MULTI-FAMILY HOME SALES IN CALGARY GROW
Tighter mortgage rules have pushed sales down from last quarter
New home sales at multi-family developments in the Calgary area at the start of 2018 cooled compared from the previous quarter, but outpaced the same period year over year.
There were 634 sales of condos and townhomes combined from Dec. 1, 2017, to the end of February 2018, which is the first quarter of the reporting period for Urban Analytics, a market research and advisory firm.
This activity marks a 13 per cent climb from the same time a year ago when 544 of these homes changed hands.
However, compared to the previous three months, sales slipped 32 per cent.
The firm says, the upswing in sales during the previous quarter was particularly due to buyers looking to make their home purchase prior to tighter mortgage qualifications rules being introduced this year.
“Younger, price-sensitive buyers were less active in the initial months of 2018 as they adjusted to the reduced buying power that resulted from the new rule changes,” says Kimberly Poffenroth, senior market analyst for Urban Analytics.
The Office of the Superintendent of Financial Institutions brought in revised guidelines for residential mortgage writing practices and procedures, starting Jan. 1.
This includes a new “stress test” for uninsured mortgages that requires the borrower to qualify at the higher figure between the fiveyear benchmark rate published by the Bank of Canada and two per cent above the contracted mortgage rate.
“We anticipate these buyers to begin re-entering the market as the spring selling season commences,” Poffenroth says. “We expect they will be particularly interested in more affordably priced townhome and wood-frame condominium product.”
Here are four things from the Urban Analytics’ recent report on multi-family sales in the Calgary area.
TOWNHOME SURGE
The year-over-year increase in new multi-family sales last quarter was led by the townhome market. The segment recorded 290 transactions, rising from 228 in the first quarter from a year ago, says Urban Analytics.
At the same time, wood-frame condo sales dipped to 245 from 294, and concrete condos eased to 99 from 102.
INNER SOUTHWEST RISING
When looking at specific areas of Calgary, two locations within the inner-city led multi-family sales growth year over year. An area Urban Analytics dubs inner-southwest saw sales soar 93 per cent from a year ago. Inner-northeast was next with 10 per cent growth.
Quarter over quarter, in Airdrie, sales slowed to 31 moves from 37, while Cochrane’s set back to 30 from 36.
NEW MULTI-FAMILY SUPPLY GROWS
Condos in wood-frame buildings led the overall increase in released but unsold homes at multi-family developments in Calgary last quarter. There were 1,727 condos at wood frame structures available, up from 1,418 in the previous quarter, and 1,481 year over year, says Urban Analytics.
Meanwhile, 799 condos at concrete buildings were released and unsold last quarter, slipping from 960 in the previous quarter, and 1,285 during the same months in 2017.
The townhome segment had 1,050 released but unsold units in the recent quarter, down by one from the previous quarter. A year earlier, the townhome tally was 588.
SELECTION IN THE OUTER SOUTH
An area Urban Analytics defines as the outer south led all ends of Calgary in supply of released multi-family units last quarter with 1,076. This was up from 959 in the previous quarter.
The next highest count on released multi-family units was in the outer north with 956.
The sharpest quarter over quarter increase came from the inner southwest, rallying to 484 from 213.
There’s been a limited amount of new product brought on stream in downtown Calgary, says Poffenroth.
“Only one project launched in the downtown market in over two years,” she adds. “Some developers converted standing inventory units in concrete condominium projects to rental units in downtown sub-markets, putting further pressure on supply.
“We suggest a comprehensive new condominium project in and around downtown Calgary offering an appropriate unit mix and priced to attract entry level/move-up and investor buyers would generate some urgency and excitement in the market and exceed marketaverage absorptions.”