Parking stalls becoming key bargaining chips in a buyers’ market for apartment condos
Parking is at a premium in Calgary’s inner city.
Granted, that’s not new news. But its impact on the local resale residential housing market is now making waves, especially as a bargaining chip for sellers in the beleaguered apartment-style condominium sector.
Benchmark prices in Calgary fell overall by 0.7 per cent in October compared with the month before, and 1.2 per cent from October the previous year, according to CREB®’s most recent monthly housing summary.
The steepest decline, however, was in the apartment condo sector where the benchmark price fell 0.8 per cent to $288,300 and four per cent from October 2014. CREB® attributed the decline to a corresponding increase in months of supply, which approached six months. In other words, more supply created a downward pressure on prices.
The good news for apartment sellers with parking spots is they may find themselves with an important bargaining chip going forward, say industry experts.
“Downtown, some people are getting $500 to $600 a month for indoor parking stalls,” said Calgary-based lawyer Jeff Kahane with Kahane Law Office, who has also seen some of his clients sell additional spots for $5,000 to $30,000.
Added CREB® president Corinne Lyall: “It definitely could help make your property more saleable, and you could market the parking as a potential revenue source. “Saying that, you would need to be relatively close to downtown to make it valuable.”
Before owners hit the open market, both Lyall and Kahane warn them to first be aware of how parking stalls are designated in a condominium. Apartment owners can generally only sell or rent their stalls if they are titled to them, meaning they purchase the spot along with the units. Otherwise, stalls may be assigned by the board, rented to condominium owners or leased long-term.
Calgary-based real estate lawyer Darrel Cohen also urges apartment owners who intend to sell their spot or rent it out to do their due diligence beforehand by reviewing their buildings’ respective condominium bylaws.
“There are often covenants to ensure that you at least keep on parking unit with your residential unit,” he said. “There are other limitations too like concerns over security so you can’t, for instance, rent to people who do not live in the building.”
While many real estate professionals will make their clients aware of this, Kahane still sees deals fall apart over issues arising over how stalls are designated.
It’s important to ask the right questions, he said.
“If it’s leased, for example, and there’s only one year left, are you going to be able to renew it?”
In cases where parking is assigned, rules may stipulate new owners start at the bottom of the list for spots. As a result, buyers under the assumption they would get an indoor spot might actually receive less-desirable outdoor spots.
“The point is as people need to know clearly what it is they’re buying well before they sign anything,” said Kahane.
Cohen also urges apartment style condo owners to think long-term before selling off their parking spots – even if they don’t see a short-term need.
“It affects the marketability of the residential unit,” he said. “Without the parking unit, it reduces the scope of the market because you’re only dealing with buyers without vehicles or are willing to make some sort of accommodation.”