Is Calgary’s condo market cooling down?
Published Wednesday, January 21, 2015 5:13PM MST Last Updated Wednesday, January 21, 2015 7:07PM MST
Low oil prices are having an effect on the economy in the province and the drop below 50 bucks a barrel could also be having an effect on Calgary's condo market.
Compared to the same time last year, sales are down by a third, the number of units listed has nearly doubled and the average price is down almost nine percent.
Bank of Montreal Economist Sal Guatieri believes the overall housing market will likely decline by 10 percent and a Queen’s University expert expects prices to drop 15 to 20 percent.
Real estate experts say condos are particularly prone to the highs and lows of the market.
“There’s a lot of investors in the condominium market, they’re definitely, without question, they’re being affected. I mean we’ve felt it in the last 30 days since Christmas. They’re holding back, they’re pulling back, they’re thinking of cutting back to only investing in one instead of two or three, so I mean there’s definitely an effect there,” said Jim Bryce, VP Sales & Marketing, Carlisle Group.
Bryce says the market always recovers and in two years there will be a high demand for new condos, but right now, home buyers are being a bit cautious.
“They’re not as willing as they were literally, before Christmas, the weeks before Christmas, so it’s a longer sell. People are comparing more, they’re making sure that they’re getting the best value for what they’re looking for. They’re hesitant, they’re sitting on the fence, they’re waiting to see what’s going to happen in the market today, tomorrow, next week. Sales are still, I’d say steady, but certainly the volume isn’t there,” said Bryce.
He says the higher end properties are more likely to be affected than entry level condos.
“I don’t think there’s any question that the high end of the market is going to feel the brunt of it, folks that are looking at the million dollar properties or the 750,000 dollar ones, are probably going to come down a notch. Where we’re at in the market place, at the entry level stand point, I’m not concerned about that because you’re always going to have people looking for the affordable housing and that’s where young kids today are going into the market is into condos, so I don’t think we’re going to feel it at our end but absolutely as a market segment, there’s going to be cut backs because the high end is going to get hit the hardest.”
First time home buyer, Anna Husted, is one of those entry-level buyers and says for her it’s the right time to buy.
“I’m feeling really excited about being a first time home buyer and getting my first condo so it’s just kind of coincidence that I’ve been buying at this time with the falling oil prices and the rise in listings, I guess, so it’s a good thing for me, because there’s lots of places on the market and prices are down,” said Husted.
Joel Gwillim from CIR Realty says some of his clients are just waiting to see how much the economy is affected before they commit to one of the biggest purchases of their lives.
“I do have a few clients that are kind of on the fence waiting a bit right now, but for the most part they’re still looking actively they want to be on search listings and sent properties and they’re just kind of waiting to see where prices go, there’s a lot of people kind of holding off for a couple of months just waiting to see what’s going on out there,” said Gwillim.
Gwillam says he doesn’t think it’s anything to worry about long-term and that it’s a blip on the radar.
“Softening, a little correction, I don’t see it lasting too long. I don’t see anything dramatic happening. It’s just a few people testing out the market for the most part,” he said. “I think if you’re looking for deals, hang tight a bit they might be there but there’s not going to be too many crazy things happening.
The chief economist for the Calgary Real Estate Board says she still expects condo prices to increase by one percent by the end of the year.
(With files from Scott McLean)