On March 24, Courtney Montgomery and her realtor were viewing a for-sale unit in a Calgary duplex. Barely 10-minutes into the viewing they were suddenly interrupted by a knock on the door. Irritated by the disruption, Ms. Montgomery’s realtor opened the door to find another realtor who’d been waiting outside to show the same unit to their clients. “‘I don’t know if you’ve got the memo. But I just got an e-mail from the listing realtor,’” Ms. Montgomery recalls the other realtor saying. “[The seller] had three offers and they accepted one.” The unit had been listed that same morning. “It was kind of heart breaking,” she says.
Currently, the challenge for Albertans isn’t finding a home within an affordable price-point, as it is in Ontario and B.C. The challenge for buyers in Calgary and Edmonton is having the capacity to move quickly.
According to Matthew Boukall, vice-president of product management and data solutions at Altus Group, along with immigration, millennials entering the market in Alberta are driving the growing demand. “We have a very young demographic with a large percentage of our population being Millennials or Gen Zs, and they’re making house purchase decisions. They are active in the market, but both of those segments are price sensitive.”
In Alberta, people aged between 25 and 39 represent nearly 23 per cent of the province’s population, according to Statistics Canada – just over 20 per cent of Canadians are millennials.
“They’re the largest group of first-time homebuyers this country has ever seen,” says Diana Petramala, a senior economist at the Centre for Urban Research and Land Development at Ryerson University. “And they’re growing quite rapidly because of immigration. People who are immigrating to Canada typically are coming within that age group. So that age group is growing. They’re much bigger than the boomers now, even in Alberta.”
In February, the Alberta Real Estate Association reported a 50 per cent increase in sales so far this year, compared to 2020, but only a 1 per cent increase in new listings during the same period. This has resulted in a 10 per cent increase in housing prices across the province. But in a market that had been depressed since 2015, “this is a long time coming for Alberta,” Mr. Boukall says.
“Calgary and Edmonton’s frothiness today is different than what we see in Ontario, [where] buyers [have] been priced out for so long,” says Mr. Boukall “…In Alberta we’ve got like six years of pent-up demand being released effectively during a great time to buy a house because interest rates are low and supply was relatively good.”
This is the reason why Ms. Montgomery decided it was about time to buy her first home. “I’ve been saving money for about 15 years,” she says. “And always in the mindset of, ‘One day, I’ll use it for a down payment.’” So when the interest rates bottomed, she was encouraged to start looking for her first home.
Despite the pandemic (or perhaps because of it), millennials in Alberta are finally entering the market. “I think that millennials are probably richer than we think,” Ms. Petramala says. “If you look at some of the surveys on wealth, those under 35 have actually been accumulating real estate at a slower pace than generations that came before them but accumulating cash and financial assets at a faster pace, so they have good down payments. Or, their parents can afford to give them a little bit of a nest egg. So the combination of that is helping people with a bigger down payment to jump into the market.”
Last November, Aileen Bishop and her partner purchased a home in Bonnie Doon, in Edmonton, with the help of both of their parents. “We were feeling a little concerned about the down payment, and then my in laws stepped in and said, ‘Yes, we’ll support you,’” she says.
But the couple struggle to even get any viewings. So to help the couple take advantage of the low interest rates, Ms. Bishop’s parents decided to sell them a house they owned in Bonnie Doon. “We’re extremely privileged that both of our parents were able to help in some way to make it happen,” Ms. Bishop says.
On March 25, The Canada Mortgage and Housing Corporation reported an “abnormally high” number of sales over the winter months in Calgary, and despite the high vacancy-rate of apartments, the supply of single-family, semi-detached and townhomes remains low. “We’re seeing aging millennials who are choosing to go buy their white picket-fence dream in the suburbs, which is what’s happening Calgary,” Mr. Boukall explains.
But the low supply of product in the segments between apartments and single-family homes may be cajoling millennials into buying single-family homes. “I’d choose to stay in this neighbourhood, if I [could] get the family housing that I want,” says Calgary buyer Melanee Thomas. “I’m not looking for a single family home. I’m looking at it because in Calgary that’s my option for the kind of space that I need.”
Looking to move to a more spacious home in Calgary, Ms. Thomas and her partner have been trying on and off to sell their one-bedroom condo since early in 2020. Located in trendy East Village, Ms. Thomas purchased the unit in 2012, when a shortage of rental units made it easier to buy than to rent. “I needed to be able to rent on the train line, and the supply just wasn’t there,” she recalls.
But the market is much different today. In Alberta it’s also a renters’ market, the flight of millennials to the suburbs are keeping condo sales low, and vacancy rates high. “When you’re up to 25 years old, you’re more likely to want to rent, and that means you’re also more likely to be downtown,” Ms. Petramala explains. “But then, as households age, they move out of city centres. So it’s not surprising we saw city centres booming with the millennials being in that under-25 age group. But now as they’re older, it’s also not surprising to see those differences shift.”
Ms. Montgomery continues to look for a suitable townhome for her and her dog, a miniature Schnauzer. But she’s starting to get frustrated. “You have to be ready to move, ready to say yes on the spot,” she says. “If I would had put in an offer the other day, I would have had to put in a higher offer and probably talk to my parents about dipping into my future inheritance just to bump up my budget… I’m very thankful that I have that [option].”
But for Alberta buyers, there’s no need to rush into the market, as Ms. Petramala notes that interest rates won’t change much in the next few years. Furthermore, housing prices in Alberta are likely to remain affordable to most.
“We’re seeing buyers get into the market because interest rates are low and likely they’ve been deferring a home purchase or upgrade decision for a long time,” Mr. Boukall says. “…But as prices start to rise, I think we will price ourselves out of continued growth.”
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