The sharp drop in oil prices this year has clearly taken a toll on Calgary’s economy and as a result, our housing market. The condo market has historically been relatively unaffected by the usual up and downs in the marketplace, but we’re dealing with a different situation this year. However, if you understand a bit more about the condo market here, it’s not all doom and gloom, things are changing, but not necessarily in a bad way.
Existing condos in Calgary aren’t selling as much as in the boom years, so there’s definitely more supply on the market right now. The same can be said for new condo developments, where completions are happening faster than buyers are snatching them up. The Conference Board of Canada, along with Genworth Financial, recently put out a report on metropolitan condo markets in Canada and cited the following about Calgary specifically:
Forecasting a “bottom” for these markets is tricky, though, since it depends heavily on future oil prices. Falling housing prices do have one bright spot: carrying costs on the median apartment unit will fall in 2015. Calgary’s previously excellent housing affordability, partly resulting from the price drop from the previous downturn, was eroding with recent years’ price growth.
Because of the changing conditions here, condo builders are likely to drop construction a bit until we’re dealing with more balanced markets in Calgary. Calgary’s apartment starts are forecasted to ease 45 per cent in 2015.
Over the following few years, recovering oil prices will improve Calgary’s housing demand, leading to falling builder stocks and then higher starts. We expect starts to rise 1–3 per cent annually between 2017 and 2019. [Conference Board of Canada, Genworth Financial]
In summary, things will come back up, they always do. Right now, the condo market is definitely more affordable than it’s been in a while, which makes for favourable conditions for condo buyers.
To read the full condo market report from the Conference Board of Canada and Genworth Financial, you can do so online. If you have questions about selling your condo or buying one, feel free to contact us.
