AYE AYE

Buoyant economy fueling Calgary condo growth
Sales and new construction expected to rise in next two years
By Mario Toneguzzi 
Calgary Herald April 2, 2014 

CALGARY - Calgary’s buoyant economy, healthy population growth and excellent affordability will keep sales of existing condominiums rising over the next few years, says a new housing report released Wednesday.

The latest Conference Board of Canada condo report, released by Genworth Canada, said good demand will also lift condo starts in the city following a pullback in 2013 that was at least partly due to flooding in the summer.

The Winter 2014 Metropolitan Condo Outlook forecast Calgary to see the best growth in prices this year, for eight cities studied, for the resale condo market with median prices rising by 3.2 per cent to $260,523.

The report said they will rise a further 3.4 per cent in 2015 to $269,508.

“A strong economy is first and foremost and everything kind of spins off that,” said Robin Wiebe, senior economist at the Centre for Municipal Studies at the conference board, of the reasons for the optimism in the Calgary market. “When the economy is strong, people come there, come out for work, and that sets in motion the whole housing chain. Starts and resales and all the rest of it.”

The report forecast resale apartment condo sales would be up 2.9 per cent this year to 4,507 units and increase by 2.1 per cent next year to 4,601 units.

Wiebe said affordability in Calgary is a factor. The city has the highest average household income among the report’s eight cities and Calgary’s apartments are not particularly expensive with a median price below Montreal, Toronto, Ottawa, Victoria and Vancouver.

“That makes housing affordability in Calgary excellent,” he said.

The report forecast new condo apartment starts of 2,601 this year, up 6.9 per cent, followed by 2,680 in 2015, up by 3.0 per cent.

It said 2013’s absorptions of 2,772 was the most since 2008 “and likely would have been even stronger were it not for the floods.”

“Accordingly, the inventory of newly completed and unoccupied apartments fell to 244 units - a marked improvement from inventories of nearly 600 units in 2010. Absorptions are forecast to pull back in 2014, but remain strong at nearly 2,400 units,” said the report.

“Modest absorption gains during the medium term are forecast to keep trimming inventories - they will dip below their 20-year average in the projection’s outer years. Falling inventories will give builders the confidence to boost housing starts.”

According to the Calgary Real Estate Board, condo apartment MLS sales in the resale market totaled 1,062 after the first quarter. Sales growth was strongest in this sector due to the availability of listings, it said. New listings after the first quarter totaled 1,722, an 18 per cent increase over the previous year. While demand continued to outpace listing growth, keeping market conditions relatively tight, inventory levels are similar to the previous year, said the board.

“Nearly 50 per cent of new listings in the apartment sector are priced in the range of $200,000 - $299,999, providing options for those looking for affordable product,” said Bill Kirk, CREB’s president.

For the first quarter of this year, the average MLS sale price for condo apartments in Calgary is $317,855, up 9.03 per cent from the same period last year.

“Some easing of the supply pressure in the condominium market is expected as new construction projects are completed,” said Ann-Marie Lurie, CREB’s chief economist. “However, thanks to Calgary’s strong economy, it is expected that most new supply can be absorbed without risk of oversupply and condominium price correction.”

Photo By: Toni Holopainen