Calgary's real estate market often reflects what is happening in the energy market. But right now, home buyers are defying this pattern. The price of oil is at a two-year low, but Calgarians are still hot on homes.
The median price for a home in the City of Calgary jumped 5.9 per cent in September to $425,000, according to the Calgary Real Estate Board (CREB). The price of single-family homes, condos and townhouses all jumped from the same month a year earlier. Last month's sales also beat August's median by $2,000.
The median price of a single family home in September made the most significant jump, gaining 8.6 per cent year over year. Buyers coughed up median amount of $488,750 for these properties last month. Prices in this category also climbed month over month. In August, the median price for a single-family home was $478,000, according to CREB.
The condo market posted similar results, but the townhouse market played out somewhat differently. The median price for condos was $294,750 in September, up 7.77 per cent from the same month last year. That was also better than the $287,500 median price in August. Meanwhile, buyers who purchased townhouses got a better deal this September compared to August. Buyers paid a median price of $330,000 for a townhouse last month, up 7 per cent from September, 2013. However, the price fell from $339,894 in this August.
"September's sales growth was stronger than expected, due largely to a surge in condominium apartment and townhouse sales," Ann-Marie Lurie, CREB's chief economist, said in a statement Wednesday. She accredited this to what CREB described as Calgary's strong economy and fewer options for cheaper single family homes.
CREB president Bill Kirk added: "While overall supply levels have improved, the condominium-townhouse sector continues to reflect the tightest market conditions in Calgary."
This comes as the price of oil – one of the most important drivers in Alberta's economy – has slumped to two-year lows. Wages in Alberta for everyone from geologists to plumbers are influenced by the price of energy. So far, the province has staved off the pain that hit it during the global financial crisis, but if energy prices continue to fall, so too will Alberta's prosperity. Calgary's housing market, which is especially dependent on the oil and gas sector, has been hit hard in past crashes.
And as home prices rise in Calgary and other Alberta hot spots, so too are debt loads. The province's citizens are turning to debt to finance their lifestyles, including home purchases. Alberta households are saddled with an average of debt totalling $124,838, according to a Bank of Montreal report published in August. This is $35,000 higher than it was last year. Further, this load is the highest in the country – about 64 per cent above the national average.
But neither of those influential factors have hit the local housing market. Total housing sales in Calgary climbed 11.93 per cent in September when stacked against a year earlier. Sales in all three categories – single family homes, condos, and townhouses – all increased, led by a 33.33-per-cent jump in the number of condo sales.