Ben Rabidoux, an analyst and strategist with M Hanson Advisors and author of the TheEconomicAnalyst.com, recently took a look at real estate in Canada`s largest cities.
Below is his take on Calgary`s market:
Calgary underwent a market correction staring in 2007. Resale prices have nearly returned to their previous highs but the fundamentals remain stretched. I often liken Calgary real estate to a high price-to-earnings growth stock where future earnings potential is being reflected in current prices.
In Calgary, it’s clear that prices reflect the popular belief that the province will continue to experience strong economic growth. If this happens, it’s possible that prices will continue to move sideways – or slowly rise – while fundamentals catch up. But if the expected economic growth fails to materialize, there would be quite a bit of dead air between prices and underlying fundamentals.
In terms of supply and demand, the city looks pretty strong with sales rebounding off their lows but still well below the highs of the boom years. Inventory levels also remain healthy suggesting that over the short term, there is strong support for resale prices in the city. In April, resale prices rose a paltry 0.8 per cent on a year-over-year basis but this pace could quicken slightly in the coming months.
For the full article in the Globe & Mail which he provides insight on other cities including Vancouver, Toronto, Ottawa, and Montreal, please click here