The recent sharp growth in the value Canadian real estate has rightfully grabbed the headlines over the past few quarters, but an industry analyst stated that the market should also take into account the impact of average household earnings—a metric in which Calgary holds a clear advantage when compared to the rest of the country.
In the January 26 edition of his column for The Globe and Mail
, markets observer Rob Carrick said that too many consumers and market players disregard the differences between housing price growth and wage increases.
“Low interest rates help to justify housing prices, as does population growth and scarcity of new house construction in some cities,” Carrick wrote. “But at the same time, house prices in some places have jumped way ahead of the ability of middle-class people to afford home ownership. This disparity is part of the conversation about housing, too.”
With the median total family income at $107,804 (2016 est.), Calgary currently stands far above the national average of $81,341 despite being one of the markets hardest hit by the oil devaluations (as Alberta’s largest city).
“The slide in energy prices over the past few years has hurt both incomes and house prices in the city, with the net effect being that incomes gained ground on houses,” Carrick explained. “The estimated 2016 total median family income in Calgary was $3,179 ahead of incomes pegged to house price gains.”
All of these factors turned the city into what Carrick called Canada’s “affordability star”.
“People used to look to Calgary for its strong job market; now, the attraction is affordable housing along with median incomes that are well ahead of the other cities in this comparison.”
Data from Statistics Canada pointed at other possible destinations like Regina (with an average home resale price of $312,000 as of December), Edmonton ($358,000), and Ottawa ($388,500).
“These are places where the economics of middle-class home buying are still friendly.”
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