People in the market for a new home in Calgary may be facing a price shock these days—at least compared to their northern counterparts.
According to the latest New Housing Price Index, compiled monthly by Statistics Canada, Calgary’s index value for December was 104.5, up slightly from 104.4 in November. The index sets prices in 2007 equal to 100, so prices in December were 4.5 per cent higher than in 2007. The price index in Edmonton was steady at 90.9—essentially unchanged over the last two years. That's more than nine per cent below the price in 2007.
While both cities are doing well economically and receiving roughly their proportion of interprovincial migrants, Calgary’s housing market is decidedly warmer than Edmonton’s. This is particularly true with respect to prices for new homes which continue to show gradual gains in Calgary while flat-lining in Edmonton (as illustrated in the graph below).
The gap between the two cities involves a number of factors, including the cost and availability of land and the inventory of existing homes in both cities. As well, incomes in Calgary have outpaced those in Edmonton.
The residual effects of the 2013 flood could also be a factor. Rebuilding efforts in Calgary and southern Alberta after the June disaster have pushed up labour costs and created some shortages of materials. All of this affects costs for builders who may find little choice but to add these to the price tag of new homes.
Todd Hirsch Chief Economist ATB Financial