July 19, 2012 | Cody Stuart
Best of Both Worlds
For some, the image of the typical Calgary condominium might conjure visions of an affordable and stylish option for first-time buyers – an attainable way for first-time buyers to enter the market, often in the most desirable neighbourhoods in the city. However, as Calgary continues to mature and evolve as a city, other possibilities begin to present themselves.Just as the city's housing stock has grown to include stately homes befitting a major metropolitan centre of Calgary's stature, high-end condominiums have also become popular.
Looking at June sales in the condo sector provides a telling window of both the value and variety to be found in the Calgary market. As of the end of June, 3,232 townhouse and apartment condominiums were sold in Calgary, about an eight per cent increase over the 2,962 sold through the first six months of 2011. In June alone, 340 condo apartments and 253 condo townhomes were sold in Calgary, with both categories posting increases over the activity seen in the same month of 2011.
Of those 593 sales, 355 were priced below $300,000, representing a solid indicator of the affordability up for grabs in the sector.
"For the most part, elevated supply levels in the condominium apartment market yielded conditions that favoured the buyer and contributed to year-over-year price declines throughout most of 2011," said CREB® economist Ann-Marie Lurie. "However, tighter supply levels in the single-family market and the rental market have contributed to the recent rise in demand for condominiums, helping push the market into balanced territory."
According to the Canadian Mortgage and Housing Corporation (CMHC), the average apartment vacancy rate in Alberta's urban centres decreased from 4.7 per cent to three per cent between April 2011 and April 2012, with the average two-bedroom apartment in the Calgary CMA, including new and existing structures, was $1,113 per month. However, according to www.rentfaster.ca, apartments in the city ranged from as much as $5,000 a month for a 2,300 sq. ft. two-bedroom condo in Eau Claire to $1,000 for a 950 sq. ft. apartment in Chinook Park.
Even with the rise in demand for rental housing, the price of condominiums in Calgary has remained stable. As of June 2012 the condominium apartment benchmark price was $246,300, a 1.5 per cent increase over the previous year.
Still representing solid value given the amenities and locations available, Calgary's luxury condo market has also seen a rise in sales this year.
Up until the end of June, 19 condos priced at $1,000,000 or more had been sold in Calgary, compared to 14 at the same point in 2011. While the numbers of $1 million and up condos changing hands might pale in comparison to the entry-level sector – a testament to the fact that luxury in Calgary is no longer confined to single-family homes – the increase is notable nonetheless.
The demand for luxury condos in the city recently hit the headlines thanks to a couple of notable sales at a new condo development in the community of Mission. A 5,626 sq. ft. penthouse (with 2,950 square feet in additional outdoor space) at THE RIVER recently sold for the record sum of $8.99 million, exceeding the development's previous record-breaking $8.3 million sale.
The growing confidence in the city's luxury market was recently reaffirmed by a recent report from RE/ MAX, which singled out the Calgary real estate outlook as "exceptionally positive," echoing the sentiment that buyers are getting more housing bang for their buck.
"The overall market appears to be healthier than in recent years, finally heading in the right direction, with homebuying activity gaining traction across the board," stated the report. "Locals are primarily behind the push, trading up to larger homes or lot sizes, taking advantage of today's low interest rates and more affordable housing values."
What the Economist has to say:
"For the most part, elevated supply levels in the condominium apartment market yielded conditions that favoured the buyer and contributed to year-over-year price declines throughout most of 2011. However, tighter supply levels in the single family market and the rental market have contributed to the recent rise in demand for condominiums, helping push the market into balanced territory. As the market has improved we have started to record some modest price increase. As of June 2012 the condominium apartment benchmark price was 246,300, a 1.5 per cent increase over the previous year. While this is a move in the right direction, prices continue to remain 17 per cent below peak levels.
"The condominium townhouse market has fared better than apartment styles in terms of improved demand and price appreciation this year, however, this relative improvement has been marginal. The townhouse market did not reach the oversupply highs recorded in the apartment market, so the recent improvement in housing demand helped push the months of supply below 3 and cause some price appreciation. Despite June's yearover- year price growth of 3.3 per cent, prices continue to remain 16 per cent below peak levels."
- Ann-Marie Lurie, CREB® Economist.