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Calgary Real Estate
The Calgary Real Estate market has undoubtedly been one of the hottest in Canada for several years with house sales rising over 25% on average from the 2004 figures according to the MLS reports. The booming Albertan economy has brought a huge influx of newcomers both from within Canada looking to reap the rewards of the boom and immigrants from all over the world. With Calgary finally crossing the 1 million residents in 2006, the city reached a big milestone and is now considered “a big” city.
The real story is that of the actual housing prices themselves. While 2005 was a record year for the prices with an increase of over 15% from 2004, the first half of 2006 saw an absolute explosion in the prices with bidding wars erupting for the first time. Properties were selling the day they were listed without even a for sale sign going up and there were line ups to view properties the first day they were on the market. Despite the prices falling back at the end of the year due to rising inventories of available properties, the median house value had still risen over 40% from the end of 2005.
There were several factors affecting the boom, most notable were the shortage of skilled labour to carry out the work and also the rising costs of the raw materials. Natural disasters – including the Hurricane Katrina disaster – had placed a huge demand on the building supplies which led to shortages and steep price rises. Builders were eventually forced into selling their new houses for “forecast” values as they were suddenly taking over 12 months to build in some cases. Even having the plans authorized and permits issued caused delays due to the workload of the city planning department.
The rising prices affected many Canadians looking to move internally for work as Calgary rapidly grew too expensive for people to move to. The roll on for the surrounding towns caused similar issues for previously cheap and affordable areas. Airdrie, Cochrane, Okotoks, Chestermere and Mackenzie Town to name a few also saw meteoric rises in prices. The strength of the Canadian Dollar made previously affordable property stretch out of immigrant’s reaches and the foreign currencies no longer had a favorable exchange rate.
With the Oil and Gas industry enjoying record profits and several big companies relocating to Calgary, suddenly a lot more Calgarians/Albertans were able to fund these higher prices. Banks and Mortgage lenders were also offering higher debt to income ratio lending and longer amortization periods to make the housing more affordable.
There were record amounts of listings on the market at the end of 2006 and into 2007 which led to a slight (4%) roll back of the prices. This looks set to continue for a short while with a relatively quiet market with Oil and gas prices down dramatically and the announcement of the trust fund taxation by the Federal government reducing bonuses and pay rises in the previously strong sector. There are still indications of resurgence in the Oil and gas prices for 2007 as the world demand continues to grow.
The vast Oil sands in the North of Alberta are the scene of several mega projects that will help keep the Albertan economy moving forwards along with manufacturing and tourism. There is no doubt that Alberta is the “Have” Province of Canada and many of its residents are enjoying new levels of personal wealth which gives analysts positive feelings towards another year of strong housing prices.
The weakening of the Canadian Dollar against the world’s major currencies by around 10 – 15% is beginning to attract foreign investors and immigrants back into the market place as the properties have started to become more affordable.
The City of Calgary have been proactive by annexing large amounts of land around the City limits to ensure its growth can continue. With the main demand being single family dwellings there is a major concern about “Urban Sprawl” and the level of taxes it takes to maintain both the City as it is and the required growth in its services. New Schools and sports facilities are required and many Doctors are unable to operate their family practices due to extortionate rents. These are genuine problems for the City to contend with as well as the fact that there are so many higher paid jobs available that it is difficult to recruit good staff for the public transport and other vital positions that keep the City operating.
How the year plays out is certainly a fascinating and nerve wracking subject for anyone looking to move to Calgary or invest in its housing market.
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Travel Part B