Canmore real estate has seen substantial gains in value since the spring of 2021. We have seen a roughly 30% increase in Canmore real estate values. The real estate value increase is historically rare for Canmore, which usually runs at a 5% or inflationary value increase year over year. Many ask why there has been such a boom in Canmore real estate, especially during the pandemic.
Whether for the ease of a condo or a sprawling mountain home, out-of-province buyers are driving the Canmore real estate market. Two key reasons are influencing buyers’ decisions here in Canmore.
1. Interest Rates
The interest rates are historically low. This allows people needing a mortgage to borrow more than they would have been able to in the past. The Bank of Canada has made a concerted effort to keep its overnight lending rate low to fuel the economy during a very uncertain time in our history. The low-interest rates have enabled buyers to pay more than they would have in the past. Buyers don’t purchase based on real estate prices; they buy based on mortgage payments. The lower the interest rates, the lower the mortgage payment, and the more the buyer is willing to pay.
There is no doubt that the government plans to increase the lending rate throughout 2022. They will be watching the economy closely to ensure that goods and services continue to flow.
We do not expect the interest rates to increase to the point of having a negative impact on the real estate market.
2. City Real Estate
Cities across Canada and the US have seen massive gains in value. Toronto, for instance, saw a 37% increase in a single year, let alone the many years leading up to their current values, which rank amongst the top 4 most expensive cities in North America. The detached home in Toronto is $2 million; that being said, the city’s core is much higher than that. Vancouver has also seen pandemic growth. More recently, the city of Calgary has been going through a boom in real estate not seen since the oil price heydays.
The cost to purchase a recreational property outside of Toronto is so high that many Torontonians are willing to drive 4-5 hours for a cottage – while most cottages (western Canada refers to these as “cabins”) are located within a 2.5-hour drive. This is a significant commitment. Not only is it a commitment and that they are unlikely to get a charming home on the land, but there are bidding wars on these cottages and chalets. Many people in Toronto decide to unlock that capital appreciation in their homes and buy a mountain getaway here in Canmore. After all, for some, the commute isn’t much longer to come out to a mountain home in Canmore – and if it were, Canmore is worth it! Not to mention that property in Canmore is cheaper and better value than the options they have outside of Toronto.
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Other Factors
Other factors are driving the out-of-province relocation buyers, such as people looking to retire, no provincial taxes, no double land transfer taxes (like Vancouver and Toronto), not to mention the incredible views and lifestyle that Canmore has to offer!
We don’t see this out-of-province influence ending any time soon. It’s likely here to stay, especially with the accumulated wealth in Canada’s biggest cities. We know several people who have moved from Vancouver and Toronto to our town of Canmore. It’s great to have new people as it increases the vibrancy of Canmore.
