In 2022, the Alberta government launched the Alberta is Calling campaign to attract newcomers to the province with promises of job opportunities and affordable housing. The campaign proved highly successful, drawing 184,000 new residents between July 2022 and July 2023. Between July 1, 2023, and July 1, 2024, the province’s population expanded further by 204,209 people. Many of these newcomers came from British Columbia and Ontario, where housing prices were among the highest in Canada, seeking Alberta’s comparatively “affordable” options.
However, the surge in population, coupled with a shortage of new housing developments, has driven up home prices in several areas of the province. For many middle-income families, purchasing a single-family home has become increasingly out of reach. This issue is particularly acute in Canmore, Alberta’s most expensive town, where the median home price now is $1.67 million.
Desirable Often Means Unaffordable
While some parts of Alberta, like Camrose, Nanton, Fort Mcleod, and Pincher Creek, remain relatively affordable to buy a home, desirable places like Calgary, Airdrie, and Cochrane are fast becoming expensive places to own a home.
Calgary was just named the 7th most ‘liveable’ city in Canada by the Globe and Mail. And, the more good press the city gets, the more people want to move there. There is that FOMO effect happening, for sure!
This high desirability translates to high house prices. Single detached homes have increased in price on average 11.3% year-over-year. According to the Calgary Real Estate Board (CREB), the median house price in Calgary is $689,900.
How affordable is a median-priced home in Calgary for your budget? Suppose you have 10% down (nearly $70,000), a mortgage interest rate of 4.14% (a current 5-year fixed rate), and a 25-year mortgage. In that case, you’ll be paying $3416 per month to be in your home (over $100 a day) without utilities, insurance, maintenance, and property taxes for the house (the latter usually add another $600 per month). So, at over $4000 per month, it might be cheaper to live in a hotel! Want groceries, a car, and an occasional vacation? Then you better make far more than Alberta’s minimum wage of $15 an hour.
Banks typically use the 28/36 rule to determine how much of a person’s income to allocate to a mortgage.
A maximum of 28% of a person’s gross monthly income should be spent on housing expenses, including principal, interest, taxes, and insurance. In addition, a maximum of 36% of a person’s monthly income should be spent on total debt service, including housing and other debt such as car payments and credit card debt.
So, if you want a mortgage on a median-priced house in Calgary, you need an annual family income of at least $171,000! Yikes.
As of September 2024, the provincial government reported that the average yearly salary per person in Alberta is $70,200. With two people working and making around $70,000, or $140,000 in family income, you simply can’t afford a house costing nearly $700,000.
The Most Expensive Homes in Canada
With Alberta’s house prices surging, the province is now home to some of Canada’s priciest real estate. In the past, Vancouver and Toronto held that honour.
For example, suppose you’re looking for a Christmas present for that special someone. Why not consider this 20,000 sq. foot home in Springbank with three garages, six bedrooms, two offices, ten bathrooms, an outdoor pool, a tennis court, and a zen garden all on an 18.65-acre estate for a sweet deal at $14.3 million? If you have 20% down Mortgage payments (a cool $2.68 million), your monthly mortgage payments would only be $61,000!!
Reality Bites
Now that we have detoured into how the 1% live, what does high housing costs mean for the rest of us? If you have the average Alberta salary of $70,000 a year, you can make monthly mortgage and home payments in the $1600 range according to the 28/36 rule. From a practical point of view, this means buying something in the $350 – $400,000 range and having a 20% down payment. In Calgary, you’re stuck with condos, and then you add condo fees to the mix. No wonder some people are moving to small towns in Alberta where they can find homes under $400,000, but only if they are lucky enough to work remotely or in decent-paying jobs in the community they move to.
It’s no wonder many young families in Calgary never see themselves owning a home.
