Will the Calgary Housing Market CRASH!? The answer might surprise you
Sunday, 6 June 2021
The Calgary housing market really took off this spring with a lot of action from buyers and sellers walking away with a premium on their house sale. An increase in buyers entering the housing market, coupled with a limited inventory of homes, helped to create a sellers’ market that saw homes selling in their first days on market, often with competing numbers. With the continued frenzy still going on in June, and with news of the “housing bubbles” in Vancouver and Toronto, many are asking “will the Calgary housing market crash?
Looking at future projections and key statements made by the federal government and bank of Canada, there are a few key takeaways that should give optimism to anyone still looking at purchasing their first home. Not only will the Calgary housing market not crash, it is actually expected to stay positive throughout the next couple of years. Here are the top three reasons to support this claim!
Its starting to feel like the beginning of the end of the pandemic. As vaccines become more readily available, and to more age groups, the optimism of things returning to normal is becoming more real. Just recently, Jason Kenney announced that potentially as early as June 11, we could reach a new phase in returning to normalcy, including reopening public libraries, indoor restaurants, gyms, and even movie theatres. There is even plans to have the Stampede return (even if its scaled back, this is still huge news!). And this is all great news for buyers and sellers of real estate. During the pandemic, Canadians saved much more than typical, going from around 3% before the pandemic to over 25% during. Uncertainty around job security forced people to save during these times in the event they lost their income.
With the vaccine rollout there is a lot more confidence in the job market which is also showing in the housing market. Now that the light at the end of the tunnel is becoming more apparent, these same savers will most likely become the biggest spenders opting for home ownership or larger homes to accommodate their new lifestyle of working from home which is becoming more acceptable and even preferred with many companies.
Long term stability of low interest rates
Interest rates continue to be at historical lows of just 2.45%. And with the Bank of Canada announcing that they plan on keeping it this way until at least October 2022, speculation for the future becomes much more predictable. But another interesting thing happens when the bank of Canada lowers the interest rates and announces no changes to be made until that far down the line – firms and households increase their demand for credit, and commercial banks increase their quantity of credit supplied.
This is huge, especially for the housing market. Having lower interest rates, and a larger pool to draw from, makes it easier for purchasers to finance their home, as well as increases the amount the amount they can borrow, giving them more choice in the market. One caveat to mention though is that they did also increase the mortgage stress test (read more here) to slow down the flurry of buyers entering the housing market. Regardless, low interest rates attract more buyers, and until the interest rates increase, you can expect people to take advantage of the low cost of financing.
Increase in Immigration
When the pandemic was officially announced in February of 2020, the Federal government gradually introduced stricter measures to limit travel into Canada. As a result, we saw immigration decrease by over 60% in 2020. Eventually, international travel did become more permissible, however, anyone entering Canada from another country were forced to be quarantine at approved hotels, with security present. Covid testing was also strictly enforced to ensure those travelling did not unwittingly bring the virus to Canada.
With the steady pace of vaccinations rolling out, these international travel restrictions are expected to be lifted, and with that, immigration to resume. In fact, during the last quarter of 2020, Marco Mendecino, the Canadian minister of immigration announced plans to significantly increase immigration levels in 2021-2023 to help the Canadian economy recover. (read article here). His projections are that over 400,000 immigrants will become permanent residents of Canada PER YEAR. To put this in other terms, if those numbers are met, that could mean that approx. 3% of Canada’s population could be newly landed immigrants by end of 2023.
With immigration comes an influx of investing, new opportunities, and an increase in the labor force. Over the next three years, over 1.2 million new people will move to Canada, and they are going to need a place to rent or buy!
If you are planning to purchase your first home soon, rest assured your investment will be well spent. Calgary is already one of the top ten best places to live, but if you zoom in enough on the map, you’ll see Axis at Walden, where we have some of the best built townhomes. Treat yourself to an amazing home, in an amazing city!
Our show homes can be found at 10 Walden Lane S.E
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