Sales in Calgary’s multi-family new home market increased by 28 per cent in the second quarter of this year from the first quarter, according to a report by market research and advisory firm Urban Analytics.
The report said that while the second quarter increase indicates rising confidence, the new mortgage stress test rules implemented at the start of the year, combined with higher interest rates, continue to have an impact. Year-over-year sales have decreased by 13 per cent.
Urban Analytics said first-time homebuyers, who are finding it more difficult to qualify for a mortgage, drove the demand to price-sensitive projects, primarily in the outer sub-markets. The outer sub-markets accounted for 76 per cent of all sales in the second quarter.
“Young first-time homebuyers are still cautious in the new home market,” said Kimberly Poffenroth, senior market analyst with Urban Analytics in Calgary. “The change in buying power due to the new mortgage rules has caused many to delay their purchasing decision. UA predicts these buyers will become more active in the coming months, especially in the outer markets that have more affordable homes.”
Kimberly Poffenroth, senior market analyst for Urban Analytics in Calgary
Here are some highlights from the report:
- The outer south sub-market experienced the largest increase in sales in the second quarter, with 50 per cent more sales than the previous quarter. The outer north had a 34 per cent increase.
- Demand in the downtown market remained limited due to the lack of new product in the area.
- New multi-family home projects did not undergo many price changes but developers have continued to offer price reducing and value-added incentives, including free condo fees, design studio credits, and price incentives ranging from $5,000 to $60,000.
- Wood-frame condo sales increased 69 per cent compared to the first quarter.
- Townhomes had a 16 per cent increase of sales.
- Concrete condominium sales dropped by 36 per cent.
- Standing inventory levels increased by two per cent, the first increase in completed move-in ready units in over a year.
- Fifteen new projects launched in the second quarter.
“While the stress test and new mortgage rules will continue to impact sales in Calgary, Urban Analytics anticipates that sales volume will be higher in the second half of 2018 than in the same period in 2017,” said Poffenroth.
Respected business writer Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald in various capacities, including 12 years as a senior business writer.
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