Lux­ury home re­sale mar­ket re­mains ‘un­set­tled’ in city

Calgary Herald - - NEW HOMES - CLAIRE YOUNG

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.”

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