with the area’s housing market enjoying its strongest performance since 2008.
The recreational hotspot is back in favour with property investors, many of whom are buying second homes for short-term rentals. According to the Alberta Real Estate Board, there were 527 sales in 2013, compared to 293 in 2011.
With more supply currently in development, investor appetite for the tourist area is naturally increasing. More than three million people visit the nearby Banff National Park annually, with many landlords trying to tap into this growing market.
Scenery is not the only thing that Canmore
attracts. Its property tax rates also very appealing. They are among the lowest in Alberta at 0.0022423 per cent.
The current rates may prove appealing but investors also need to think of long-term factors. “There might be changes in total assessment due to growth or decline and changes in market values, especially if one segment changes at a different rate than another,” says Katherine Van Keimpema, manager of finance for the Town of Canmore
“Other factors include changes to service levels, cost of living increases, grant funding availability, decisions about what services are paid for from taxes and what are paid for from other revenue sources."
In addition to covering residential properties, the total mill rate will also cover education through the Alberta School Foundation and accommodations for a local seniors’ lodge. Furthermore, there is an additional tax that must be paid if education is opted out of.
As with all prime recreational hotspots, the price tag is high with the average price for a single-family home at $695,000 [in 2014]. Prices have not been helped by the region’s zero vacancy rate but with more units in the pipeline, that should increase over time.
Most investors target the short-term rental market, through sites such as AirBNB.com, with many properties letting for $250 per night to groups.
“Single-family land or homes would be Canmore’s best buy
,” says Kyle Pressman, an agent with MaxWell Mountain Realty. “There is an absolute shortage of both in this town, and a four-bedroom home would rent out for about $3,000 [per month].”
Property taxes are expected to increase, and although there are many determinants for the increase, they are not likely to impact buyers’ interest in doing business within the town.
“Taxes will likely increase,” Van Keimpema says. “There have been increases in service costs due to an increased amount of services provided. Service levels will also increase, prices are rising, and grant availability is decreasing.”
He notes that Canmore
has remained steady over the years, and that the growth will be gradual.
“We’ve moved pretty gradually here, aside from a couple of big bumps in 2005 and 2006,” he says. “We’re going to steadily [increase], and I would expect us to outdo interest rates. But you’re not going to see 20 per cent growth throughout the year.”
Property tax rate:
$3,000 (four-bedroom house)
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This article was originally published in the June 2014 issue of Canadian Real Estate Wealth magazine
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