WOODFRAME CONDOS SEE INCREASE OVER LAST YEAR
New report indicates market still reacting to change to mortgage rules
While sales at new multi-family developments of all kinds last quarter were consistent with the same time in 2017, woodframe condo structures saw a bump in activity.
There were 715 total sales at multi-family developments — including woodframe condos, concrete condos, and townhomes — in Calgary, Airdrie and Cochrane between June 1 and the end of August, says Urban Analytics, a market research and advisory firm. This timeframe is the third quarter of Urban Analytics’ reporting period.
Last quarter nearly mirrored the same period a year earlier, when there were 717 such sales. The third quarter also marked an increase over the first quarter of this year, when there were 634 of these transactions, and a setback from the second quarter, when there were 811.
“The biggest factor we’re still seeing is the implications from the (change in) mortgage rules,” says Kimberly Poffenroth, vice-president of business development and market analysis for Urban Analytics.
The Office of the Superintendent of Financial Institutions rolled out revised guidelines for residential mortgage writing practices and procedures on Jan. 1. This includes a new “stress test” for uninsured mortgages that requires the borrower to qualify at the higher figure between the five-year benchmark rate published by the Bank of Canada and two per cent above the contracted mortgage rate.
“That still seems to be playing a large part in the market,” Poffenroth says. “We’ve seen that throughout the past three quarters. It’s adjusting to that new normal, in terms of qualifications and how much you’re going to get approved for.”
With that said, sales in the third quarter were typical, says Poffenroth.
“We do see it a bit slower in summer months and we also see the fourth quarter really be the time of the year where things start to pick up,” she adds. “We can also tell, just by the number of project launches coming that the fourth quarter should be a busier quarter in terms of sales, movement, and project launches.”
Condos at woodframe developments carried the pace last quarter with 365 sales, says Urban Analytics. This was an 11 per cent climb from the segment’s 325 deals a year earlier, but 48 fewer than the previous three-month span.
For both townhomes, and condos at concrete buildings, sales last quarter cooled.
Condos in concrete developments in Calgary recorded 59 sales last quarter, slipping from 89 in the third quarter of 2017 and 63 in the previous quarter of this year, Urban Analytics says.
Townhomes eased to 291 sales last quarter from 335 over the previous three months. Quarter three also saw transactions decline from 303 year over year.
An area that Urban Analytics defines as Calgary’s outer south led the city in total new multifamily sales between June 1 and the end of August with 291. This was a four-sale decline from the previous three months.
The quarter over quarter increases came from three sub-markets near Calgary’s core. Activity in an area Urban Analytics calls the inner northwest led the way climbing to 81 sales from 58. At the same time, sales in the inner-southwest hiked to 63 deals from 56, and the Beltline/East Village area inched to 13 from 12.
While released inventory of condos at both new concrete and woodframe developments in Calgary recorded a downtick quarter over quarter, the townhome tally rose.
There were 1,461 released new townhomes between June 1 and the end of August, rising from 1,200 last quarter and 908 year over year, says Urban Analytics.
Released woodframe condos declined to 2,138 units last quarter from 2,303 during the previous quarter. With that said, last quarter soared 54 per cent year over year.
From concrete condos, there were 805 released last quarter, down from 844 during the previous quarter, and 1,118 a year earlier.