Tim Mangat, an investor and realtor at CIR Realtor, says: “Real estate in Calgary right now is fundamentally overvalued, but why? Because interest rates are so low and income is so high. There is a big disconnect.
“I think a lot of it is psychological. If you think about it, prices should go down because oil is down. People should be scared.”
But the latest housing outlook from BMO showed that, while prices in Toronto and Montreal will see moderate correction, Calgary will not be affected by interest rate rises in the same way, due to a growing population, strong economy and relatively affordable prices.
Indeed, CREA's latest data shows that the average housing price in Calgary has increased by 6.6 per cent in the past year, from $436,216 in October 2013 to $465,047 in October 2014. Unit sales were up as well, from 2,510 last year to 2,848 this year.
Meanwhile, speakers at the Calgary Economic Development’s 2015 Economic Outlook last week used words such as ‘moderation’ to explain their analysis that the Alberta economy may soften next year.
ATB Financial’s chief economist Todd Hirsch said that he sees nothing on the horizon that would be a ‘bust’ but the economy would “pullback” by maybe half of one percentage point.
There is no doubt that consumer confidence in Alberta is very high and is not changing anytime soon. Tiffany Young, Alberta on Fire, says: “When consumer confidence is up, that's good news for the market as a whole.
“The confidence usually translates to more retail spending, more disposable income being enjoyed and our GDP being strong.
"As for affordability, because our incomes in Alberta are growing at a faster rate than both inflation and house prices, our affordability is staying well within the bounds of a very balanced market.”
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Belledune, Onslow, Mount Brydges, Morriston, Western Bay
Though economists have predicted a very slight softening of the economy in Calgary and throughout Alberta next year, some real estate experts warn investors to be cautious.