It continues to be a tale of two cities in Alberta when it comes to the price of a new home—and the tales in Edmonton and Calgary couldn’t be more different.
According to the latest information released by Statistics Canada, the index of new homes in Calgary reached 109.7 in June (with the index of prices in 2007 set equal to 100). That’s 7.3 per cent higher than June of last year.
Up the highway, Alberta’s capital city reported virtually no change in the price of a new home. Edmonton’s index in June stood at 91.1. Over the last four years, new home prices have been stuck essentially unchanged at close to an index of 90 (see chart). That means prices are nearly 10 per cent lower than they were in 2007.
Both cities continue to do well economically and attract growing populations from interprovincial migration. The difference can be attributed to higher building costs in Calgary. Statistics Canada reports: “New home prices in Calgary rose ... as builders continued to report higher material and labour costs, good market conditions and higher costs for developed land as the reasons for the gain.”
Over the last three years, the price of a new house in Calgary has risen by 14 per cent. The cost of the land itself has risen by 7.3 per cent. But the cost of building the house—which includes material and labour—has risen by a much steeper 19.3 per cent.
**Article courtesy of Todd Hirsch, Chief Economist with ATB Financial. Thanks Todd!!
Something that most folks who have lived in Alberta for more than a few months know, is that whether it's football, universities or our biz, real estate, there is always ongoing competition between the two power cities.
With record setting sales in May of 2014, Calgary's residential housing market continued its upward surge. We're talking about a 16% increase in sales over 2013. Some didn't think it possible that the residential values would be able to sustain a steady increase, but they have. Low interest rates have definitely helped. Single-family homes gained a 10% increase in value over last year. This astonishingly brought the average home price of this class up to $504,300. A $50K gain in one year. That goes for condo values too (10.7% increase). It's happening all around us every day in Calgary. New builds are up up up to the tune of 5,857 new units in the first quarter of 2014 alone. A substantial 64% increase over this quarter 2013. Incredible. An interesting fact is that apartment construction was the largest contributor to this gain. It's a multi-family heaven for those looking to get into brand new homes.
To summarily quantify the magnitude of the transactions going on in Calgary ... The majority of sales occurring are between $300 and $500K. The number of listings in this bracket are however declining. Instead, higher up the market in the amounts closer to the millions and above, we're seeing a surge in new listings. A quick search of a portion of West Calgary (Springbank Hill, Slopes, Aspen, Coach Hill and a few more favourites) for homes valued at $1million or more revealed well over 120 listings. In fact, I have just executed a search for homes valued over $1 million in all of Calgary to find that there are currently 558 listings starting at $1million. Back to the topic at hand, the same search of our neighbours to the north in Edmonton has yielded 177 listings. Calgary seems to be leading the charge when it comes to high-end product availability.
Calgary single-family sales and new listings for 2014 to date are 8,175 and 11,950 units respectively. That means that of the 5,177 real estate agents and brokers in Calgary, each one of them could have had a deal, and for many even two or three. There doesn't seem to be a stranglehold on business in that ratio, which is a great incentive for agents to do their best to represent as many listings as they can in this lucrative climate.
Single-family sales and new listings for 2014 to date in Edmonton totalled 4,746 and 7,590 units respectively. Of course we have to take into account that Calgary has a couple hundred thousand more residents than Edmonton.
We can see from the numbers that there are definitely some differences between the two real estate markets north and south. Both markets are performing very healthily, however one seems to be a little more active over the broad spectrum of analysis ;)
What can both cities look forward to in the next few months? So far it has been smooth sailing. Good returns for sellers with homes that buyers can still afford? Praise that low interest rate right now. Without knowing what will actually happen tomorrow in the market, the absolute best thing you can do is work with an agent that you trust on an ongoing basis. Together you will be prepared to make your decisions based on real knowledge from real professionals right at that critical moment you need to.