Condo ownership is a hot topic in many Canadian housing markets.
Housing market analysts and developers continually monitor trends, underscoring the relevance of factors such as demographics, price points (compared with single-family/detached homes), migration, the economy, affordability, the job market and consumer confidence.
According to data from the most recent Canadian census released late last year, almost one in seven Canadians have opted for condo living. More than 13 per cent of Canadian households live in a condominium, a ratio that has increased by 1.2 percentage points from the last census five years ago. The stats also show that more than two-thirds were condo owners, with the balance being renters.
Close to home, according to Calgary-specific new-home housing numbers, 22 per cent of Calgarians have chosen condos versus single-family homes, second only to the Vancouver housing market, where nearly 31 per cent call condos home.
Although the Calgary condo market has been on a 10-year boom streak, the recent two-year downturn is, by no means, the only factor impacting the city’s 2017 condo market trend or the 2018 forecast.
There’s the supply and availability factor. The price factor. The immigration and migration factor. The job market factor. The affordability factor. The consumer trend factor. And more.
“World events play a major role in the confidence of buyers, who are directly affected by changes in their economic outlook,” explains Calgary Realtor and condo specialist Mike Leibel, associate broker with CIR Realty. “The lack of diversification in the Canadian job market and Alberta in particular, and more specifically in Calgary, have had a big impact.
“Calgary condo prices are way cheaper than Toronto and Vancouver. And there’s no shortage of people interested in buying,” he notes with enthusiasm.
“But it seems whenever we turn around we are being hit with another tax increase in all areas of government. Federal, provincial and civic governments are all spending more, and passing these costs on. Carbon tax, minimum wages, rising interest rates, a tightening of mortgage lending regulations, increased property taxes and floundering NAFTA negotiations all play a role in driving prices down.”
CREB (Calgary Real Estate Board) continually updates, analyzes and tracks area housing sales and listings, and underscores the significant impact of condo supply and prices. Citing November year-to-date statistics, CREB chief economist Ann-Marie Lurie points out, “Condo sales have totalled 2,699 units, 4.6 per cent higher than last year. While sales have increased, so too has the availability of new listings.” The supply of new listings over the same time frame have totalled 6,954 units, which is higher than last year and the highest yearly average on record. Based on current sales it would take nearly seven months to clear out all of the inventory.
The relationship between the sales and inventory is important for understating the state of the market. Lurie explains that, while demand is improving compared to last year, there is still a significant amount of supply in the market causing prices to fall. Benchmark prices have averaged $264,000 this year, four per cent below last year but 12 per cent lower than previous peak levels.
“Some of the challenge with the condominium and apartment market is not just the supply in the resale market but supply in competing new-home and rental markets. More rental product has prevented some people moving from rental to ownership and it may have impacted the smaller investor purchaser, concerned about lower rents and higher vacancy rates.
“At the same time all of the new construction is competing with the resale market. Builders are offering a significant amount of incentives for purchasers looking for a new property. The large amount of competition coming from the new-home sector has had a more significant impact on the resale condominium product versus single-family homes,” Lurie adds.
“While demand eased across all sectors, elevated supply levels in the condo sector caused far steeper price declines than what we recorded in the detached market.
“There has also been a tremendous increase in the number of new builds saturating the condo market, all over the city. These sales may not be reflected in our local board statistics since they are most often direct from the builder.”
Leibel is an upbeat and positive professional who shrugs off lingering references to the Calgary slump and affordability. “There are condos available in just about every price range. It is one reason why many buyers may prefer condos.
“For new condos, the Calgary hot spot is the Downtown East Village community, a spectacular new development with years of strategic planning invested and lots of amenities. For resale, it is the beltline community, followed by the downtown commercial core. These communities have the highest density of condominiums and the highest number of sales.
“I believe that 2018 will be a good year,” he notes with enthusiasm. “Hopefully we will have the bad news built into the prices and we are definitely ready for some good news. The traffic here is crazy now and the shopping malls are full. There seems to be a lot more optimism than previous years. Everything is on sale!”