Recently, I’ve noticed on blogs moderated by realtors, that talk and hype has been focused (sustained) purely on the SFH market.
But what they fail to acknowledge (perhaps denial?) is that the Calgary condo market is on the cusp of self destruction. The condo market is symbolized as the most affordable entry point into the real estate market. There should be market activity. But where is it? If you examine the market closely, it is stalling, weak and ready to crumble. Once the condo market falls, the effects will ultimately cascade into the SFH market (or will simultaneous combustion occur?).
Initially, we can examine inventory levels. We currently have 2313 active listings for condos in Calgary. That is only 16 listings away from the all time high of listings on October 2007 (2329). We should easily be surpassing that mark earlier this week.
Secondly, condo sales are down 38% compared to last year. Currently, 2008 sales are stalling and flat lining:
Feb 2008: 562
Jan 2008: 454
—
Feb 2007: 895
Jan 2007: 736
Thirdly, current condo prices are also stalling and flat lining as well. We no longer see the massive month to month price increases we saw in 2007:
Feb 2008 Median Price: $295,000 Average Price: $311,812
Jan 2008 Median Price: $290,000 Average Price: $311,232
—
Feb 2007 Median Price: $280,800 Average Price: $301,812
Jan 2007 Median Price: $267,500 Average Price: $287,299
In addition, the sales list ratio is plunging into the abyss as compared with 2007 statistics.
Feb 2008: 45%
Jan 2008: 32%
—
Feb 2007: 101%
Jan 2007: 73%
Lastly, the February 2008 DOM statistic has barely moved from January 2008 DOM. DOM is not generally a good indicator to use when deciphering market conditions and direction, but for fun I thought I’d throw in the comparison as realtors use DOM as smoke and mirrors. Notice the difference from 2007 to now, when DOM a year ago was under a month.
Feb 2008: 45
Jan 2008: 48
—
Feb 2007: 28
Jan 2007: 39
We are witnessing a contraction in demand and super dilation of inventory for condominium units in Calgary. This contraction in demand may also be affecting the SFH market, resulting in a tapered variance in the sales mix. This would explain why the SFH market is seeing higher prices when inventory is high and sales are low.
New condo developments such as Arriva, Xenex on 12th, Nuera, Centro 733, Stonecroft, London London, Colors and so many others have been on the market for over a year and have not sold out.
With so much inventory right now, the sky will be the limit this year. It’s going to be a challenge for flippers to maintain their list prices at the current levels. If they maintain their denial, they’ll be priced out of the market forever – literally in terms of being able to sell their condo.
The days of a $300,000K+ 700 sq foot 1 bedroom condo are soon to be over.
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Dear CREBB:
I’ve ready your article and found it to be quite informative.
We are relocating from Vancouver to Calgary for work and are currently looking at the following options to buy:
1. $800 to $1 mill NEW house in the new communities of West Park and the Estates of Aspen Woods in SW Calgary
2. $1 mill 10 year old houses in established communities of Patterson Heights in SW Calgary
3. $1 mill 2 year old houses in Aspen Estates in SW Calgary
I am quite concerned about losing value on our house right after we move in summer of 2008, so please give us your advice as to what we should do.
Thanks,
Perry
Just buy a 500 000 dollar house and give me the difference
Good post crebb. What part of “unlimited supply and stagnant demand” don’t people understand.anyway?
The condo inventory record has just been surpassed (2329 – October 2007) now is at 2385.
And we have near record levels (9200 units) of MFH construction according to CMHC in the pipeline. Not only that, but multifamily home starts were up 78% year over year for January 2008 according to CMHC.
Prices are also way down for condos since February. You’re right.
Edmonton is probably in much worse shape. I’ve heard that there exists something like 2200 condo conversions currently under construction to be completed by fall of 2009. I doubt very many have been pre-sold.
That, in addition to the spec inventory, is simply going to drive down prices to the point where many FTHB’s will be able to enter the condo market.
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The Calgary condo market is on life support IMHO.
When you can rent an apartment for 1/3 of the carrying costs of an identically sized and similarily located condo…..you’ve got big trouble.
We’re looking and looking and amazed at how quickly and HARD the Calgary market is changing..Wow you guys go thru such ups and downs! I have to agree with all the posts on this blog that things are WAAAAYYYY out of hand and we’re tired of looking at Flipping properties. Here in T.O. ( yes I know you hate us) we PRE-SELL 30, 40 even 50% of a condo building, even a subdivision BEFORE the rest is released AFTER it’s built, that way the developer/builder knows it a sure thing..maybe it’s that fact that we have 5X the amount of population to buy those properties but have to agree with other blogs/posts, you simply don;t have the population to get these prices for condos or houses…nice try but get bake to reality. Yes I agree with CC before that get the same place ( even a townhouse what we’re looking at ) for 1/3 and keep you equity safe not subject to market ups and downs for a short while then it’s better to rent..can;t BELIEVE the amount of EMPTY places available..sure sign somethings desperate!
We’re looking and looking and amazed at how quickly and HARD the Calgary market is changing..Wow you guys go thru such ups and downs! I have to agree with all the posts on this blog that things are WAAAAYYYY out of hand and we’re tired of looking at Flipping properties. Here in T.O. ( yes I know you hate us) we PRE-SELL 30, 40 even 50% of a condo building, even a subdivision BEFORE the rest is released AFTER it’s built, that way the developer/builder knows it a sure thing..maybe it’s that fact that we have 5X the amount of population to buy those properties but have to agree with other blogs/posts, you simply don’t have the population to get these prices for condos or houses…nice try but get back to reality. Yes I agree with CC before that get the same place ( even a townhouse what we’re looking at ) for 1/3 and keep you equity safe not subject to market ups and downs for a short while then it’s better to rent..can;t BELIEVE the amount of EMPTY places available..sure sign somethings desperate!