What To Expect In 2014 Province By Province: Alberta

Arguably the strongest market in Canada, Alberta’s housing sector is growing strongly along with the provincial economy.  Home to two of the fastest growing regional markets in the country, as well as being the backbone of the Canadian economy, thousands of people are migrating to Alberta from all over the country new opportunities.

So how can you take advantage of the strong housing market to become a homeowner in Alberta?  Is 2014 the right year for you to buy?  The answers to those questions are for you alone to decide, but these forecasts might help you to make your decision.

Variable or Fixed Mortgage

Deciding on the right type of mortgage is very important for prospective buyers in Alberta, or anywhere across the country.  A variable mortgage generally costs less money at the beginning of a loan than a fixed mortgage, but fixed rates offer more stability over the entire term of the agreement.

Most Albertans prefer the stability of fixed mortgage rates over variable options, with approximately two thirds of the province’s homeowners agreeing to fixed mortgage loans.  However, the provincial trend should be a guide that encourages you to compare all mortgage rates in Alberta for the proper loan that caters to your best interests.

2013

Functioning as the new backbone of the Canadian economy has helped real estate in Alberta become more valuable with each passing year.  Total listings for sale in 2013 increased by approximately 5,000 homes compared to 2012, while the provincial sale price averaged around $380,000 – slightly below the national average.

The Bank of Canada is hinting that interest rates may be adjusted in the medium term, though it is anyone’s guess as to whether that adjustment will raise or lower the rate.  With rates remaining near record lows, Alberta’s strong economy were the primary driver of rising home values throughout 2013, and stable employment provided many homeowners the ability to pay their mortgages each month, reducing default rates.

The province also was forced to cope with the devastating floods that overran the lower plains in June.  Houses in and around Calgary were left largely in ruin, though the city did end the year with higher net gains in home sales than any other major city in Canada.

Home Price Predictions 2014

Due to the floods increasing demand for new homes in the southern half of the province, prices across the Greater Calgary Area are expected to rise distinctly throughout 2014.  However, prices are also forecast to go up in most of the province’s major centres – stretching north through Red Deer, into Edmonton, and even as far north as Wood Buffalo near the oil sands.

Homes will become more valuable, and consequently more expensive, while the province expects fewer new housing starts in 2014.  In fact, most regions across the province can expect the rate of new home construction to remain flat or drop off year over year.  Calgary and its surrounding regions, including High River which was one of the most extensively damaged regions from the floods, will be the exceptions as demand for homes currently outweighs supply.

As long as the economy remains strong, rising prices will be a positive asset for buyers, sellers, and the Alberta economy at large.  Remember that mortgage interest rates are unlikely to post significant changes in the short-term.  Therefore, if your salary and career prospects can withstand a bump in home prices, 2014 could be an excellent opportunity to invest in a home.

Calgary

The strongest regional market in all of Canada, the city of Calgary was forced to adapt following the rainstorms that flooded the region last June.  But rather than let the disaster disrupt development plans, Calgary’s housing market thrived in the aftermath of the floods.

Not surprisingly, the rate of single detached developments accelerated in the second half of 2013.  Interestingly, the CMHC predicts Calgary will invest more in multiunit buildings, such as condos and apartments in the first half of 2014 – perhaps advice from developers to buy small in the future.

Greater investments to develop new homes will slow rising values of existing properties, but not by much.  Sales are forecast to continue growing across Calgary throughout 2014.  This means sellers can continue raising their listing prices on the market, which the CMHC predicts will rise to around $450,000, with no signs of slowing down into 2015.

If you work in Calgary and can afford to pay a little more, there could be great buying opportunities in the year ahead.  On the other hand, if your budget is tight, renting may be the best option for the time being.

Edmonton

The provincial capital of Alberta will follow a similar pattern to Calgary, with average prices and total unit sales expected to rise in 2014.  However, the one expected difference between the two cities is their respective investments in developing new homes.

Edmonton invested more time and money creating multiunit buildings like condos rather than single detached homes in 2013 – the exact opposite of Calgary.  In 2014 housing experts forecast the reverse to occur, with Edmonton constructing more single detached homes, and Calgary investing more into condos.  Therefore, if you are in the market for a new single detached home, and prefer living in a major city – Edmonton could be the place to be.

The demand for these single detached homes will keep prices on the rise in the provincial capital, as economists forecast prices to average around $353,000 by the end of the year.

Northwest Alberta

The northern half of the province is growing largely due to the strength of the local economy.  Much of that growth is tied up in oilsands development, with areas around Grande Prairie benefitting tremendously.

The northwestern regions are smaller compared to the larger southern cities, but the area is still home to approximately 250,000 people.  Many people successfully found new homes in 2013, and economists forecast construction of new homes will continue supplying demand in 2014.  Sales around Grand Prairie are forecast to continue growing, while average prices will rise to around $290,000.

Wood Buffalo

The area surrounding the largest oilsands development in Alberta includes the urban service area of Fort McMurray.  Back in 2006, the cost of a home in this region was more expensive than any other area in Alberta, though some properties are still worth over $1.8 million.

Prices across Wood Buffalo averaged around $630,000 at the end of 2013.  With increased investment and development of the oilsands, northeastern Alberta will become more economically viable over the next several years, subsequently increasing the value of the land and real estate.

Closing Thoughts

The message is fairly clear – Alberta is booming, with no signs of the province’s housing market or economic development slowing down.  The real question you must ask yourself is what you can realistically afford, and where would you like to buy it.

Even though home prices are rising across the board, mortgage rates remain near record lows.  You may require a larger down payment upfront, but you will likely pay less interest over the term of your agreement with today’s rates than in 2015.  Also remember to calculate if a fixed or variable mortgage is in your best financial interest.