Calgary Market Slowdown Only Temporary

The recent slowdown in the Calgary real estate market is only temporary, as the fundamentals of both the Calgary and Alberta economy remain strong. According to Don Campbell, author of books that include Real Estate Investing in Canada and 97 Tips for Canadian Real Estate Investors, the real estate boom Calgary experienced from June 2005 through June 2006 "are indications of the true economics of the region".

Campbell's comments were featured in both the Calgary Herald and on ROB TV in late October 2006. Asked about the increase in number of Calgary MLS listings since June '06, Campbell suggested "there are a lot of 'fishers' out there who are putting their homes up for sale at ridiculous prices, hoping that people will grab them. They are either going to go away, or they will lower their price. Whenever there is a boom, there is a lot of fear and greed at the same time -- and we're seeing that. The market is simply taking a breather", he says. "The increases in the last eight or nine months are completely unsustainable. What we're going to see is a market taking a bit of a breather and not continuing to skyrocket. But it will remain strong", he says.

The most recent Calgary listings & sales stats bear that out: In the past 7 weeks, listings have dropped from a high of just under 7,000 to the current level of 5,840 (a drop of 17%). While some of this is due to seasonal swings in Listing Inventory, many of the "overpriced" listings have either expired or have had significant price reductions.

Campbell went on to say that the economic fundamentals of Calgary are incredibly strong, and house builders can't build homes fast enough for everyone moving here. Alberta is "the talk of not only Canada, but other countries". "I don't think Albertan's really understand what they're sitting on in an economic context" he said.

Below are 14 economic factors that Campbell believes are positive for real estate investment. Of the 14, Calgary and Edmonton had 13 positive. Campbell says "I've never seen that before".

•  Is its economy growing faster than the national/provincial average? And if so, by how much?
• Is its population growing faster than the national/provincial average? And if so, by how much?
• Is the area creating jobs faster than the national/provincial average?
• Does the area have more than one major employer?
• Is the area's affordability index in the hot zone (between 25 and 39 per cent)?
• Is it in an area that is going to benefit from a boom's ripple effect (such as spreading to the surrounding areas)?
• Has the political leadership created a growth atmosphere?
• Is the economic development office helpful and effective in attracting new companies?
• Is the area's infrastructure being built to handle the expected growth?
• Is there a major transportation improvement occurring nearby your target neighbourhood?
• Is the area attractive to baby boomers (for example, does it provide quality of life with things such as lifestyle options)?
• Is a short-term perceived problem occurring that will disappear (such as negative economic news)?
• Are mortgage interest rates lower than the 10-year average?
• Is there a noted increase in labour and material costs in the area (this will drive up the value of new construction, thus lifting the value of existing homes)?

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