Mike Moreau outside a house he just sold in the hot real estate market in Calgary, on March 25.Todd Korol/The Globe and Mail
After a woeful decade, Calgary homeowners are finally having a moment.
“Calgary homeowners are long overdue for a win, when it comes to equity in their homes,” says Jared Chamberlain, founder and co-owner of Chamberlain Real Estate Group, a Calgary brokerage. “For too long we’ve had many conversations about clients homes not being worth what they paid for, and they have to sell for a loss.”
In 2011, Greater Vancouver was the first metro area in Canada to surpass a $600,000 composite benchmark price, which includes all types of properties. Five years later, the Greater Toronto Area would follow, according to CREA data. Calgary is expected to catch up in 2024, as the city’s composite benchmark price inches toward the $600,000 mark.
In Calgary, this price growth is largely driven by demand for properties in the single- and semi-detached segment, as buyers continue to take advantage of the city’s relative affordability – and get more bang for their buck. Since 2020, the benchmark price for detached homes in Calgary has risen by 44 per cent, a much-needed boon after a decade of modest appreciation, reaching an all-time high of $654,300 in February.
To capitalize on these price gains, Mike Moreau decided to list one of his investment properties, a suited semi-detached home, or half duplex, in Ogden, a working class neighbourhood in southeast Calgary.
When he acquired the 1,800-square-foot home in 2021 for $256,000, Mr. Moreau’s intention was to renovate and hold the property indefinitely. But as interest rates took off a year later, and the home continued to appreciate, he realized selling the 1973-build to extract the equity accrued so far was the best alternative.
“Our interest rate was higher after refinancing it; we were only making about $100 a month,” Mr. Moreau says, noting that he’d invested more than $11,000 in renovations. “Our initial investment strategy was to buy it distressed, give it an uplift, legalize [the suite], refinance, hold it and let it cash flow – and then evaluate year over year.”
Listed on the first week of March at $499,000, the Ogden property received a firm offer on Day 1, and sold for $517,000 three days later. “We did not expect this,” Mr. Moreau says. “Appreciation is icing on the cake for us.”
Price growth isn’t only beneficial to investors seeking to cash out, Calgarians downsizing or moving up, are also reaping the perks of a red-hot market – especially those who own detached homes in high-demand areas in Calgary’s inner city.
As properties appreciate across segments, homeowners can make a jump to a product type that better suits their needs and lifestyle, explains Terrin Daemen, a Calgary realtor. “For people who are wanting to upsize, to go from a starter home to a bigger one, their house is now worth between $550,000 and $600,000, so they can buy something a little more easily in that higher price bracket, because they’re going to sell theirs for a good profit.”
However, those looking to exit the market, or to downsize, have an advantage over move-up sellers. “If homeowners are looking to upsize, then I would say [they should] find the house that they want first, because their home is going to sell very quickly. " Ms. Daemen advises. “Sellers definitely have the upper hand right now.”
Despite the nascent opportunity for homeowners to turn a profit on their property, regardless of its type, the resale inventory for single- and semi-detached homes is dwindling, as investors increasingly capture this segment of the market.
In February, CREB reported an inventory of 1,275 active listings for single- and semi-detached homes in Calgary’s resale market, a 36-per-cent drop relative to February, 2022, when sales in the detached segment soared.
One of the reasons why supply is struggling to catch up is investor demand. In a report released in March, the Bank of Canada estimates that the share of homes flipped within 12 months reached 6.54 per cent in Calgary, the largest in the country.
Because finding detached properties for less than $700,000 is nearly impossible in the Toronto and Vancouver markets, investors have turned to Alberta’s largest city in search for cash-flow opportunities.
“In the last couple of years, the interest for investors really started in the detached market,” says Natasha Phipps, a Calgary realtor and investment specialist, noting that in a seller’s market, buying a distressed property to renovate and sell it in the short term is an attractive proposition. “As prices go up, you’re going to see more and more flippers, because there’s a lot of demand on the detached side.”
But not all investors in Calgary are flipping properties. An important driver of demand in the detached segment is that some of these homes are ripe for redevelopment.
“The City of Calgary is very much on board with increasing density, particularly in the inner city,” Ms. Phipps says. “In Killarney and Shaganappi you’re seeing a lot of homes being torn down, and putting in four to eight units. … And we’re going to see even more of that as the city allows for those types of developments.”
Although the influx of investors seems to be undermining Calgary’s resale inventory today, this issue is only temporary. Eventually, redevelopment should bolster the city’s supply of housing, Ms. Phipps says.
“Calgary historically is just single-family houses as far as the eye can see, and that’s creating a problem. Allowing more density – and not just inner city, but even in suburban communities – will absolutely help create more options.”
The City of Calgary estimates that, in the long term, rezoning will drive the construction of about 1,500 net more homes per year.