Well you can tell summer is right around the corner; gas prices have jumped and as I write this, they are calling for rain this long weekend. Another sector of our local economy that’s experienced a major jump in price recently is the cost of renting a home–by as much as 40% in just the last twelve months.
There is no question that Calgary is on another growth spurt with rental rates up by large amounts, energy costs and groceries costs escalating, higher property taxes, and of course home prices moving up again.
My concern is that for a large part of the population, wages are not keeping pace with the inflation that is now running rampant through the local Calgary and Alberta economy. Don’t think there is any real inflation in Calgary? Well, ask anyone who is filling up their gas tank or looking to find new accommodation, and they may beg to differ.
There is nothing wrong with a strong economy of course, as it helps us all; and it’s certainly a better than alternative problem of living with a weak economic environment, but that pesky inflation has a way of chewing through your take-home pay and savings.
I see a very real problem in housing in Calgary developing right before our eyes, and it’s got the potential to cause all kinds of havoc in the housing market. It’s that vicious cycle of first time home ownership. As rental rates rise, it makes it virtually impossible for those renting to save enough for a down payment, and without first time home buyers the housing market starts to fragment.
The whole industry of housing is dependent upon the first time home buyer, at least if you don’t want to live in a city like Portersville portrayed in the movie “It’s a Wonderful Life”. Most of us go through the home ownership cycle of first home (which is now more than likely going to be a condo) and then hopefully moving up that property ladder to your dream home.
The housing industry is responding to the needs of first time buyers with condos–and lots of them. As a matter of fact, Calgary for the first time in history is about to cross over the line, with the majority of homes built as multi-family vs. a detached single family home.
Some new condos downtown are less than 500 sq. ft. in space, not really where many folks envision their start of home ownership. But the harsh new reality of purchasing a home in an ever-increasing costly city to live in.
The new reality of living in the City of Calgary is that it’s an expensive place to live, and that with the projected increase of 125,000 new citizens over the next five years, it shows no signs of leveling off or slowing down. Great news for those of us already planted and living in our homes, but for those moving here, be prepared–Calgary just isn’t what it used to be.