Calgary townhomes experience fastest price growth in Canada

Increased demand for townhouses driven by first-time homebuyers, downsizers and those looking for affordability.

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They are not too expensive nor too small. Townhouses have become the Goldilocks type of housing in many markets across Canada, including Calgary.

And a recent study shows the city is the most attractive market for rowhomes when it comes to year-over-year percentage price growth.

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“For many people, it’s the closest thing to a single-family home,” says Mark Neustaedter, a real estate agent with eXp Realty in Calgary. “That’s why townhouses have been so sought after in the city.”

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He report from national real estate firm Zoocasa examined the year-over-year growth of the average price of a townhouse in 20 Canadian cities from February of last year to February 29 of this year. In Calgary, the average rose 17 per cent to $458,100. The next highest growth came in Edmonton, where prices grew about 10 per cent to $245,900, the second least expensive market after Regina.

In Saskatchewan’s capital prices fell two per cent to $225,600, the third largest percentage drop in the study. Winnipeg saw the biggest drop of 10 per cent with an average price of $283,500.

Despite rising townhome prices in Calgary, the segment remains “achievable for many buyers,” Neustaedter says.

Townhouses have also continued to sell at a good pace since February. As of late April, the average price had risen nearly 19 percent year over year to nearly $475,000, and sales have grown about 13 percent. Calgary Real Estate Board Statistics show.

By comparison, the median price of a resale single-family detached home at the end of April rose about eight percent to nearly $790,000, while sales remained flat year-over-year.

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The rise in townhome sales reflects a trend in Calgary that has been building for about five years, says Tim Jones, associate broker and owner of Re/Max Complete Realty in Calgary.

A townhouse “is increasingly a good option for first-time buyers, (buyers) looking to downsize and also for those trying to reduce costs,” Jones says, noting that townhomes account for 17 percent of all resales. .

Five years ago, about 60 percent of all resales were of single-family detached homes. At that time, the benchmark price (the typical home) was about $476,000. Now, about 44 percent of resales are single-family detached homes, he adds.

Apartments have also seen a resurgence due to their affordability. The average price five years ago was about $285,000, while today the average price is about $337,000.

Jones further notes that townhomes were only slightly more expensive in 2019, with a median price of $300,000, when they represented about 12 percent of total sales.

Townhouses, although less expensive than single-family homes, are generally not a second choice for buyers due to their lower supply than other segments and their higher price. In mid-April, for example, the median price was $614,000, up nearly 17 percent year over year, but representing just eight percent of the entire housing inventory.

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A key factor for townhomes is the lower minimum down payment due to the lower price, making them more accessible to first-time buyers, Neustaedter says, pointing to the Zoocasa study showing that the minimum down payment (five percent ) in February was approximately $23,000.

By contrast, the down payment for a single-family home was more than $52,000, and about $36,000 for a semi-detached unit.

When interest rates decline, demand for townhomes and other housing will likely increase rapidly as buyers become more affluent. Although it will probably be short-lived, as prices will probably rise as well, Neustaedter notes.

“I hope it’s a really small window toward greater affordability.”

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