Statistics Canada recently released an interesting piece of information regarding Calgary’s residential real estate market that went relatively unnoticed.
According to the government agency, the share of households in the Calgary census metropolitan area living in condominiums was 21.8 per cent in 2016. That represented the second highest percentage in the country, behind only Vancouver at 30.6 per cent, and was much higher than the national average of 13.3 per cent.
“The growth in this product type tends to occur with a denser population. It is also a more affordable option for consumers,” said Ann-Marie Lurie, CREB® chief economist.
“The share will likely remain relatively stable over the near term, but the growth will depend on population growth and affordability of all products in the market.”
I was curious about the StatsCan info, so I asked Lurie if she could do some number crunching and pull out the relevant data regarding the city’s condo market.
It’s clear that condos have become a more popular homeownership choice over the years.
“The growth in this product type tends to occur with a denser population. It is also a more affordable option for consumers.” – Ann-Marie Lurie, CREB® chief economist
In 2000, condo sales accounted for 10.07 per cent of all MLS® System sales in Calgary. In 2016, it was 15.32 per cent. The figure peaked in 2014, when 18.77 per cent of all MLS® System sales in the city were condos. Over the last few years, the percentage has hovered in the 15 to 18 per cent range – quite impressive numbers.
Total condo sales in 2000 were 1,720 and reached a high of 4,796 in 2014 before dipping due to a recession. However, in 2016, sales numbers remained elevated from 2000 levels, as transactions in the condo market totaled 2,726.
The pace of activity in the market has picked up this year, as the city slowly recovers from the recession. Year-to-date sales until the end of October were up 3.82 per cent over the same time last year to 2,476 units, but the benchmark price has dipped by 4.04 per cent to $264,570.
Richard Cho, principal market analyst for Calgary with Canada Mortgage and Housing Corp., says the growth in the percentage of condos sold in the market is due to several factors, including increasing popularity among young adults.
“With the condo market comes a certain type of lifestyle – more of a maintenance-free lifestyle – and condos are also fairly close to amenities as well. That appeals to a lot of buyers,” said Cho. “Affordability is also a big factor as well. The average condos are priced lower than single-detached homes. Condos also appeal to many downsizers – people who are looking for a smaller place … who were living in a larger home and now want something with a little less maintenance.”
The growing popularity of condos in recent years has also led to the market’s biggest current challenge – an elevated level of new-product inventory, which reached a record high in the spring of this year. It has come down since then, but remains elevated, which is having an impact on prices.
According to Cho, inventory in October that was completed but unsold sat at 1,107 units, up 36 per cent from a year ago. There were also 6,026 units under construction in October, down two per cent from last year and a far cry from a high of close to 9,000 units near the end of 2015.