Calgary’s crazy economy. The Good, the Bad, and the Ugly
Jul 16th, 2007 by Dan Standeven
I took a title from one of my favorite Clint Eastwood movies, which I think really describes the ever booming economy and real estate market here in Calgary Alberta Canada.
For those of you who don’t know the majority of Calgary’s economy is based on the Oil and Gas industry, and in recent years it has exploded by enormous proportions.
When I moved here about 5 years ago the average house price was hovering around $250,000 and at that time seemed like a fairly substantial price for a house in Calgary. The market had already started to up trend and imports like myself were calling Calgary home. The average house price in the last 30 days in Calgary is just over $504,000 that is over 100% increase in the last 5 years.
The Good:
Well the real good, if you have owned your house for the past 20 years, which you probably bought for under $100,000 and you’re in the last 5 years of your mortgage, your sitting on a mound of equity. It is also easy to believe that the way things are going here that isn’t likely to slow down anytime soon.
If you’re like me and moved and bought about 5 years ago, you are still sitting pretty good, most properties in the past 4-5 years have at least doubled in value. This of course has given most of us the 5-year itch to upgrade, buying that next home with the equity from our original property purchase. This all sounds great but really only applies to a portion of the population.
The Bad:
Because the economy is so good and the real estate market is so hot, if you haven’t jumped into it yet you are facing higher and higher house prices. Most people in this situation usually have a great job, are renting but can’t come up with a down payment, so they get stuck in a vicious circle. Even a 5% down payment on a $500,000 house is $25,000, a lot of money to save for someone shelling out $1,200 a month in rent and living costs.
The Ugly:
Unfortunately the crazy boom in economy has put living space in Calgary at an extreme shortage. Even if you can secure a place to call home, you are paying a minimum of $1,000 a month. This extreme condition has created what is being called the working homeless. People who have fulltime steady jobs but do not have any place to live.
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Good thing some people were able to purchase before the boom. I can’t imagine trying to come out of school these days and laying out $2500 a month in mortgage payments for an average home.
You are right on the money there Lewis. I can’t imagine trying to start out now either. It was tough enough then
Sounds a bit like Oxford, where i live. House prices have increased but its not much use if you have to move, because its just as expensive elsewhere.