Calgary among best condo markets for investors in Canada

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Calgary is likely to be on Toronto real estate investors’ radar more thanks to a recent report showing the city is among the more lucrative markets in Canada where average rent exceeds the mortgage cost when purchasing the average-priced condominium.

“Alberta’s largest cities were among top cities in the report with Edmonton at No. 1 and Calgary in sixth,” says Tarek Hageahmad, realtor with eXp Realty in Calgary.

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The study by Zoocasa, a national realty firm, compared average monthly rents in 23 cities across Canada, excluding major markets like Vancouver and the Greater Toronto Area, with the average monthly mortgage payment based on the average price of a condo.

Edmonton ranked No. 1 for being the most attractive from a Toronto investor point of view. There, the average price of $202,000 for a condo apartment came with a monthly mortgage cost of $886, based on a 4.79 per cent fixed-rate, five-year mortgage and a 20 per cent down payment.

That’s compared with the average rent of $1,553.

In turn, an investor would see a monthly surplus of $667 — though the report did not include condo fees and taxes.

Investors in Calgary would see a $474 monthly surplus where rents average about $1,945 a month. Yet the average monthly mortgage payment for the average condominium price of $341,379 was about $1,480.

That Calgary is an attractive condominium investment market has not been lost on out-of-town investors. Hageahmad says demand from this group of buyers has helped revive the segment that only recently had seen prices surpass their peak in 2014.

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“One of the most important things to an investor is price appreciation,” he adds.

And the resale condominium market has been surging, Calgary Real Estate Board statistics show. In July, the benchmark price of a condominium on the resale market increased 17 per cent year over year to $346,400, the largest percentage increase among all segments.

Yet investors are far from the norm in the Calgary market for condominiums, says Tim Jones, associate broker with Re/Max Complete Realty in the city.

“Honestly, I have not worked with a lot of straight-up investors seeking condos,” he says.

One recent newly built condo project only had one investor among the 24 units available for sale, Jones says.

What is increasingly common, however, is more builders working on purpose-built rentals due to growing rental demand.

“So these are not instances of one-off investors, but planned projects with 75 or more units that will be for rental” funded by institutional investors, Jones says.

Even the out-of-town investors are not buying condominiums strictly on a dollars and cents basis, Hageahmad says.

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“When we get out-of-towners looking here, one of the most interesting things about them is their different perspective.”

It’s not so much FOMO (fear of missing out); it’s fear of being priced out, again.

“They want to make sure they’re purchasing a property here so they don’t miss the boat a second time,” he says.

In many cases, these are greying buyers with children fast-approaching the start of post-secondary education.

“So the parents are thinking where their children might live,” Jones says, adding parents recognize that they can afford to purchase a condominium in Calgary and be able to rent it for likely more than enough to cover its costs, while building up equity in the meantime.

“Yes, investors from out-of-town are buying, but they’re not only looking at the purchase through the lens of the numbers.”

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