Condo Conundrum
Yesterday was the 6th Annual Calgary Real Estate Board Forecast Breakfast Tradeshow and Conference. Calgary Realtors were given an overview of what to expect in the following months. I thought I would share some of the information with you that was shared with me.
CONDO MARKET LAGS IN THE FACE OF STEADY INVENTORY
Calgary’s recent housing boom pushed single family prices up at a rapid rate and demand for condominium and multi-family homes quickly followed. In repsonse builders generated an average of 1200 starts per month from 2004 through 2007 resulting in a build-up of inventory under construction that peaked in 2008 at nearly 15,500 units.
A steady supply of new and resale multi-family units has meant little price growth for the condominium market, while a diminishing inventory of singles has put upward pressure on the average price of a single family home.
In 2010 single family resale prices will again outpace condos as equity gains from pre-2006 will enable move-up buyers to afford more. Consequently, the gap between single family homes and condominium prices will continue to widen in the short term.
AVERAGE PRICE COMPARISON, SINGLE FAMILY TO CONDO, CITY OF CALGARY
AFFORDABILITY WILL BENEFIT CONDO MARKET LATER IN 2010
Multi-family supplies are typically “lumpy” with building completions adding hundreds of units to the market at one time. Late 2008 saw many of the multi-family starts from 2007 completing at the same time. Longer build-times of condos also complicate market timing and the rate of supply. Completions of unsold unitys, especially in the downtown apartment segment, will contiunue through 2010. The oversupply of complete and unoccupied condo apartments is expected to persist as completions of investor units are added to the rental stock or are immediately listed for sale.
On a more positive note, once this excess inventory works through the marketplace, the extremely low level of new starts will again drive prices up, particularly for the lower priced end of the market that connot be supplied by the single family market.
source: Calgary and Area Housing Market Forecast 2010
