Experts believe higher-priced home market is not out for the count
Despite ongoing oil patch uncertainty that plagued the province’s economy for much of 2014, Calgary’s luxury housing market is still alive and well, say industry insiders.
While experts acknowledge the sector is going through a rough patch, they say the industry is undaunted, instead pushing ahead in hopes that Alberta’s infamous cyclical economy is due for another upswing.
Most recently, Homes by Avi and Augusta Fine Homes opened new sales centres last month in Artesia at Heritage Pointe, a luxury community just south of Calgary. A show home parade featuring homes by those two builders plus Albi Homes is also due to open there in April.
The luxury home market saw a decline in demand compared to 2014 and to the lower-priced segment of the market, said Richard Cho, principal of market analysis in Calgary for Canada Mortgage and Housing Corp.
On the resale side, year-to-date MLS® sales over $1 million in Calgary were down year-over-year by more than 40 per cent to just 482 units at the end of November, according to CREB®.
Outside of Calgary, year-to-date MLS® sales in Rocky View County until the end of October declined 38 per cent to 128 units.
“That doesn’t mean there’s no one looking to buy luxury product – just not to the same degree,” said Cho. “What we are looking at into 2016 is we’re expecting that part of the market to gradually recover. We’re forecasting prices to remain fairly flat in 2016.”
Homes by Avi principal Alice Mateyko said low interest rates “are definitely helping with the decision-making process. Demographics (that), in the past, may not have had the opportunity to own a luxury home are taking advantage of the low rates.
“The market has been mixed. We have seen a number of professionals with younger families interested in our product, as well as an older demographic looking to build their dream homes.”
Augusta vice-president Mike Plumton, pictured, said despite the shaky economy, he’s still busy developing custom homes in Artesia (where he has 13 lots) and elsewhere.
“I’m probably working with as many clients now as I was working with at the beginning of last year,” he said.
“Whether all those buy or not is another story, (but) there are definitely people looking to take advantage of what’s going on.”
Plumton, whose show home in Artesia is a 2,000-square-foot bungalow backing onto a lake amenity, said many of his clients are experienced homebuyers. During times like this, these savvy buyers pay special attention to the quality of the builder and its product (in his case, custom homes).
Daren Gull, a local real estate professional with Sotheby’s International Realty Canada, said what he noticed most in the high-end market in 2015, especially in the last quarter, was luxury buyers “taking a bit more time. They’re really sensing it’s a buyer’s market in the luxury market. They can go to a builder and build something brand-new for the relatively same cost as resale.”
CREB® chief economist Ann-Marie Lurie noted the ratio of sales to new listings in 2015 dropped to 25 per cent compared to “closer to 40 per cent” year-to-date in 2014, indicating buyers’ conditions.
Gull said some buyers entering the $1-million-plus estate market in 2015 were “moving money into real-estate assets because other markets like the stock market and bonds were down.”
“We saw a lot of people in the 50-plus range coming in and buying maybe their fourth or fifth home,” he said.
Mateyko, whose company is showcasing its Waterford show home in Artesia aimed at growing families, said challenges for the luxury market still lie ahead in 2016, meaning it’s up to builders to provide product people are willing to invest in.
“(It) will be a tough year for all of us, market recovery is hard to predict, but one thing we can guarantee is our continued attention to quality and customer satisfaction,” she said.