Higher-priced home segment show some staying power
Calgary’s luxury housing sector has weathered the current economic storm better than others so far, with sales of properties over $1 million up slightly during the first six months of 2016.
“Sales have increased from 347 to 371 homes and condos combined,” said CREB chief economist, Ann-Marie Lurie, cautioning, “it’s not a big change.”
Lurie credited the slight uptick in luxury sales to a decrease in many of these properties’ asking prices.
“Anecdotally, we’ve heard more price adjustments have helped buyers feel there is more value in the homes,” she said.
“It’s not that everything is going to turn around and be all rosy, but there’s a feeling that we’ve seen the worse of the economic downturn.”
ATB Financial chief economist Todd Hirsch senses a growing optimism in Calgary, which has been reflected in the incremental gain reported in the $1-million-plus new home sector.
“It’s not that everything is going to turn around and be all rosy, but there’s a feeling that we’ve seen the worse of the economic downturn,” he said, adding the leveling off of luxury home prices have pushed some buyers into action.
“That may have encouraged luxury home buyers to say, ‘Well, now is as good at time to get back into that luxury home market because we don’t think things are going to get a lot worse.’”
And it’s not limited to the resale market, either. The new home $1-million-plus housing sector has also been fairly active in 2016, noted Chris Richer, vice-president of Albi Homes, a division of Brookfield Residential.
“We’ve actually seen a lot of resilience this summer,” he said. “We’ve had four or five very strong months and a fairly steady incline in market confidence.”
Specifically, Richer points to strong activity in Brookfield’s lake homes in Auburn Bay and luxury products in Aspen.
“Those are some of the markets we’ve seen come back a little,” he said.
Richer pointed to a strong market in the “move-down” luxury buyer – often older couples looking for smaller homes now that their children have purchased or rented places of their own.
“Those who are looking are very serious about buying.”
There have been less move-up buyers (people looking to purchase their first luxury homes) over the past two years, however, said Richer, who still expects that market rebound slightly in the past few months as well.
In recent months, the number of window shoppers has also declined, while more serious buyers have started to emerge from the woodwork, according to Richer.
“Aspirational buyers don’t have that confidence to look at new show homes right now,” he said. “But those who are looking are very serious about buying.”
Richer said Albi has not felt pressure to drop prices on luxury home significantly, focusing instead on referrals and long-term value as to not drive the market down.
“I think what we find is that the premium luxury buyer seeks out the premium brand and we have to make sure we’re as sharp as possible within that segment,” he said.
“There isn’t a sense of desperation that we have to go out and drop our prices or negotiate for every sale. We know there are buyers out there. We see them and there is activity. What we need to do is be excellent to every person who comes in the door. And it’s working. We’re seeing fairly robust sales on the luxury side right now.”