bolster Alberta’s housing market according to a recent report by Zonda Urban.

Alberta workers have the nation’s highest incomes with $5,345 in average monthly earnings, a rate that  outpaces Ontario ($5,051) and British Columbia ($4,921). Meanwhile, Alberta’s unemployment rates have dropped from 11.8 per cent in October 2020 to approximately eight per cent in November 2021, with new business investments creating optimism in the province.

“There’s been a lot of positive buzz about Alberta’s economic recovery, the affordability of the housing markets, housing starts, and we have seen increased migration from other provinces,” said Jackson Cornelius, director of advisory services in Alberta for Zonda Urban.

Zonda Urban reports that the average price of single-family detached homes in Edmonton ($404,000) and Calgary ($540,900) have enabled homeowners to keep their proportion of monthly income required for a mortgage payment — 34.5 per cent and 46.1 per cent, respectively — far closer to the 30 per cent benchmark than Canada’s major urban centres.

“Edmonton and Calgary aren’t subject to the same geographical constraints that exist in Toronto and Vancouver, so urban sprawl can almost expand in perpetuity in a number of directions to keep housing affordable,” said Cornelius.

“This is going to work to help attract new migrants to the province throughout the Edmonton-Calgary corridor, as well as new international immigrants that will boost residential demand moving forward,” he added.

Zonda Urban notes that the average townhome costs $210,800 in Edmonton and $300,300 in Calgary, with condominium prices sitting at $181,300 and $252,200, respectively.

Calgary’s new multi-family transaction volume significantly outpaces Edmonton’s, dipping slightly during Q3-2021with 935 sales compared to 998 in Q2-2021. Edmonton only recorded 257 multi-family sales in Q3-2021, a 43 per cent drop from 450 in the previous quarter.

“Calgary has seen more consistent activity, as well as more consistent project launches in both wood-frame condominium and townhome projects,” said Cornelius. “Demand in Calgary has tended to outpace the supply of new projects.”

While condominium sales in Edmonton have slowed, Cornelius attributes the shift to a lack of new product rather than reduced demand. Several condo projects have been delayed or converted to rentals in the past few years, shrinking the supply of new homes for sale.

“There haven’t been a lot of new launches,” Cornelius explained “Anything that’s been launching in the market has primarily been purpose-built rental, and the number of actively selling projects has decreased substantially since the end of 2018.”

On the rental side, Zonda Urban reported that one-bedroom apartments now average $925 in Edmonton and $1,177 in Calgary. While vacancy rates in the provincial capital hover around the 10 per cent mark, Calgary’s have dropped to 7.8 per cent from approximately 18 per cent during Q3-2020.. 

Increased rental demand in both markets has put upward pressure on prices, resulting in an average of $1.70 per square foot in Edmonton (up from $1.64 earlier this year) and $2.28 per square foot in Calgary (up from $2.10).

“I believe that there’s going to be an accelerated absorption rate in the rental market, as well as a return to city centres as the work-from-home trend dissipates a bit,” said Cornelius. “So I think there will be increased demand for more centrally located projects.”

Since the start of the year, Edmonton has launched 13 new purpose-built rental projects totalling 1,777 units, with 741 of them leased. Meanwhile, Calgary launched 18 new projects with 1,409 of the 1,961 total units leased. 

“When I look at the two-year timeframe for new projects coming online given our current availability I’m not concerned at all — I actually think there’s room for new supply given the accelerated population growth in the province,” said Cornelius.

Forecasting single-family home sales in 2022, Zonda Urban expects increases of 26 per cent in Edmonton and 13 per cent in Calgary. Condominium sales are projected to rise two per cent and 12 per cent, respectively, with townhome transactions dropping three per cent and 13 per cent in Alberta’s largest markets.

“Given the affordability that we’re seeing within Edmonton and Calgary, as well as the job creation and overall opportunity in the province, we will see population growth continue to accelerate and increase demand,” said Cornelius.