Calgary leads Alberta home prices

Josh Skapin
Calgary Herald

In all forms of the Battle of Alberta, I fully admit to being a biased Calgarian. Whether it be the sports rivalry or nuances like who has better restaurants or more polite drivers, I’ll turn to the Stampede City 10 times out of 10.

So, it wasn’t a head-scratcher when I saw recent Canada Mortgage and Housing Corp. statistics point to a higher average price for single-family homes in Calgary than in our northern counterpart.
What’s worth noting is the widening gap between Alberta’s two biggest cities. In 2009, a few years into the economic downturn, the price difference seemed like pennies.

In fact, if a newcomer to Alberta was on the fence about which city to pick, the cost of a new home likely wouldn’t have made the difference. CMHC says the average price of a single-family home in the Calgary census metropolitan area in 2009 was $547,769. In the Edmonton Census Metropolitan Area, it was $543,243.

Census Metropolitan Area counts neighbouring communities such as Airdrie for Calgary and Sherwood Park for Edmonton.

One year later, the two sides take a bigger step in the opposite direction – where Calgary’s average cost of a single-family home hits $514,466, three hours up the Queen Elizabeth 2 Highway, it tumbles to $490,128. That trend continues and is even more pronounced with CMHC’s estimated closing averages for the two cities in 2012 and 2013 respectively.

If things continue the way CMHC expects, the average cost of a single-family home in Calgary this year will finish at $570,000, while Edmonton’s will be $516,000. CMHC estimates 2013’s prices will be $583,000 in Calgary and only $525,000 in Edmonton. That’s a difference of almost 12 per cent.
CMHC economist Lai Sing Louie says there are a few explanations for the divide. One of the measures CMHC looks at is the new house price index released through Statistics Canada, which tracks the same size of house surrounded by similar amenities in two different periods. That index shows the price of a home in Edmonton is 90.8 per cent of the price it was in 2007, prior to when the economy soured. Calgary is 97.7 per cent of its 2007 price.

“It’s significantly higher,” says Louie. “Calgary has come back more so than Edmonton has since the economic downturn.”

Calgary buyers are also reaching deeper into their pockets for homes than people living in Edmonton. Louie says, despite flat price growth, he’s seen a shift in Calgary buyers putting pen to paper on higher priced homes than people living in Edmonton, adding “that shifted the average higher in Calgary relative to Edmonton.”

“Calgarians like to move-up buy,” says Louie.
“If you look around, there are lots of more expensive homes being bought by people in Calgary.”
As an example, Louie says just look to the trend in the inner-city where builders are knocking down older homes to put up more modern houses surrounded by central amenities. “That’s happening throughout the inner-city,” he adds.

Economic analyst for the Canadian Home Builders’ Association- Alberta Richard Goatcher says you’ll typically see a higher price tag in Calgary because “incomes are higher and buyers can, on average, carry more mortgage debt and therefore can pay more.”
Goatcher suggests land supply may also be an influence.

“In Edmonton, the market is fairly balanced with a good supply in all quadrants,” he says. “Calgary, I believe, has a less-generous supply of new single-detached lots which maybe put more upward pressure on price.”