Buoyed by increasing wages and the continuance of low mortgage rates, Calgary’s luxury home sector set new records for sales in May.
Classified as those homes priced $1 million or more, there were 84 luxury sales in Calgary in May, setting the record for the most million dollar homes sold in a single month. The previous record was set in May 2012, when 80 homes priced $1 million or more were sold.
“The luxury home market still represents a small portion of our total city housing market, but the share of activity has improved over the previous year,” said CREB® economist Ann-Marie Lurie.
Through the first five months of 2013, 320 luxury homes were sold in Calgary, representing a 33 per cent increase from the 241 homes sold during the same period last year. While still representing a small portion of the Calgary market as a whole, luxury homes have grown from encompassing 2.5 per cent of total sales in May 2012 to 3.2 per cent this year.
Lurie pointed out prices in the luxury sector haven’t been increasing as quickly as in other price points, giving buyers increased incentive to enhance their living situation. In addition, Lurie said Alberta’s excellent economy has provided an extra boost for the sector.
“Wages continue to rise, mortgage rates remain at low levels and long-term economic prospects are favourable, potentially offering an opportunity for those looking to upgrade,” she said.
In March, Alberta employees earned an average of $1,111.20 per week, a nearly five per cent increase from the previous year. Placed next to fellow Canadians, Albertans’ weekly earnings stand out, with the average employee taking home 21.5 per cent more per week than the Canadian average.
As a result of Alberta’s bustling economy, Lurie said those looking to move into more luxurious accommodations have more choice. However, she did point out that despite appearance, some indicators are not what they seem.
“When we consider the median value of the transactions, while they have trended up from the low of the recession, they still remain below levels recorded during the 2007 period. Furthermore, home sizes are still larger than what was transacting in the market highs.”
Earlier this year, Calgary’s luxury market set another record with the sale of a $10.35 million home in Aspen Woods. At $10.35 million, the sale of the 14,500 sq. ft. French countrycastle style home broke the record for the highest price ever paid for a single-family home in the city, topping the $10.3 sale of former Calgary Flames goaltender Mike Vernon’s house in Elbow Park.
In April, Sotheby’s International Realty Canada released a report listing Calgary as “one of Canada’s most robust markets for luxury homes” – outpacing most of the country – and echoed Lurie’s sentiments regarding the impact of strong employment rates, which have encouraged the migration of a cross section of residents to inner city homes.
The Calgary market also has the lowest overall percentage of foreign investment of the urban markets surveyed, with the majority of purchases of top-tier single-family homes made by Canadians (85 per cent according to survey results).