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Calgary is the notable exception in a new report forecasting a slowdown in Canada’s condominium market due to higher borrowing costs.
“It’s everybody — from first-time buyers to seasoned investor buyers and even people are downsizing, moving from their large single-family homes to a condo,” Calgary realtor Richard Fleming with Re/Max Mountain View explains about what’s driving demand in the city.
The veteran real estate agent points to affordability being the main tailwind for condominiums’ resurgence in Calgary, one of two major cities in the Re/Max 2023 National Condominium Report that have seen sales grow year over year in the first eight months of the year.
In Calgary, sales are up 22 per cent over the same period last year, the report found.
The only other city seeing growth is Edmonton, where sales grew about three per cent.
In contrast, other major centres saw declines in sales, even though condominiums are the most affordable housing type in Canada, the report notes.
In the Greater Vancouver Area, sales are down 17 per cent, and in the Greater Toronto Area sales have fallen nearly 13 per cent year over year.
Ottawa also saw condo sales drop 17 per cent.
Price is a key factor in determining the direction of demand in Canada, including Calgary where the average condo price, despite climbing more than eight per cent year over year, is about $302,000.
“Condo demand is certainly fuelled by relative affordability to other segments and cities,” says Ann-Marie Lurie, chief economist with the Calgary Real Estate Board.
Ample supply for the apartment segment also helps, she adds.
“If you’re looking in the $300,000 range, a condo is likely the only segment with supply at that price.”
One reason for greater inventory is the apartment segment had been in a multi-year slump until 2021. Only recently has the segment’s benchmark price surpassed its previous high set in 2014, she says.
With more first-time buyers struggling to qualify for mortgages amid higher interest rates, they are looking more than ever at apartment condos.
Demand is indeed high, as CREB statistics show, with condominium sales helping the Calgary market set overall sales records for each respective month from May to September this year.
It’s not just first-time buyers, Fleming points out.
“It’s investors seeing high rents they can get.”
A September report from Rentals.ca shows the average Calgary one-bedroom’s monthly rent was about $1,700, up nearly 22 per cent year over year.
Higher rents, along with the relatively low prices compared with other major centres has Calgary on the radar of out-of-province buyers whether they’re investors or people moving here for opportunity, Lurie says.
That’s especially the case for individuals coming from the GTA where the average condo price was about $747,000, as noted in the report.
“Another driver are higher rents, pushing renters into home ownership,” Lurie adds.
In the past, this pool of buyers would have purchased a single-family detached home, which just two years ago accounted for about 60 per cent of sales in Calgary.
Yet the benchmark price for this segment hit a record $696,000 in September, up nearly nine per cent from last year. In turn, single-family homes now account for only about 47 per cent of all sales, Lurie says.
“Things have really changed where the market is increasingly driven by apartment sales.”