First-time buyers on the edge of being priced out of Calgary's market

Calgary led the nation with net migration from July 2022 to July 2023. But as home prices rise, some Calgarians are turning to Edmonton.

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That Calgary is becoming a pricier real estate market is no secret — at least to locals looking to buy. Yet home prices are now escalating to the point that the city may be suffering from a trend that previously served to fuel its recent ascent.

“Anecdotally, we’re already seeing that, and it doesn’t surprise me,” Karen Yolevski, chief operations officer at Royal LePage Real Estate Services Ltd. in Toronto.

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She is referring to what she has heard in recent months among Edmonton colleagues seeing more Calgary buyers looking for a home in Edmonton after finding themselves priced out of the market here.

Indeed, Edmonton has much to offer from an affordability perspective relative to Calgary these days. The capital city ranked fifth among Canada’s most affordable cities in a recent Royal LePage study.

The report examined aggregate (all housing types) average prices in 62 cities, and monthly mortgage payments as a percentage of median income. In Edmonton, the average price was $442,200 at the end of March, requiring buyers to have a monthly payment of $2,306.18. That’s based on a 20 per cent down payment for a three-year term, fixed-rate mortgage at 5.7 per cent.

Using the median provincial income of $95,900, 28.9 per cent of monthly income would go toward the mortgage payments.

Yolevski says the survey only included the top 15 cities and did not include data for Calgary, but Royal LePage did provide additional information to the Calgary Herald. It cited that Calgary would rank 21st with buyers who would see 44.1 per cent of monthly median income being paid toward their mortgage.

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Notably, Red Deer ranked third in the survey, requiring just 25.7 per cent of a buyer’s household income to afford a mortgage payment on a home worth $392,900.

Yolevski notes that Alberta, as a whole, is less costly than many cities in British Columbia and Ontario. That fact is not lost on buyers in large cities in those provinces, who have found themselves priced out and forced to consider alternatives.

Often, their top alternate choice has been Alberta.

“Alberta has been the recipient of Ontario and British Columbia’s donation of people,” Yolevski says. “If you look at interprovincial migration, Ontario and B.C. are the primary donors of interprovincial migration to Alberta.”

More often than not, Calgary has been their destination. Recent Statistics Canada data on interprovincial migration shows Calgary led the nation between July 2022 to July 2023 with 26,662 in net migration. That’s compared with Toronto — which had a net loss of 93,024, and Vancouver, which saw 18,399 people leave.

Edmonton saw the second highest net migration gain of 16,082.

Yolevski predicts the province’s capital could see more buyers even from Calgary in the coming months, given home prices in Edmonton are significantly less costly.

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Calgary realtor Tim Jones with Re/Max Complete Realty says the increasing lack of affordable housing options in the city for “younger families with children earning an average wage is causing hardship.”

While Calgary’s market remains affordable relative to Vancouver and Toronto — where average home prices exceed $1 million — single-family homes prices are increasingly out of reach for young families. Calgary Real Estate Board statistics from May show the benchmark price — excluding the least and most costly homes sold on the market — reached a record high of $761,800, up 13 per cent year over year.

If that price was included in the Royal LePage study, the monthly payment accounts for about 47 per cent of median income.

“Apartments are often the only affordable choice left, which is why demand has surged recently,” Jones says, noting recent CREB data shows the apartment benchmark reached $340,500 in May, up nearly 18 per cent year over year.

Indeed, all that migration, while good for the economy, has its downside, Yolevski notes.

“It puts upward pressure on prices, and as people get priced out in Calgary, they will start looking at Edmonton.”

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