Calgary’s real estate market has caught fire, and while some of that can be attributed to help from outside Alberta, the city’s economic renaissance is beginning to conjure memories of its heyday before the energy sector crashed.

“No question, energy is still important, and its rebound is good news for Calgary, but there’s also growth in different industries that are important to us and some of that is because of affordability relative to other larger cities in the country, and that’s an advantage to us,” Ann-Marie Lurie, Chief Economist at the Calgary Real Estate Board (CREB), told STOREYS.

“Policymakers, government and businesses are working together to attract different companies to locate to Calgary. After several years of work following the energy crisis in 2014-15, we’re starting to see some benefits of that change, and it’s a benefit to our city to have a more diversified workforce.”

Of all major cities in Canada last year, Calgary had the highest average salary at $69,499, which increased by 0.8% from the year prior, according to Conference Board of Canada statistics. By contrast, Toronto and Vancouver, Canada’s two most expensive cities, last year had average salaries of $61,747 and $51,894, respectively.

According to CREB’s latest statistics, the benchmark price of a detached home in Calgary was $628,900 in April, while the Real Estate Board of Greater Vancouver reported a house in the city averaged $2,139,200 last month. The Toronto Regional Real Estate Board’s latest sales data had detached homes in Toronto selling for an average of $1,697,396.

READ: Priced Out Toronto and Vancouver Buyers Bring New Heat to Calgary Market

Lurie says a lot of Calgary’s economic growth stems from professional and technical services, which tend to remunerate well, and, lately, the financial, insurance, and real estate sectors.

Additionally, the $1.4B Calgary Cancer Centre is slated to open to the public next year. With more than 100 patient exam rooms, just as many chemotherapy chairs, 160 inpatient unit beds -- not to mention 1,650 parking stalls -- the Calgary Cancer Centre is positioned to become a major employer in the city.

“Really over the past year, there’s more and more construction activity, which is creating jobs in this area,” Lurie said. “The technical sector is where we see a lot of growth, and there’s a good sign in how that impacts the overall housing market as well, because those tend to be higher-paid positions.”

A Market Still Tethered to the Fundamentals

Calgary is poised to return to its juggernaut status because its underlying fundamentals are robust. The city’s housing is affordable and, unlike in Toronto and Vancouver, still tethered to said fundamentals, resulting in more Canadians from outside of Alberta flocking to the city.

Calgary is dissimilar to Toronto, which receives the largest share of Canada’s immigrants every year, in that its construction industry is capable of building to meet new demand, ensuring that supply never falls too far behind and that prices remain sensible.

“Supply hasn’t kept apace demand; I don’t expect the growth I see to maintain, but going forward I’m not expecting a correction, either,” Lurie said. “In Calgary, we underperformed for so long that prices just recovered. We’ve just had strong gains but I expect it to move to normal levels, which is going to be higher than what we’ve experienced recently because our economy is better than it was from 2015-19.

“Markets like Toronto and Vancouver experienced growth during that timeframe, and while we hadn’t, our fundamentals are returning, as is economic growth and intra-provincial migration. In our market, if we have short-term supply constraints, we can still build to meet demand, and we have the chance to meet demand as our population grows.”

The Downtown Resurgence

Since around the oil and gas plummet of 2014, downtown Calgary has been saddled with a glut of condominium inventory. Instead of living downtown, the city’s inner suburbs became more attractive to renters, but now that commerce is returning to the city, downtown is once again the place to be, creating demand for those erstwhile surplus condos.

“The reason people were pushing out to the suburbs previously was because we were in a recession and they wanted more for their money, more affordability, and the suburbs is where people could find that,” said Natasha Phipps, an investment specialist and realtor with CIR Realty. “As we see everything going up -- prices, inflation, rents -- people need to look at high-density again to afford their lifestyle and a place to rent, period. Inflationary measures will force people into high-density rental options.”

Phipps describes Calgary’s economy as having been previously built on a house of cards because of how deleteriously reliant it was on a single economic sector, but now that the city’s economy has diversified, future stability is a reasonable expectation. Moreover, even though the energy sector has rebounded thanks to rising oil prices and job creation, it isn’t the only game in town, and with a varied economy comes interprovincial migration and a diverse workforce.

“The main one here is the tech sector. Every few days, a new tech startup relocates to Calgary and it attracts a workforce from outside of the city,” Phipps said. “Given we have the highest household income in Canada, our more affordable lifestyle is attracting business people, infrastructure and investment in our city. There are a lot of newcomers, and combined with the great jobs downtown, they want to live that invigorating downtown lifestyle.”

Calgary’s propitious economy has drawn the attention of real estate investors in Vancouver and Toronto who are fed up with rental income failing to carry their mortgages. As a result, a lot of them are buying rental properties in Calgary, but according to Phipps, out-of-province realtors are closing a lot of the deals, sometimes to the detriment of their clients.

“Just because Calgary is on fire, it doesn’t mean everything is a good deal,” she said. “Because they’re buying from a distance and used to paying Toronto and Vancouver prices, some -- not all -- realtors from outside of Alberta are jacking up prices because they build themselves very hefty commissions.”

The ramifications manifest in failure to close deals because the properties won’t appraise or the actual rental income doesn’t correspond to what was promised.

Said Phipps, “You still need to be strategic, use right people and run the numbers properly to make sure your investment will perform.”