CALGARY – Extensive flooding that hit southern Alberta in June has contributed to a booming housing market in Calgary.
Demand for homes in the city had peaked in 2007 and then crashed a couple of years later, but real estate people are reporting a big upswing again.
“Oh, my gosh,” says Thomas Keeper of Tink International Real Estate. “Last night I had two properties that had multiple offers on them. That was all within a 48-hour period.”
Thousands of people move to the city every year. The local economy is strong. And increased demand created by the flooding means houses are being snapped up almost as soon as they hit the market.
“Since the floods, you’re seeing a market increase of six per cent and I was only predicting three.”
Wealthy neighbourhoods along the city’s Elbow River were among the areas hardest hit by floodwaters. Some homeowners there have bought elsewhere, either as permanent abodes or as places to live while their homes are repaired or replaced
The chief economist at the Calgary Real Estate Board, Ann-Marie Lurie, echoes Keeper’s sentiment.
“It’s a strong economic situation combined with some of that increased activity due to the floods,” she says, adding that the healthy economy means homes are affordable.
“People who were trying to decide what they were going to do, like renters, decided to move to home ownership.”
Even with that happening, the vacancy rate for rentals in Calgary stands at well below one per cent.
Home sales were busy in July in Calgary and August could well set a record. The real estate board expects sales to be roughly 20 per cent higher than at this time last year. Prices for an average single family home are up by about seven per cent from 2012 — to $461,600 in July.
The flooding is definitely playing a key role in the hot market, says Keeper. “But more importantly is just the simple fact we have low interest rates and no places to rent.
“The federal government is increasing interest rates,” he says. “And every time there’s an interest rate increase or rumours, it makes people who are sitting on the fence want to buy.”
Realtor Mike Leibel from CIR Realty believes the impact of flooding was short-lived and that the fear of higher mortgage rates will drive home purchases now.
Leibel calls it a “sellers’ market.”
Prices have come up substantially in the past 30 or 60 days, he says, adding that there have been “incredible increases in prices — particularly in the single-family area.”
The picture is far different just to the south in High River, which was devastated by the floodwaters.
“We have had a grand total of 10 sales since the flood, since June 19th and 20th,” says Jamie Ellice of Century 21 Foothills.
“Two of those were flood-affected homes and they sold for about 15 to 17 per cent below fair market value. The other eight actually were for fair market value but they were not affected by flood or sewer backup.”
Ellice says High River will remain a question mark for buyers until the Alberta government tells people what it intends to do about the course of the Highwood River and whether it might be altered to reduce the risk of flooding in the future.
He also says that consumers tend to have short memories when it comes to such events as flooding and he predicts they will eventually see the town as a good place to live again.