Debunking the Myth: No, Calgary is not in a Real Estate Bubble

Debunking the Myth: No, Calgary is not in a Real Estate Bubble

Debunking the Myth: No, Calgary is not in a Real Estate Bubble

With the recent surge in real estate prices across the globe, asking whether the real estate market in Calgary is a bubble waiting to burst is a fair question. It's easy to assume that the high property prices, interest rates, and the current pandemic may contribute to Calgary's concerning real estate market. However, despite the increasing prices and an undeniable real estate boom in the city, many experts believe that Calgary is not in a real estate bubble. In this blog post, we will discuss what exactly constitutes a real estate bubble, factors that explain why Calgary is not in one, and what this means for working professionals and investors.

First, let's define what a real estate bubble is. A real estate bubble happens when housing prices rise so rapidly that they exceed the homebuyers' ability to afford them. This price hike creates a cycle, where the demand for housing becomes so high that supply can't keep up. Eventually, the bubble bursts as buyers cannot afford the exaggerated prices, leading to a significant drop in demand and a decline in the housing market.

Now, why isn't Calgary in a real estate bubble? To start, Calgary's real estate market is not exhibiting drastic fluctuations in housing prices. Instead, the market has exhibited slow and steady growth over the years despite the pandemic. Yes, prices have increased in recent months, but it is not a sudden spike. The ongoing price growth aligns with the overall trends and economic indicators of the city and the neighboring areas, making it reasonable and default rather than a risky investment. Keeping this fact checked, one can conclude that the market is moving towards a stable direction.

Secondly, Calgary's economy's stability lends to a good housing market as well. As one of the top energy cities in the world, Calgary attracts workers from all over the world, with people moving here for work rather than a temporary home. Stable growth in these industries is better likely to last longer, providing stability in the real estate market as well. With new projects announced almost every month, it's fair to say that different sectors in Calgary won't be taking a massive downturn any time soon.

Thirdly, the city's housing affordability ratio is another indicator that Calgary is not in a real estate bubble. This ratio calculates the median home price in relation to the median household income. A ratio of more than 5:1 means homes are overpriced and unaffordable for many. Currently, Calgary's housing affordability ratio is 3.5:1, indicating that homes are priced relatively affordably compared to other cities in Canada. Calgary's market is still accessible, mainly for first-time homebuyers, which means long-term value and appreciation for homeowners.

Lastly, it's vital to note that the recent increase in housing prices in Calgary is not restricted to just one type of home or region. Instead, it is happening across the board – in various sub-markets across the city. It points to a solid market strength and activity across the city, making it less likely to experience a price downturn or market decline shortly.

Conclusion:

Despite concerns, it appears Calgary is not on the verge of a real estate bubble, as many experts predict steady growth and stability in the housing market. Calgary's housing market has demonstrated modest, sustainable price growth compared to a quick price bubble that is unsustainable. Calgary's stable economy, diverse job prospects, and a healthy supply of affordable homes make it an ideal investment opportunity for investors and working professionals. If you're looking for a stable and secure investment in real estate, Calgary seems like a solid, long-term bet.