Calgary broker on city's madcap market

Calgary broker on city's madcap market

Calgary broker on city

Last month saw the strongest February in the Alberta housing market for 14 years, with a 55.9% year over year increase, and one Calgary broker says that madcap pace is also reflected in the province’s mortgage industry.

Skye McLean (pictured), a broker with VERICO’s Mortgage Connection, told Mortgage Broker News that activity in the market during the first two months of 2021 had already risen above the levels shown last year, bolstered by low interest rates and purchases by first-time buyers.

“It’s extremely busy right now,” she said. “With the volume we’ve been seeing – especially for first-time home buyers, because the rates are still quite low – it’s [already] busier than last year. The January/February volume has almost been like a spring volume. It’s a pretty active market right now, and I’ve seen multiple offers on properties of $500,000 and under.”

Those low lending rates led the Alberta Real Estate Association (AREA) to forecast sustained strength in the province’s housing market, although it also warned that sales gains are currently far outstripping supply.

There are currently just 19,555 homes for sale across the province, but McLean noted that while it is undoubtedly a “seller’s market” right now, construction also remained strong in Calgary. “Hopefully the inventory will pick back up again,” she said.

One of the most significant trends in the housing and mortgage industries since the beginning of the pandemic has been the urban exodus, with homeowners increasingly turning their attention towards more remote, affordable areas outside major cities. McLean said that that trend has been most pronounced in the Greater Toronto Area and Ontario, with no significant number of Calgarians leaving the city for more rural areas.  

“House prices [in Calgary] are still not as crazy as the core Toronto area,” she said. “I don’t see many people moving to the outskirts of the city for a lower purchase price. There are a few that go to Airdrie [a city located north of Calgary], which is maybe half an hour away from the city limits, but those people most likely want a bigger house than what they can buy in Calgary.”

Rather, McLean says, those low current interest rates are the main reason for the surge in activity since the beginning of the year, in addition to Canadians continuing to save due to travel restrictions and remote working. “[A lot of] first-time home buyers are putting 5% down with a half-million price range and under,” she said, “and with people saving more because of COVID-19, and not travelling, they have that ability to come up with a minimum down payment.”

The AREA report said that the continued vaccine rollout across Alberta, coupled with robust energy prices, had helped buoy consumer confidence in the housing market. However, RBC warned at the beginning of this month that despite high levels of activity in Canada’s four largest cities (Toronto, Vancouver, Montreal and Calgary), “overheating” remained a significant risk to the Canadian housing market.

McLean said that interest rates would likely remain the key factor in determining whether the current frenetic pace of Calgary’s housing and mortgage markets continues, or ultimately cools off.

“If rates stay as low as 2.5% or under, the market will continue to be busy,” she said. “I think we might see a slowdown a little bit once interest rates increase, every couple of weeks a quarter of a percent here and there.”