Varcoe: Calgary housing prices, rents rise — and employers are worried

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Alberta is experiencing a inhabitants growth and a housing disaster, and the repercussions proceed to unfold throughout Wild Rose Nation.

For Albertans on the lookout for a spot to reside, it’s an anxious second, with hovering rents, rising mortgages and better residence costs.

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For companies, it’s additionally a rising fear, as it would develop into more and more tough to draw or retain staff if they’ll’t discover an inexpensive place to name residence.

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“We’re in a dire state of affairs for housing, notably on the decrease finish . . . It’s a state of affairs of high quality of life and making certain that Calgary could be the place the place all people can reside with dignity,” mentioned Adam Legge, president of the Enterprise Council of Alberta.

“Except we resolve a few of these challenges, we’re going to face an growing problem to draw expertise and entice folks.”

In a report on housing affordability issued final week, the Royal Financial institution of Canada declared that “Calgary is Canada’s present scorching spot.”

“That is the market the place exercise continues to be very, very strong,” Robert Hogue, RBC assistant chief economist, mentioned Friday in an interview.

“That’s in fairly stark distinction to many markets throughout Canada, together with these in Ontario and B.C.”

The explanations behind the development in Calgary are nicely understood.

Hogue factors to huge inhabitants progress that far exceeds different Canadian markets and a comparatively strong financial system that’s outperforming different provinces, pulling extra newcomers to the town and different communities in Alberta.

As nicely, Calgary’s housing market is taking part in “catch-up” for a half-decade of weak gross sales and costs earlier than the pandemic.

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Knowledge present Alberta’s inhabitants jumped by 4.4 per cent final yr — growing by greater than 200,000 residents — marking the province’s highest progress price since Pierre Trudeau was Canada’s prime minister.

In Calgary, housing gross sales climbed 10 per cent from ranges a yr earlier. The benchmark value for a Calgary residence has shot up 11 per cent over the previous yr to almost $600,000. The provision of properties is now lower than one month.

Circumstances in March haven’t been this tight in 18 years, mentioned Ann-Marie Lurie, the Calgary Actual Property Board’s chief economist.

“The largest problem we’ve got is that even when listings enhance, gross sales are enhancing quicker. There continues to be some exceptionally sturdy demand. Provide simply can’t preserve tempo,” Lurie mentioned Monday.

“You’re feeling the influence of the expansion that we’ve had over the previous three or 4 years.”

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Housing begins are rising within the metropolis and are anticipated to hit new highs in 2024, though Calgary is anticipated to proceed to expertise the situations of a sellers’ market, in response to a Canada Mortgage and Housing Corp. report.

It additionally forecasts that the emptiness price within the native rental market, which hovered about 5 per cent in 2021, will fall to simply 1.1 per cent this yr.

In flip, the common hire for a two-bedroom unit is anticipated to extend by 9.6 per cent from final yr’s stage to $1,859 a month.

That represents a $500-a-month leap since 2021.

On the homebuying entrance, the strain can also be rising. RBC’s housing affordability index, which appears to be like on the share of the median family revenue required to cowl residence possession prices, has elevated to 48.3 per cent in Calgary — up 4.5 proportion factors up to now yr — in contrast with 36.8 per cent in Edmonton.

A lack of affordability “might put a damper on the restoration going ahead if the worsening development persists,” RBC’s report cautions.

“Affordability is deteriorating, like elsewhere,” Hogue mentioned. “Actually, in Calgary, our affordability measure is at its worst level . . . in additional than a decade.”

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Throughout Canada, housing affordability has develop into a hot-button political difficulty.

For employers, housing has additionally develop into a priority.

Mogens Smed, founding father of Calgary-based building know-how firm Falkbuilt Ltd., worries hovering rents and housing prices will finally value staff out of the town.

The corporate has grown to 550 workers since being established lower than 5 years in the past, and Smed hopes so as to add one other 50 jobs by yr’s finish.

“Our manufacturing unit wages, candidly, are fairly excessive in comparison with anyone else. However you understand what, even what we pay them in a beginning wage, there’s no means they’ll (purchase) on that quantity. They simply can’t — the mathematics doesn’t work. And it’s a disaster,” Smed mentioned Monday.

“We have now to get inventive. We acquired to seek out higher methods to assist the folks right here.”

Whereas Alberta’s housing affordability in contrast with Ontario and B.C. has helped entice newcomers up to now two years, one other main draw to the province is the sturdy employment market.

Over the previous yr, Alberta has created greater than 80,000 jobs. As of January, there have been additionally 71,490 job vacancies within the province, in contrast with 53,000 within the yr earlier than the pandemic, famous Alberta Central chief economist Charles St-Arnaud.

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“Nobody goes to maneuver right here if they’ll’t discover someplace to reside. Our benefit continues to be fairly sturdy in comparison with Vancouver or Toronto, by way of the fee,” added Legge.

RBC notes that Calgary’s affordability index continues to be under the nationwide common — and much under the degrees seen in Vancouver and Toronto. It’s additionally barely under ranges in Ottawa and Montreal.

However the benefit is ebbing as housing costs and rents climb.

“We want inexpensive housing. And that’s actually vital, from the angle we have to proceed to draw expertise and labour and assist the inflow of individuals into the province,” mentioned Deborah Yedlin, CEO of the Calgary Chamber of Commerce.

“Affordability is a large fear.”

Chris Varcoe is a Calgary Herald columnist.

cvarcoe@postmedia.com

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