Having long provided an affordable entry into the housing market, Calgarians are again turning to the condo sector as a way to make their homebuying dreams a reality.
According to CREB®, sales in the apartment and townhouse sector recorded annual increases of 12 and 16 per cent, respectively, in 2012, despite a decline in listings.
A likely factor in the rising demand for Calgary condos is the lack of availability in the city rental market. According to the Canada Mortgage and Housing Corporation’s (CMHC) Fall Rental Market report for the city, the apartment vacancy rate in the Calgary CMA declined to 1.3 per cent in October 2012.
“Calgary’s rental market absolutely contributed to me buying my home,” said Monica Kotscha, who recently purchased her first home – a condo in SkyView Ranch – after renting for several years in the city. “When my landlord told me she was raising my rent I started looking to upgrade to a larger house, but I couldn’t find anything at all that was worth it.”
Since she has yet to take possession of her new home, Kotscha currently pays $1,150 for her rental suite in Saddlebrook, a number that coincides with the average rent for a two-bedroom apartment in the city reported by CMHC. According to CREB’s January numbers, the benchmark-price for condo apartment in the city was $251,300. With a five per cent down payment, 25-year amortization and a posted five-year fixed rate of 3.79 per cent, a purchaser’s monthly payment on such a property would be $1,147.
Kotscha said the similarity between the cost of renting and the cost of becoming a homeowner made the choice an easy one.
“I figured why continue to pay someone else [when I can] start investing into my future to build equity so by the time I decide to have kids I can afford to move up to something larger that was mine,” she said.
Like many of those entering the market for the first time, Kotscha purchased her condo in one of the newer communities in the city. While she admits the community currently lacks amenities – despite ranking as one of Calgary’s fastest growing neighbourhoods– the promise of things to come and the affordability were more than enough to tip the scales in favour of buying.
“I bought in Skyview Ranch as it has minimal amenities at this moment so the price was great but with the coming infrastructure I know it will bring the value of my condo up,” she said. “So it might be full of construction today but in two or three years it’ll be a different story. I researched and found out that Superstore is coming and many more large stores. It’s expected to be a self contained area and I loved that.”
Kotscha’s comments on the value of her condo increasing come as the Calgary condo market is showing upward momentum in terms of sales and prices. While benchmark prices remain nearly 13 per cent below the highs recorded in 2007, apartment condo prices in January increased by 7.5 per cent over the previous year.
In addition, the sales increase seen in 2012 continued into the New Year, with Januarys condo sales eclipsing those seen in the same month of 2012, with condo apartment sales rising by nearly 14 per cent and condo townhouse sales rising by more than 16 per cent. The increases in the resale condo market were echoed in new condo transactions, where sales hit their highest level since 2006.
“As single-family markets tighten and consumers are looking for affordable product, demand has improved in the condo segment and will likely continue to do so for the remainder of the year,” said CREB® economist Ann-Marie Lurie.