July 05, 2012 | CREBNow
The Importance of New Calgarians
It's a well known fact that immigration has significant importance for economic growth, which also affects housing demand. According to recent statistics, Calgary's population has increased by nearly 30,000 over the past year – resulting in a population of 1,120,225. This is a considerable factor that affects the housing market in several important ways.
Immigrants and in-migrants — those fellow Canadians who are coming from other provinces — compose a large number of potential home buyers and can also cause the housing supply to rise if there are expectations of higher demand.
But what does this mean for the Calgary housing market? The City of Calgary's 2012 census revealed Calgary's suburbs are growing, and so are some of our older, Inner City neighbourhoods like Chinatown, Inglewood and the Beltline. This may be attributed to new condo projects which can spike communitypopulations. Densification can play a role in population growth – with the population surge being attributed to immigration rather than higher births as was the case two years ago when births made up all of Calgary's population increase.
Apparently, most of the new immigrants are tenants, but it's interesting to note there are more and more new home owners among immigrants who have lived in Canada for several years. According to Frank Clayton, Toronto's BILD's economic advisor, the number o immigrants living in their own homes is growing quickly, from 17 per cent six months after arrival to 55 per cent four years after arrival. The research also revealed a desire to achieve ownership that is disproportional to the level of household income received by immigrants, to the point of a willingness to cut consumption in other areas in order to do so, the report notes.
A study called Settling In: Newcomers in the Canadian Housing Market, conducted by University of British Columbia professors Daniel Hiebert and Pablo Mendez, estimates over 28 per cent of all home sales between 2001 and 2008 were to immigrant households. This represents approximately 122,000 units, including about 40,000 newly-built units. These high numbers show that immigration is a truly important factor in the housing market.
The impact of immigration on a market originates in the shift in demand, as the housing supply isn't able to swiftly react to an unexpected rise in demand. As immigrants settling in their destination cities come to be homebuyers, they leave the rental housing market. Therefore the effect of immigration on housing prices is less significant in the short run and we see its impact more in the long run.
Bob Jablonski | Calgary Community | Calgary Real Estate News | Housing Market