Many first-time or budget-conscious buyers seek out townhome condos and apartments, which have more inventory and often lower prices.
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Calgary real estate is a tale of two markets with recent resale numbers showing growing affordability challenges holding back detached single-family home activity as condo demand increases.
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“One of the challenges on the independent side of the market is that there isn’t a lot of supply in the lower price range of the market,” says Ann-Marie Lurie, chief economist for the Calgary Real Estate Board.
In turn, many first-time buyers or other budget-conscious buyers are looking for townhomes and apartment condos, which have more inventory and generally lower prices, he adds.
The CREB figures for last month suggest that this trend, which was already underway in the spring, is deepening.
Sales fell nearly 3 percent year over year for all home types in July, but single-family home sales fell 19 percent. Townhome sales also fell 17 percent from July 2021.
By contrast, apartment condo sales were up 49 percent and row sales were up 23 percent.
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Lurie notes that the ratio of sales to new listings, a measure of demand, remains above 80 percent for single-family homes priced at $500,000 or less, favoring sellers.
“There’s not a lot of supply there, but the demand is still there,” he says.
By comparison, higher price ranges for single-family homes have more supply, reflecting a greater balance between buyers and sellers, it adds.
Despite the drop in single-family single-family home sales, the segment still led the market in price gains with the benchmark price rising 15 percent last month from the same month a year earlier to $643,600.
Townhouses also saw a 12% year-over-year increase to $579,900, while rows also rose 15% to $362,600, and the reference price of apartments grew 10% to $278,800.
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At the same time, apartment supply fell 45 percent in just over three months. Row supply also fell by the same percentage to 1.7 months, making it the tightest segment in the city.
Only single-family homes saw an increase in supply, up three percent over two months.
Lurie points out that higher interest rates represent less activity, as fewer buyers can afford single-family homes in the $500,000 and higher range.
Despite the cooling conditions, the market is returning to its normal rhythms after record highs earlier this year in sales and prices amid historically low mortgage rates, says realtor Richard Fleming of Re/Max Mountain View .
“Sales traditionally go down during the summer,” he adds.
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With interest rates rising, many buyers have put their purchases on hold or downgraded to a more affordable segment.
“Before, going up a couple hundred thousand in price was easier,” he says of existing buyers considering a move to a larger home.
“Now that’s more difficult because of the qualifying challenges.”
He predicts activity will pick up again come fall, traditionally the second busiest time of year after spring for the market.
However, how busy the fall market will be relative to last year is still up for debate.
“There’s a lot of discussion about a possible fix,” says Lurie.
Still, a slowdown would not be unexpected given how extraordinarily high demand has been, he adds.
“So it may be slower, but it’s really about the perspective of where the market has been.”
