Is buying a home in Calgary on your agenda for this year? It is one of the biggest and one of the less expensive cities in Canada.
Before you start pounding the pavement in search of a new home, you may want to do a little research first on the real estate market in your area. Further, you should also take some time to make sure that your finances are all in order so that you’re in a strong financial position to buy a home and take out a mortgage.
The question is, what’s the average price for a home in Calgary? How much can you expect to spend on a home in the city, and what can you do to make sure you don’t spend any more than what your current finances can handle?
Average Price Of Homes In Calgary
The average price for a home in Calgary is currently $540,700. Home prices in the city increased by just 2.6% over the past 12 months.
In most other parts of the country, home prices have skyrocketed. And although prices increased in Calgary, they didn’t increase by much. The same can be said for the province of Alberta as a whole. Over the past year, prices in the province increased by just 2.7%. Today, province-wide home prices are averaging $465,198.
It’s a different story nation-wide. Canada saw home prices increase by 3.2%, with home prices currently averaging $729,044.
Comparing Average House Prices By City In Alberta
|Home Prices 2023||Year-Over-Year % Change|
What Affects Home Prices?
Whether you’re looking for a home in Calgary or any other city in Alberta, the value of a home is affected by the same factors, including the following:
- Age and condition of the home
- Size of the home
- Size and type of lot
- Features and finishes
All these factors play a role in how much a home is valued at and what a qualified buyer may be willing to pay for it.
That said, the value of real estate also fluctuates over time based on the temperature of the market, the economy, and mortgage interest rates, all of which impact demand for housing. Basic economics suggests that prices for commodities — including housing — can increase as the demand increases. So, the higher the demand for housing, the higher the prices for homes will be.
For instance, a strong economy is usually characterized by low unemployment and higher wages. People who have more money to spend may be in a better position to buy a home, which can drive demand for real estate, and therefore push prices up.
Lower mortgage interest rates can also fuel demand, as they can make borrowing more affordable. And the more consumers are able to afford a mortgage, the higher the demand will be for housing, which can further drive prices up.
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How Do Sellers Come Up With Listing Prices?
The goal for every seller is to sell their homes for the highest price possible. That said, it wouldn’t be prudent to just arbitrarily pick a listing price out of thin air. Instead, there’s some behind-the-scenes work that needs to be done to make sure a listing price is chosen that accurately reflects the current market.
Real estate agents who represent sellers will go through a certain process to establish an appropriate listing price. Most often, this involves pulling a list of comparables — or “comps” — to help narrow down a listing price.
This list includes homes that are very similar to the subject property, are located in the same area, and have recently sold. While it may be somewhat helpful to look at prices of current listings, sellers would get a much better picture of what homes actually sold for.
From this list of comps, real estate agents can then make adjustments to come up with an appropriate listing price. More specifically, they’ll compare the following features to the subject property:
- Type of dwelling
- Number of bedrooms and bathrooms
- Square footage
- Age of the home
- Condition of the home
- Size of the lot
The closer the comparable homes are to the subject property, the better. This will make establishing a listing price easier.
How To Determine How Much To Spend On A Home Purchase
You might have some idea of how much you can afford when buying a home, but your income alone should not be the only thing you look at when making this decision. Before you call up a real estate agent and start making appointments to visit homes for sale in Calgary, you should have a clear idea of the price range to look within.
With a price range in mind, you can avoid wasting time looking at properties that are far outside of your budget. Plus, you’ll avoid the disappointment of falling in love with a home, only to find out that you can’t secure a mortgage to finance it based on your financial health.
To determine exactly how much you should spend on a home purchase, consider the following.
Get Pre-Approved For A Mortgage
The first person you should speak with before you start looking at homes for sale is a mortgage specialist. They will look at your financial profile closely to help you determine how much you can afford to spend on a home purchase and the maximum loan amount you can be approved for.
Getting pre-approved for a mortgage will require you to provide the lender with certain documentation that details your income and debts. From this information, the lender will be able to determine how much of a loan you could get approved for. You can then use this figure to narrow your focus on listings that match your budget.
It’s important to note, however, that a pre-approval does not guarantee final mortgage approval. If certain things change with your finances, you could be denied a mortgage, even if the loan amount you request is within the loan limits specified in your pre-approval letter. For example, if you change your job or take out another loan before you apply for final mortgage approval, you could find yourself denied a mortgage.
Further, pre-approvals do not last forever. They usually expire after 90 to 120 days. So, if it takes you longer than this to put in an offer on a home and request final mortgage approval, you may have to start the mortgage approval process all over again.
Calculate Your Current Debt
A healthy income is a crucial component of getting approved for a mortgage. After all, you’ll need to earn enough to cover your mortgage payments. But your debt load also plays a key role in the equation. You’ll need to know exactly how much money goes out every month relative to your income to understand how much is left over to dedicate to your mortgage payments.
It’s important to make a detailed list of all your monthly expenses to determine how much of your income you can use to pay a mortgage. Common monthly expenses often include the following:
- Car loans
- Car insurance
- Public transit
- Student loans
- Credit card bills
- Personal loans
Add up all the expenses you incur every month and deduct the figure from your income to find out what you can realistically afford to spend on mortgage payments.
Understand The Costs Of Homeownership
A mortgage may be the most expensive part of owning a home in Calgary, but there are plenty of other costs associated with homeownership. It’s important to understand what these are and how much it will cost you to operate a home every month. That way, you’ll be better able to budget appropriately so you don’t find yourself in the red every month.
The following are some of the more common costs of homeownership:
- Property taxes
- Home insurance
Don’t forget about closing costs when buying a home.
Should You Buy A House Or A Condo?
When it comes to buying a home in Calgary, you’ve got lots of options, including whether to buy a condo or a single-family home. There are pros and cons to both, so you should take some time to weigh each of them before deciding which type of dwelling to buy.
Reasons To Buy A Condo
Condos are usually cheaper than single-family homes.
Owning a condo promises maintenance-free living. Property management is responsible for maintaining and repairing all common areas outside of your unit, so you won’t have to shovel any driveways or cut the grass.
Condos are typically located in areas that are closer to things like work, shopping, and entertainment. Often, you can walk to all your amenities; otherwise, public transit is often close by, making commuting easy without the need for a car.
Condo buildings typically feature several on-site amenities, like gyms, pools, party rooms, and rooftop gardens.
Reasons To Buy A Home
Single-family homes are larger than condo units, giving you a lot more square footage to make use of.
Aside from a balcony, condos don’t really offer much in the way of outdoor space. With a single-family home, however, you’ll have your own yard to enjoy, no matter how large or small it may be.
There are typically rules to abide by when living in a condo that can impede your freedom to decorate or use your home as you wish. For instance, there may be rules about pets, balcony BBQs, and visitor parking. But with a single-family home, you’ll have the liberty to do as you please, as long as you are not a nuisance to your neighbours.
Calgary is a great place to live and plant some roots. And compared to other cities across Canada, it’s relatively affordable. That said, buying a home is still an expensive endeavour. Make sure you’ve got a hold on your finances and do your homework on home prices in Calgary to ensure you make a sound purchasing decision.