Real estate agents aren’t complaining about Calgary’s hot real estate market.
Recent data from the Bank of Canada shows that house-flipping is happening more in Calgary than in any other major Canadian city.
House-flipping is a real estate investment strategy involving purchasing a house, often in poor condition, renovating it, and then quickly selling the refurbished property for a profit.
The key intention behind flipping is to sell the house rapidly, typically within a few months to a year, rather than using it as a residence.
According to the statistics, 6.5 percent of homes sold in Calgary were resold within 12 months.
That’s the highest house-flipping rate recorded since the central bank began sharing this type of data in 2014.
“It’s crazy right now,” said Jason Shmyrko in a CBC article.
That’s realtor-speak for “It’s time to shop for a new Porsche.”
Shmyrko is one of Calgary’s flip specialists.
He helps people buy and quickly sell properties for a profit.
His Instagram handle is @flippinghousescalgary.
Shmyrko has been zipping around the city at a furious pace of house showings and deal-making.
A Feeding Frenzy
Another realtor Nadine Faule told CBC that it’s not uncommon to have 30 people lining up, many of them out of town investors, who are willing to pay “stupid” amounts for properties.
‘Then if you just hang on for a few months, without even doing any work, you can resell them and make money,” Faule said.
Real estate agents and property flippers are making hay.
For Calgarians who simply want to put a roof over their heads and own a home at a reasonable price, it sucks.
As flipping increases in this hot market, housing affordability takes a hit..
“Just trying to even look at places was impossible,” said 38-year-old newlywed Max Maxwell. “We literally had 11 different showings of things that just hit the market cancel out on us because it had sold out from under us.”
Maxwell said he and his wife were lucky enough to snag a property during a pre-Christmas lull in the market last year.
Others aren’t so lucky.
“Just lost out on another house this morning. Out of province investor paid 80k over asking with no conditions. Been looking for over a year now and keep losing out on clean offers that are significantly over asking and even the appraised value. Such a discouraging feeling,” writes one frustrated Calagarian on Reddit.
Analysts say it’s a simple case of high demand and low housing supply that’s driving this seller’s market.
According to the Calgary Real Estate Board’s latest monthly report, the past year has seen double-digit price increases across many different types of housing.
For example, in January 2020, a bungalow in one Calgary neighbourhood sold for $325,000.
Four years later, a similar bungalow in the same hood fetched $605,000, marking an 86 percent increase!
The average price of a detached home increased 14.4 percent from last year to $777,000.
New York City is having a big battle around what housing advocates call “toxic home-flipping.”
Earlier this year, the Coalition for Community Advancement hosted a walking tour of NYC neighbourhoods like Jamaica, Queens and Cypress Hills to educate people about the effects of rampant speculation.
The group is also looking to ramp up support for an “anti-flip” bill that would apply hefty taxes on property owners who sell one- to three-family homes within two years of buying them.
At this point, no such tax is being considered in Calgary.
The one potential upside for a community from house-flipping is a boost in the quality of housing stock as owners renovate before selling.
However, the Calgary market is so hot that owners are simply sitting on the property for a few months, selling it and putting cash in the bank with no improvements being made.
At the same time house-flipping is putting house prices out of reach for working Calgarians looking for a permanent home.
Calgary, the house-flipping leader, is followed by Edmonton, Vancouver, Montreal and Toronto when it comes to the percentage of houses bought and sold within 12 months.
