Luxury home resale market remains ‘unsettled’ in city
Toronto’s up. Vancouver’s down. Montreal is about to set records.
And then there’s Calgary, where the luxury market is a big question mark.
These are the findings in Sotheby ’s International Realty Canada’s recently released Top Tier Fall Forecast Real Estate Report.
“The Calgary market is still unsettled,” says Brad Henderson, president and CEO of Sotheby’s International Realty Canada. “We expect it to continue to be a bit of stop-start. Well-priced properties in better locations are still continuing to trade.”
Even while the resale real estate market in luxury properties of $1 million and more is unsettled, the numbers show a story of resiliency.
“Interestingly, as bad as things have gotten in Calgary, the prices remain very resilient. We haven’t seen precipitous drops in prices,” Henderson says. “To us, it’s a combination of the faith and confidence that people have in the Calgary marketplace, combined with people who don’t have to necessarily sell in any particular cycle. We don’t expect it to be any better or any worse. It will just continue to chug along.”
The first six months of 2018 saw an 11 per cent decline in $1 millionplus real estate sales (including condominium, attached homes and single-family homes) in Calgary. Sales then rose nine per cent year-over-year to 122 homes sold in the summer months of July and August. Most of the transactions were for detached home sales over $1 million. Sales over $1 million in the first two weeks of September were up slightly at 21 sales, compared to 18 during the same period in 2017.
Creating headwinds for Calgary’s luxury market are economic considerations — industry and consumer confidence faltering in the face of high unemployment, which rose to 8.2 per cent in August, continued roadblocks to pipeline projects, and an overall decline in capital spending in the city’s primary industries, says the report.
“But all markets have faced additional headwinds” due to federal government policies, says Henderson. “The federal government’s testing of non-conventional mortgages, the OSFI (Office of the Superintendent of Financial Institutions) tightening of conventional mortgages and the Bank of Canada having raised interest rates four times in the last 18 months. All those things have effect on all markets.”
Montreal, comparable to Calgary in that the luxury real estate market there also begins in the $1 million mark though its volume of sales is larger, was the only Canadian market to record year-over-year gains in sales over $1 million in the first half of the year. That period marked a 24 per cent increase in sales, shattering previous records.
“The message we like to try to tell is that the Calgary market, whilst it has experienced considerable reduction in the volume of people buying and selling, has remained surprisingly and positively resilient from a pricing perspective,” Henderson says. “People in the market in Vancouver or Toronto worry that the price of real estate is going to drop in a significant way, I always point to Calgary as an example of a market whose fundamental economics have changed fairly rapidly and still has been able to hold onto its value.”