Since the economic downturn, Calgary’s real estate market has suffered considerably. In almost every neighbourhood in the city, we continue to see sale signs go up. We also see many stay up, some for several months. In many cases, the signs are taken down because a home just isn’t selling. However, according to many real estate professionals, it’s the mid-range market that has suffered the most and needs a boost. Homes in the $500,000-million dollar range took the biggest hit, while those in the million dollar plus range continue to slowly gain momentum.
The real estate market will recover with time and, according to some, there is light at the end of the tunnel. There is, in fact, an upside to having more inventory – buyers are able to be very selective and find exactly, or close to, what they want. Since it’s a buyers’ market, prices for luxury homes have decreased drastically.
Mohamed Salat, senior analyst, economics with CMHC explains, “Resale homes at or above a $1 million decreased sharply when oil prices declined, creating a recession and reducing demand for higher priced housing in Calgary. Sales of homes of a $1 million and above declined by almost 40 per cent in 2015 compared to 2014.”
With Calgary’s economy growing, says Salat, sales of higher-end homes have been recovering but are still not back to the level of sales experienced prior to the economic downturn. “At the end of 2017, there were 679 sales, up 11 per cent from the previous year. In the first half of 2018, sales of million dollar homes reported by the Calgary Real Estate Board have amounted to 351, down 11 per cent from the same period last year.”
Calgary realtor Gary Cronin of Rooney, Cronin, + Valentine, says Calgary’s luxury home market has, like the general market, experienced a “slowdown” in sales. Despite the slowdown, Cronin says homes are still transacting.
The luxury market year-to-date, says Cronin, has had approximately 427 sales over $1 million dollars and 46 sales in the $2 million dollar range and higher, with another 11 sales over the $3 million dollar range. “In the $2 million+ market, buyers are looking for newer homes or substantially renovated and current. We are also seeing a fair amount of land transactions as buyers are also looking to custom build.”
Ann-Marie Lurie, chief economist for Calgary Real Estate Board says, “Like most segments of the market, sales activity for $1 million+ homes fell compared to last year. Year-to-date sales as of June stood at 350 units, which represents an 11 per cent decline over last year. At the same time, new listings continue to rise, and inventories have an average 468 units so far this year, a 23 per cent increase over the previous year.”
Lurie adds that while they do not track price movements by price range, slower sales activity combined with higher inventory is likely weighing on prices this year.
Inventories in this segment of the market reached record highs during the 2015-2016 recession, says Lurie, but did start to fall last year as price adjustments encouraged some buyers back into the market and caused some potential sellers to hold off on their decision. “However, the economic recovery has been slow to gain traction and much of the job growth has not been in areas with traditionally higher pay, impacting demand in this sector.”
Real Estate Professionals realtor Carmen Davison is hopeful and optimistic about the real estate market in Calgary, and tries to explain this to her buyers and sellers alike.
“We have seen recovery to our million dollar market in Calgary since the recession and the flood of 2013,” says Davison. Although it has been over five years since the flood, she believes that some buyers still remain nervous when it comes to purchasing in river communities.
Davison believes that elements such as job loss and uncertainty have improved for many Calgarians, therefore strengthening the market place. She does acknowledge, however, that the new mortgage rules brought in earlier this year have definitely put “a chill in people’s pocket books as well as the continual rise of interest rates over the last year.”
“The Trump phenomena and trade talks continue to keep the markets unstable and bring uncertainty,” says Davison. “There is some indication of over-building in areas where there are higher-end homes and prices may come down in order for these new homes to be absorbed over next six months. Positive, albeit very slow growth.”
While many were affected by the downturn, many were not. For those that have the means to purchase a luxury home, they would be getting great value in this market.
Compared to other major Canadian cities, “Calgary still remains one of Canada’s most affordable places to live,” says Davison.