There are glimmers of renewed investment interest in Calgary condos at a time when the city’s housing market struggles to regain its footing, according to a report from a real estate research firm.
In its overview of Calgary’s new-home market in the third quarter, Urban Analytics points to early sales at Minto’s recently launched project The Annex in Kensington as an example.
“Reasonably strong absorptions at Minto’s recently launched Annex project in Sunnyside indicates signs of revitalized investor interest for appropriately positioned concrete condominium product in desirable locations,” the Urban Analytics report reads.
In general, Calgary condo inventories are declining. In fact, the number of released and unsold new condos sunk by 28 percent in the third quarter compared to Q2. Rather than strong sales, though, Urban Analytics chalks this up mostly to builders launching fewer condo projects this year.
However, Urban Analytics sees a positive trend when looking at total sales compared to inventory.
“The fact there has been limited change in this metric over the past three quarters is an encouraging sign for the Calgary market as it indicates product is generally being absorbed as it is being completed and justifies the release of more inventory in select areas in the next two to three quarters,” the report states.
In the third quarter, overall standing condo inventory stood at 744 units, down 4 percent from the previous quarter.
From waiving tens of thousands of dollars from sale prices to upgraded countertops, developers active in Calgary have been throwing in extras to court prospective buyers, Urban Analytics has observed.
“Developers continued to offer generous value-added incentives during the third quarter of 2018, which helped to offset the impact of the mortgage rules that continued to affect the market in the third quarter,” Urban Analytics says in the report.
Still, Urban Analytics says staff at condo sales centres in the city believe more stringent mortgage qualification rules introduced at the start of the year have taken a significant toll on buying activity this year. Stress testing, which runs a household’s finances against higher mortgage interest rates than they are applying for, was expanded to include uninsured mortgages in January.
“It will take some time for people to adjust to the new reality of their limited purchasing power,” says the report.