The days of Albertans bleeding to other provinces are over, at least for now. In the second quarter alone, the province recorded a net gain of about 10,000 people due to relocations from other parts of the country, especially from Ontario.
But people aren’t just moving themselves and their families to Alberta — many are moving their money.
In recent years, Calgary has seen an increase in the number of out-of-province homebuyers buying investment properties that they can rent out, with the main driver being relatively inexpensive real estate.
“Prices in Toronto and these other cities are completely out of reach, not just for end users, but also for investors,” said Kyle Dovigi, a Toronto-based real estate broker who bills himself as the “Condominium Millionaire” and which mainly deals with investment properties.
“So people are looking outside their markets [and] Calgary is a very, very attractive market. »
And depending on whether you’re an investor, renter, or buyer, the phenomenon can mean different things for your bottom line.
On the one hand, out-of-province real estate speculation has the potential to drive up prices for potential buyers who actually live in Calgary.
On the other hand, the trend could be seen as a vote of confidence in Alberta’s economy – and a source of much-needed rental properties in an increasingly tight market.
What motivates him
The influx of out-of-province investment began just before the pandemic, just as Calgary’s economy was beginning to recover from the 2014 oil crash and rents were starting to rise.
“Just before COVID, [in] 2019 i [was] started to see the trickle of investors and then it slowly started to pick up speed,” said Natasha Phipps, investment realtor at CIR Realty in Calgary.
“[By the] spring of 2022, I felt like we had, like, planes full of people coming from Ontario to invest in Alberta,” said Phipps, who said about three-quarters of his sales from the last year came from out-of-province buyers — and she was answering a call from a Toronto area code during an interview with CBC News.
Even as home prices in Calgary rose, it remained more affordable to buy a condo in Calgary than in other major cities, she said. And it’s also more likely that investors can cover their expenses through rent without having to shell out a large sum of money every month out of their own pocket.
“In many other Canadian markets, that’s just not possible anymore,” she said.
In Calgary, the average selling price of a condo is around $297,000, while it’s just over $720,000 in the Toronto area and $769,000 in Metro Vancouver. , according to the local real estate boards of the regions.
Yet the appeal is not limited to inexpensive condos. Buyers in Alberta are not subject to land or real estate transfer taxes like in Ontario or British Columbia, where they pay between one and three percent of the final sale price on properties that cost more than $55,000. There is also no cap on rent increases and housing legislation can be seen as beneficial to property investors.
“Rental laws really favor landlords to a much greater extent than elsewhere in Canada,” said John Andrew, real estate consultant and retired professor at Queen’s University in Kingston, Ont.
“The economic outlook is very strong right now for Calgary, wages are relatively high, so it’s quite favorable right now for people in other parts of Canada, especially Toronto, to invest in real estate in Calgary.”
“Unprecedented” interest
Developer Cole Haggins said about 70% of his sales come from Ontario buyers, the majority of whom are investors.
“[It’s] extremely unprecedented,” said Haggins, president of multifamily homebuilder Cedarglen Living, who said the trend started about a year and a half ago. “We’ve seen investors in the past, but they’re usually Calgary-based investors. and not nearly at the same level.”
Paul Battistella, managing partner at Battistella Developments, noticed a similar trend. The developer is building a condo complex near downtown Calgary and said about half of the buyers are from Ontario.
“We become a rental property, but it’s not one landlord who owns it – it’s, you know, 100 landlords who have these individuals [units] for rent,” he said.
There has been a huge increase in the number of Ontario real estate agents applying to be licensed in Alberta. The Real Estate Council of Alberta typically receives about 100 “labour mobility” requests per license year, but in the 2021-2022 year it received nearly 600, the vast majority of ‘among them from Ontario, with British Columbia coming second.
The trend has also led to increased demand at Calgary-based property management firm Hope Street Management Corp.
Chairman and CEO Shamon Kureshi described the company’s typical customer as a “jet-setter” – for example, a Calgarian who recently took a new job in Texas or Silicon Valley and wants to hire his home – but these days he handles more calls from clients in Toronto and Vancouver.
“The ratio of those jet-setter type customers that we’re used to is going down, and the ratio of investor type customers is going up,” said Kureshi, who added that a silver lining to the trend is an increase in park pool. rental available in town.
Look forward
As winter sets in, there are signs that the trend has started to cool and there is some debate as to whether this is a temporary downturn that will resume in the spring.
In early 2022, Calgary mortgage broker Josh Higgelke was getting “a ton of calls” from investors in Ontario and British Columbia. of people who are actually considering moving to Alberta.
“With the increase in interest rates that we’ve seen, the market has softened somewhat for the investor,” Higgelke said.
Some maintain that the long-term outlook for the Calgary market is strong. The oil and gas sector, still at the heart of the economy, is collect money these days, but the local tech industry is also growth.
And as people move to Alberta, whether for work or in search of a different lifestyle, they will need places to live.
“It’s probably a good bet that there will be growing demand for these income properties,” said Andrew, the retired Queen’s University surveyor.