As interest rates climbed in Canada over the last year, so have mortgage payments. As a result, house prices in many markets have started to slow their steep ascent. The one major exception? Calgary.
The latest numbers from the Calgary Real Estate Board confirm it, with the average home price in Calgary at $539,461, up nearly 10 per cent compared to last year.
“I’m just surprised about the strength that we’ve continued to have in Calgary,” said Ann-Marie Lurie, chief economist for the Calgary Real Estate Board, which called its July 2023 sales numbers the strongest reported, with a “record-setting pace.”
In part, economists like Lurie pin the strength of the Calgary market on comparative pricing compared to other cities. Even as interest rates increase, the cost difference remains stark.
Calgary real estate is on a tear, bucking the trend elsewhere
With its population booming, new housing in short supply and prices cheaper than bigger markets, Calgary’s hot real estate market is bucking the cooling trend seen nearly everywhere else.
Numbers from the Teranet-National Bank House Price Index back this up. For example, while prices in Toronto or Vancouver have dropped from their peak in spring 2022, they still remain relatively higher than Calgary.
Escalating mortgage costs may not discourage those coming from markets such as Toronto, with detached homes that often cost more than $1 million. According to Lurie, those buyers are “less sensitive to those higher interest rates” when they view similar homes in Calgary with prices that are typically hundreds of thousands of dollars lower.
The ‘gold rush’
For Nadine Faule, a realtor who specializes in helping clients relocate to Calgary from other parts of Canada and the world, the current market is “like the gold rush” for people struggling to afford homes in more expensive markets.
“Everybody wants to come to Calgary and we just don’t have enough houses,” said Faule, who spoke to CBC News from an open house showing in Calgary’s Woodbine neighbourhood where nine offers were placed on the home before the open house even began.
Faule said Calgary properties like the one at her open house are ‘like the gold rush’ for people struggling to afford homes in more expensive markets. (Anis Heydari/CBC)
“We have such a lack of properties,” she said.
Faule told CBC News she typically needs to advise buyers that while Calgary prices may be lower than other Canadian cities, the market is fast-moving, with sellers in the “driver’s seat” in the current climate.
It’s a vibe felt not just by real estate agents, but also by Calgarians looking to buy.
“We thought it was gonna be way easier,” said Alejandro Decker, who stopped by Faule’s open house on a summer weekend. Over the last month, he’s been looking to buy a home for his family of four.
“We find that we don’t have choices,” he said. “It’s very frustrating.”
Alejandro Decker has been looking to purchase a home in Calgary for more than a month — but finds a lack of supply to be a problem. (Anis Heydari/CBC)
And it’s not just locals. Newcomers arriving in Calgary are definitely a factor in higher prices and tight supply, say housing market watchers.
“Let’s not forget the population surge that is still ongoing,” said Stéfane Marion, chief economist with the National Bank of Canada, who pointed out that new construction of housing — otherwise known as “housing starts” — are not keeping pace with the number of people migrating to Calgary.
Calgary is going to have an affordability issue in the not too distant future.– Stéfane Marion, National Bank of Canada
Marion pointed out that a low level of housing starts contributes to a lack of supply in the Calgary market, and as more people move to the city, the demand for housing goes up.
More demand and a lack of supply almost always lead to higher prices, which helps explain part of why prices have kept rising in Calgary despite higher interest rates over the past few months.
“If it weren’t for higher interest rates, I think the market would have been even hotter than it is right now,” said Marion.
Stéfane Marion, chief economist with National Bank of Canada, warns that there aren’t enough houses being built in Calgary to match the number of people migrating to the city. (Anis Heydari/CBC)
Why Calgary and not elsewhere?
Alberta attracted more people from other provinces compared to anywhere else in Canada in the first three months of 2023, but real estate market numbers for the summer of 2023 don’t seem to indicate price increases at the same level as Calgary’s so far.
While numbers around population shifts are less frequently updated than real estate sales numbers, the Calgary Real Estate Board’s Lurie says more migrants and newcomers are heading for Calgary rather than Edmonton.
She also pointed out that the Edmonton market had a higher inventory — or more properties available — over the past few months, which eased pressures on supply, leading to a cooler real estate market.
Affordability issues could loom
With population increases expected and low housing market inventory, the lack of affordability seen in markets like Toronto or Vancouver could be transferring to the Calgary region.
“Calgary is going to have an affordability issue in the not too distant future,” said the National Bank’s Marion.
“Higher interest rates, with the population increase, has led to a lack of apartments, a lack of supply, plus a very big increase in terms of rent inflation,” he said. “That has translated into people moving to Calgary from greater Vancouver and greater Toronto, that’s undeniable.”
However, economists also point out that Alberta remains relatively affordable compared to other Canadian regions.
Rishi Sondhi, an economist with TD Bank, points out that housing prices in Alberta were falling prior to the pandemic. (Anis Heydari/CBC)
“You’ve got to remember that before the pandemic, prices were falling. So you’re really just kind of playing catch up to some extent,” said Rishi Sondhi, an economist with TD Bank.
“Yes, affordability is deteriorating in Alberta, but from a historical perspective, it’s still quite decent,” he said.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
