calgary

It would seem that foreign investors are now looking to Calgary as the place to invest. The reality is, however, that Calgary has for years been a very volatile real estate market given that the city’s economic fortunes are closely tied to the price of oil. So it would seem to me that the investment metrics are completely different in Calgary.

Here is an article looking at what’s going on in that real estate market: Why more Chinese investors are buying Calgary real estate.

Three direct flights from China coming in a week now…we’ve become a much more accessible destination for people that are foreign buyers,” CREB president Cliff Stevenson said. “It should be noted that the U.K. and U.S. have been big sources for customers for places like Canmore for quite some time, so to have another country that has direct access…I think it’s safe to say in the future we would probably see some foreign investment from that.

The real estate guys are alway eternal optimists. You cannot be in that business and be a pessimist or a realist otherwise you would have to find something else to do. It’s just not possible to have a different mindset.

Here is an interesting chart looking at Calgary house prices that prepared by Brian Ripley. The market appears to be linked to the price of oil. This isn’t a surprise as the price of oil has a big impact on employment in Calgary. With a drop in employment, homeowners are under pressure as many family incomes are tied to jobs in the oil and related industries.

This second chart from Brian Ripley looks at housing prices and incomes. The last ten years have been great for the Toronto and Vancouver markets, but somewhat challenging in Calgary.

The big run up in Calgary housing prices occurred prior to 2008 when oil prices reached their peak prior to the economic meltdown.

I find it hard to draw a conclusion from these charts. But clearly, there is a big “disconnect” between income and housing prices which has yet to be explained.