Money is on the move in Alberta and it’s showing up in Calgary’s luxury market.
A recent report by Statistics Canada — to no surprise — says Alberta tops all provinces in weekly earnings. On average, Albertans pull in $1,128.31 per week. This number includes overtime pay and is seasonally adjusted. The next highest earners are on the east coast, where people in Newfoundland and Labrador bring in a weekly cheque of $967.98. Saskatchewan comes in third with $961.90 weekly.
Like any area, it’s easy to see where the big money jobs are based on the health of its luxury home market. And in the Calgary area, it checks out just fine. Calgary is noted as a haven for corporate head offices, where presidents and chief executive officers preside.
“There are lots of people doing very well in Calgary right now and when they do well they tend to buy expensive homes,” says Canada Mortgage and Housing Corp. regional economist Lai Sing Louie. During the first two months of 2014, about eight per cent of new homes absorbed were priced $1 million and higher, says CMHC. During the same time last year, it was five per cent. Absorption refers to the time in which a buyer takes possession of their home.
“I think what you’re seeing is people in the oil and gas sector, when wages rise in that area, the economy is doing well,” says Louie. “We’ve had oil hovering at over about $100 a barrel for a while now. That’s creating a lot of income for a lot of people.”
Look at the construction crews covering lots in high-end communities in and around the city. Builders say show-home traffic at their big-ticket homes is on the upswing.
“The interest in million-dollar-plus homes is robust,” says Jordan Tetreau, director of sales and marketing for Trickle Creek Custom Homes. The company is part of the builder group in Watermark.
“One major driver is that the supply of developable land is scarce in and around the City of Calgary, while demand for new and pre-owned homes remains high, thanks to a strong economy and steady population growth,” adds Tetreau.
“This demand is driving up the cost of land and subsequently the price of new homes. For instance, in highly sought-after neighbourhoods like Altadore and Marda Loop, a well-situated 50-foot wide building lot will likely sell for over $700,000.”
Between Jan. 1 and the end of April, 265 homes sold for at least $1 million on the resale market. This is 13 per cent more than the 235 million-dollar homes that changed hands a year earlier.
Louie says Calgary’s tight housing market has allowed sellers to reel in sizable equity. They take these dollars and turn to something in a higher price bracket.
“There’s a lot of opportunity for move-up buying now,” says Louie, adding it wasn’t long ago the city was in buyers’ market conditions. In 2012, the market saw balanced conditions before shifting to a seller’s advantage today.
“People are getting more than the list price,” adds Louie. “We’re hearing about multiple offers on homes and that’s putting upward pressure on prices and supporting the move-up buying market.”