Calgary’s Housing Market Collapses While “Three-Alarm Blaze” Burns Next Door In Vancouver
In Waterloo, Ontario, the property market is red hot.
Dubbed “Canada’s Silicon Valley,” the city of just 140,000 people is drawing interest from real estate investors far and wide. Waterloo is around 70 miles west of Toronto and is home to a Google office as well as two universities and “dozens” of startups.
One-bedroom apartments in a new development being pitched to investors are going forCAD$270,000 while a two-bedroom will run you CAD$340,000. Rents in the building are as high as $2,000/month.
Vacancy rates are running at just 1.5%.
Meanwhile, in Vancouver, housing has gone full-retard. Average home prices for detached residences rose to an astronomical $1.82 million in January. It’s not as insane in Toronto, but at $631,092, there aren’t too many “bargains” to be had.
New data out on Tuesday shows average property values on resold homes in the Greater Vancouver area rising by 30.9% in January while average prices in the Greater Toronto Area and in the abovementioned Waterloo rose 14.2% and 9% for the month, respectively.
But oh what a difference a province makes.
While the Canadian housing bubble is alive and well in Ontario and British Columbia, in the heart of Canada’s dying oil patch the picture isn’t pretty. We’ve documented the glut of vacant office space in downtown Calgary on a number of occasions. Here’s a visual for those who missed it.
Calgary is of course in Alberta, where collapsing crude has driven WCS down to just CAD1 above marginal operating costs. That’s led employers to cut jobs. In fact, last year was the worst year for provincial job losses since 1982. This has had a profound effect on Calgary and on Tuesday we learn that it isn’t just office space that’s sitting unoccupied.
According to data from Altus Group sales of condos in the city fell a whopping 38% from 3,000 units to 4,805 units in 2015, marking the largest y/y drop since 2008. “The drop-off doesn’t bode well for 2016,” Bloomberg notes. “Calgary, the biggest city in the oil-producing province of Alberta, ended 2015 with one of the highest inventories of unsold condos, at 3,356 suites in the fourth quarter, according to Altus.”
If you want to understand all of the above you need only look at the following chart which contrasts home prices in Calgary with those in Vancouver and Toronto:
Clearly, one of those things isn’t like the others. “While we continue to believe that things just can’t any hotter, markets in B.C. and Ontario continue to prove us wrong,” TD economist Diana Petramala said. “[For Toronto and Vancouver], every month of double-digit home price growth raises the risk of a deeper home price correction down the road.”
“Hot doesn’t quite describe Vancouver’s three-alarm fire of a housing market,” Bank of Montreal chief economist Doug Porter remarked.
So while you can’t give condos and office space away in Calgary, you for all intents and purposes have to be a millionaire to afford to live in British Columbia and especially in Vancouver which, judging by the parabolic chart shown above, is one of the most desirable locales on the face of the planet.
We close by noting that the Canadian real estate “bargain” we profiled three weeks ago has indeed sold – for $102,000 more than the original asking price…