Why Are Calgary Home Prices Rising so Rapidly?

Posted by Justin Havre. on Monday, May 12th, 2014 at 8:01am.

Home prices continue to rise in Calgary and are going up faster than any other city in Canada. According to economists, there are two major influencing factors that are driving up the prices. These include the curbing of urban sprawl and the leftover effects from last year's flood.

According to Todd Hirsch, the chief economist at ATB Financial, the flood that hit Calgary last year played a major factor in rising house costs. Labour, material and building costs are slightly higher as a result of the flood. He expects building prices will decrease when all of the rebuilding has been completed. At this point, he expects home prices will be more moderate.

Jack Mintz, the director of the School of Public Policy at the University of Calgary, says that the curbing of urban sprawl plays a key role in rising home prices. He believes that the City of Calgary must carefully consider the effects of limiting new home development. There must be some balance that is relative to the amount of migration into the city. He also adds the comment that rising home prices in Calgary can eventually spread to Airdrie and the other bedroom communities around the city.

According to the newest data released by Statistics Canada, Calgary had the highest year-over-year home price gains at 7.5% when compared to the other cities studied in the New Housing Price Index. The biggest drop occurred in Vancouver with a 1.1% decrease in new home prices on a year over year basis. This was the third year in a row that Vancouver reported price declines in the Price Index.

In April, the benchmark price for a single-family home in Vancouver was $956,700. The benchmark price for all residential properties was $619,000. In Calgary, a single-family home benchmark price was $496,700 and $446,300 for all residential properties in April.

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