Is this why Calgary’s prices didn’t skyrocket like Toronto’s?

Today there’s another article in the Herald about western Canadians buying property in Arizona. What I’ve never seen analysed is the effect it’s had on the Calgary market. A good portion of Calgarian’s property investment dollar is being spent in the U.S. rather than in Calgary. I personally know of many people who have bought in Arizona. Is this an explanation of why we haven’t seen the huge increases in prices in Calgary? If 3000 properties had been purchased in Calgary over the past 2 years rather than in the U.S.,  it would have put a lot of upward pressure on prices here.

By the way, did anyone correctly call a bottom to the Arizona prices? Those who bought a year ago hit it pretty close, yet I recall many doomers predicting further price decreases.

The following is from today’s Herald:

Diane Olson,  a realtor in Arizona,  says there is more competition for properties. “We are back to multiple bids,” she  said. “Within an hour of a listing there are five to 10 offers. Prices are still  below the high times, but the deal you got last year you will not get this  year.”

Phoenix prices

During the buildup of the U.S. housing bubble, house prices in Phoenix were  rising by $10,000-to-$20,000 a week according to realtor Diane Olson. Those  prices came crashing down in the fall of 2008, but are starting to come back  now. For instance:

– 2005 – a typical house price in Phoenix was about $265,000

– 2009 – that same house was selling for $70,000-to-$80,000

2012 – today, that house would sell for $130,000-to-$190,000

Read more: Canadians buying sunbelt properties

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One response to “Is this why Calgary’s prices didn’t skyrocket like Toronto’s?

  1. Bob – I think our prices did skyrocket, just way ahead of Eastern Canada, and even Vancouver (while I will admit that town is a beast of its own). While the AB ecomony was ticking in 2004-2007 we saw incredible appreciation in home prices. This did not occur in Ontario during the same period. I feel the pressure of the hot economy had the tendency for Albertans to take advantage of extended amortizations faster than any other region of Canada. Torontonians are basically where we were 5 years ago…and it has been a more gradual climb than was seen in Alberta.

    I know you love this site, but it has a good representation of what I am talking about…notice Edmonton and Calgary vs everyone else between 2005 and 2007.

    http://www.chpc.biz/canada_chart.html

    With respect to Arizona, I think it has more to do with the incredible windfall many Albertans captured in the 2005-2007 run up. People who cashed in, rather than investing in an already hot market, looked south for investment.

    My parents for example, who bought a house for $280K in 1997, sold it for $1MM in 2007. They rented in Calgary for a year, then downsized in Calgary and invested the difference in Phoenix.

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