Home Month and Year February 2024 Calgary’s Suddenly Booming Condo Market

Calgary’s Suddenly Booming Condo Market

Affordability is not an issue

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Crunching 2023 YYC real estate stats and trends confirms that, despite a lingering listings slump having caused low inventory in most housing types, for various reasons, Calgary continued as a hot market and a seller’s market.

While factors like sales to listing ratios, affordability, mortgage rates and consumer confidence traditionally impact real estate trends, the overall Calgary market continues a bit of a Canadian anomaly. It is boosted by a surging demand, triggered by migration which is attracted by good jobs and high incomes, as well as Calgary’s affordability, especially compared with other major Canadian markets like Vancouver or Toronto.

2023 Calgary real estate stats and trends are testimonials that, after several sluggish and challenging years, it was particularly good news for Calgary condos.

By fall of 2023, Calgary’s detached home average prices increased by 11.2 per cent, year-over-year, to $707K. Semi-detached home average prices increased by 13.4 per cent, year-over-year, to $584K. Townhouse average prices increased by 22.8 per cent, year-over-year, to $419K. But apartment and condo sales increased by almost 50 per cent, with Calgary condo average prices increasing by nearly 15 per cent, year over year, to $310K.

“Finally!” says the popular and upbeat Julie Dempsey, realtor and condo specialist with Royal LePage Benchmark. “It is overdue and very good news for Calgary’s condo market. It was the first time in a long time that we saw low levels of inventory, which also helped bolster sale prices.”

She points out that, after more than three years of a Calgary condo slump, the situation turned around. “Three long years ago, we were in the thick of COVID, and the last thing people wanted to do was live in a condo and share an elevator. But we got through it and by the end of 2021, the average condo prices across the city were up nearly six per cent. By the beginning of 2022, there was an uptick and a trend of Ontario and B.C. condo buyers, investing in Alberta. Every time my phone rang, it was a 416 or 604 area code, with buyers wanting to purchase a Calgary condo.”

Even with the condo momentum, Dempsey admits that, at the beginning of 2023, it was hard to tell where the condo market was headed. “We had just been through six interest rate hikes, which should have put downward pressure on prices. But last year started with low inventory and strong sales. Calgary’s condo market started to accelerate.”

Real estate professionals also credit “the substitution effect” (a quirky factor of real estate) for boosting Calgary’s condo market. When changes in home prices or mortgage rates reduce buying power, consumers tend to substitute and shift to more affordable options and the substitution effect often changes the property types which buyers look for. It is one reason why, particularly in the past two years, the composition of home sales in the Calgary market has shifted toward condos and away from detached houses.

According to recent CREB numbers, the higher interest rate environment and recent rental rate increases are causing more people to look for Calgary apartment and condos.

While it is positive news for Calgary’s condo market, the facts show that it is low inventory, not price points, which are a festering Calgary real estate problem.

CREB points out that although there is continued improvements in the number of new listings, particularly for apartment condominiums, it is still not enough to cause any substantial change from Calgary’s low inventory situation.

While there is some concern about affordability also becoming a Calgary real estate issue, like it is in Ontario and B.C., so far it does not loom as much of a Calgary condo issue. “Although the 2023 benchmark price was $300,000, we still had some condos priced below $200,000,” Dempsey points out. “So, with 10 per cent down, someone earning $52,000 a year can qualify. In the entry level of Calgary’s condo market. That means a buyer can own for the same, or less, than rent.”

The Calgary condo market’s worries of a few years ago were about a glut of unsold inventory, while many new high-rise condos were being built. That is also settling out. The Calgary condo market is changing. Although stereotypical high rise Calgary condos are still popular, there is growing development in the low-rise condo sector.

“Besides, it is much safer for developers to do this style of condos,” she explains. “The sales and build cycles are much shorter for low-rise, compared to the conventional high-rise market, which can often take two to four years from start to completion. We are also seeing more development of condos in the suburbs, with new condo developments going up in booming suburban areas.”

Considering the conventional real estate market impacts of influencers like mortgage rates, inventory and benchmark prices, real estate in general, and particularly condos, are still driven by the basics of consumer wants, needs and trends.

Added to the demand for traditional inner city, downtown condos, Calgary’s condo market is experiencing large growth in the suburbs, in new walkable communities where people can go out and get groceries and have downtown experiences like restaurants, coffee shops, retail and personal services within a short distance.

“If the past two years are any indication of 2024, ” Julie Dempsey says with enthusiasm, “the Calgary condo market is poised to be a great place to invest.”

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