Immigration, Interest Rates, and Rent
Calgary Real Estate and Rental Market Update
Feb. 1, 2022 - Written by Jamie Palmer, President/Broker of Power Properties
Bidding Wars over Calgary Real Estate
To say the current sales market is wild is a bit of an understatement! There are very few listings for sale, about 35% lower than normal for this time of year overall, and 46% lower for detached homes. Even if demand was normal these conditions would create a lot of bidding wars, but with interest rates as low as they are, demand is higher than usual. This has translated into a frenzy of bidding wars for just about every property that is listed for sale, and we will undoubtedly see a rapid increase in sale prices over the next few months. Great news for anyone who owns a property as you will undoubtedly gain equity this year; bad news for anyone trying to buy a house right now. The increased prices mean many renters will continue renting, unable to purchase at the higher prices.
Increased interest rates
The Bank of Canada has indicated they will be raising interest rates this year, with the first increase expected in March. Increases in interest rates typically decrease demand for real estate purchases as the higher cost of borrowing reduces what buyers can afford, at the same time rents tend to increase as the demand shifts from the sales market to the rental market.
Increased immigration to Alberta
Alberta is starting to once again see positive net immigration. This is being driven by two factors, our relatively low cost of living, and increased job opportunities. Immigration increases the demand for housing both for sale and for rental.
What does that mean for the Rental Market?
When you combine all of the above factors it translates into increases in rent in 2022; however the rental market typically lags the sales market by six months. So expect to see those increases materialize in late summer early fall.
To take advantage of the above-mentioned market trends, I would suggest refinancing your existing rental property in May or June 2022 when its value will likely be boosted by the Spring market; purchase an additional rental property in the summer when inventories are high (using a Power Properties Realtor who can provide expert guidance as to rental value), and take possession of the property in late summer when rents should be increasing.
Written by Jamie Palmer, President/Broker of Power Properties Ltd.
Jamie Palmer is the President and Broker of Power Properties. He holds a Certified Property Manager (CPM®) designation, the highest designation in Property Management in North America. He earned an Honors degree from the University of Toronto, and he has over 17 years of experience in property management.
About Power Properties Ltd.
Founded in 1980, Power Properties has been providing hassle-free property management services to property owners, property investors and non-residents with homes in Calgary, Alberta for over 40 years. Our full-service property management includes everything from move in to move out, so you don’t have to worry about the day-to-day operations of your rental property. With a team of licensed professionals, years of experience, and award-winning service, you can rest assured that your property is in good hands.
