Alicia Planincic: Can Alberta keep its affordability advantage as home prices cool everywhere else across Canada?

In each EconMinute, Business Council of Alberta economist Alicia Planincic seeks to better understand the economic issues that matter to Canadians: from business competitiveness to housing affordability to living standards and our country’s lack of productivity growth. She strives to answer burning questions, tackle misconceptions, and uncover what’s really going on in the Canadian economy.

It’s no secret that owning a home has grown out of reach for many. In a recent report that looks at housing affordability across the globe, four of the six Canadian cities examined were labeled as either “severely unaffordable” or “impossibly unaffordable.”

The two that weren’t? Both are in Alberta.

Not only was housing in Alberta significantly more affordable to begin with but also, prices in Alberta didn’t surge as they did elsewhere in the early 2020s. Now, that is changing.

Since 2023, prices have skyrocketed thanks to the province’s extraordinary population growth. Somewhat ironically, affordable housing is what is attracting those from higher-priced markets to Alberta.

Could this bring an end to affordability in Alberta, too? Already, prices have risen more for an apartment in Alberta than they have in B.C. since 2019. Prices of single-family homes have further to go but the same would be true in a couple of years if current trends were to continue. These increases, while good for owners, will be tough on renters—increasing the likelihood of pushing them out of home ownership or even into homelessness.

But as far as relative affordability goes, an enormous gap remains. A typical home in B.C. costs double that of one in Alberta. The province’s Alberta is Calling campaign was onto something when it targeted these higher-priced markets; it has an incredible advantage in an era of housing unaffordability.

Even so, this advantage could quickly erode. If price growth were to continue at its current pace, it would be more expensive to buy a single-family home in Alberta than in Ontario within just six years and more expensive than in B.C. within eight. In a more reasonable scenario where home values increase at historical norms in other markets, it would take longer but still evaporate within a couple of decades.

Assuming migration to the province continues, what will determine just how much further prices rise will be the province’s ability to respond to new demand. Maintaining its advantage will require Alberta to do what other provinces have struggled to do—build housing at the pace needed to match population growth.

This post was originally published by the Business Council of Alberta at businesscouncilab.com.