The word spreading along the crescents and cul-de-sacs of Calgary’s new communities is that the housing market is turning a corner. Builders are applying for permits again. House-hunters are visiting the show-home parades in urban and outlying areas. Overall, there’s an aura of optimism among residential homebuilders.
Economic indicators also show the housing market is reclaiming lost ground with 7,480 new houses started since January this year.
“That’s a 31 per cent increase in total housing starts, with encouraging gains in both the single-detached and multi-family segments of the market,” notes Richard Cho, principal analyst in Calgary for Canada Mortgage and Housing Corporation. Most of the activity is in multi-family rather than single-family housing. “Over 60 per cent of housing starts this year have been multi-family units.”
From lakeside landscapes and mountain views to countryside living with wide open spaces, each quadrant of Calgary offers different incentives in dozens of new communities. Many homes are in the planning leg, while thousands are in the construction phase or on sale.
Southwest Calgary features 27 new communities and starter homes selling for $300,000 to first-time buyers. Estate homes start at $750,000, and buyers can find a mix of housing styles in locations like Belmont, West Grove Point, Shawnee Park and Currie Barracks.
The southeast side of the city includes the Bow River and Fish Creek Provincial Park, and offers similar prices and 12 new communities with names like Cranston, Auburn Bay, Mahogany and Legacy with its $1-million-plus homes. Thanks to BILD’s annual competition for builders, the WestCreek community of Legacy won a Sales and Marketing (SAM) Award for the Calgary region. At buildout, Legacy will feature 7,000 high-end homes with prices at $1-million-plus.
The largest community going in the southeast quadrant is Wolf Willow, a WestCreek development. Located on 202 hectares between 194 and 210 Avenue SE, bulldozers are breaking the ground for construction, slated to start in 2018. Once built, the 3,500 homes will surround city parks and a public and separate school on a reclaimed brownfield that winds along the river and is near a seven-acre dog park.
“This area is ideal for buyers entering their first home or making a step up in the community to a semi-estate,” notes Kalida Goldade, WestCreek’s marketing manager.
The northwest quadrant of Calgary stretches west to the Rockies and offers mountain views and a rolling landscape. One of the city’s largest parks, Nose Hill, brings nature to urban communities where homes are selling in new areas like Nolan Hill, Evanston, EvanstonRidge and Carrington.
The northeast quarter is geographically flatter than other areas of Calgary with homes on sale in new communities such as Savanna and Redstone. Entry-level homes start at $300,000 with move-ups selling at $475,000.
Directly north of Calgary is Livingston, a Brookfield Residential community seated on 519 hectares, making it one-third the size of Okotoks. The recent discovery of fossils has garnered media attention for the area. Builders include Morrison Homes, Cedarglen Homes, Jayman Built, Brookfield Residential, Homes by Avi, Avi Urban and Brookfield.
Of sales in communities housed by Brookfield Residential, Ian Nash, vice-president of Calgary homes, says, “We’ve had great absorptions across the board from apartment projects in Regatta at Auburn Bay to our estates in Riverstone. Sales were strong in the spring. The summer lagged until people got back to their routines, and now show-home traffic is picking up again.”
Builders have also started 2,699 apartment units, which include condos and rentals, for a 14 per cent increase in numbers since January 2017.
The City of Calgary also sees housing starts climbing but not as high as in 2014. “We’re seeing strong numbers in single and multi-family home statistics,” notes Kevin Griffiths, director of buildings services. “But I’d like to see housing starts back at the high historical levels we saw in 2014.”
In 2014, construction began on 17,131 new homes followed by a downtrend. The number of housing starts dropped 24 per cent in 2015 and another 29 per cent in 2016. That’s when oil prices dipped to US$17.88 a barrel and newspaper headlines noted that Alberta’s unemployment numbers were higher than the national rate for the first time in 27 years.
That’s also when the quantity of unsold homes on the market began to burgeon. For 2017, CMHC notes that new home inventories in Calgary reached a record high in the spring. While inventories have come down since then, they still remain elevated. This has the Calgary Real Estate Board’s chief economist worried. “I look at new homes only to see how they affect the overall supply on the housing market, and their figures are increasing,” explains Anne-Marie Lurie. “Inventories for both new and resale homes are higher and this can cause housing prices to drop.”
But CMHC is forecasting inventory will shrink in 2018. “Inventory began growing in 2014 and 2015,” explains Cho. “We had a record number of homes under construction heading into the recession. The economy weakened along with housing demand, and many newly completed homes were left unsold. We are expecting the surplus will decline in 2018 as the economy improves and builders focus on selling the inventory on the market instead of starting new projects.”
Increasing mortgage rates are known to affect the housing market, and qualifying for a mortgage became more expensive on September 6, 2017 when the Bank of Canada increased interest rates 25 basis points. “CMHC is forecasting the five-year mortgage rate to increase and range between 4.4 to 5.2 per cent in 2017,” explains Cho. “This will impact the cost of financing but sales in Calgary are still forecast to increase. Job creation, population growth and improvements in consumer confidence will help support the demand for housing.”
The CEO of Buss Marketing also sees improvement and opportunities for growth in Calgary housing through investment. “Foreign investors will shift to Calgary to find some of the best investment opportunities in the country,” explains Calvin Buss. He attributes this to the foreign buyers’ tax the B.C. and Ontario governments have imposed on buyers outside Canada. Foreign investors buying residential homes in greater Vancouver pay an extra 15 per cent in property taxes. Even though the B.C. government is now saying it will review the tax, the Ontario government decided to launch a foreign home buyers’ tax in April 2017.
Whether Calgary housing sales surge through investment or better market conditions, most experts agree the market is making a comeback from the city’s roughshod recession.