It’s been dubbed “the year of the incentive” by one real estate agency.
While housing affordability remains top of mind for many Canadians, homebuilders in some of the country’s weaker real estate markets are looking to sweeten the pot in a bid to woo buyers, recent reports suggest.
In particular, house hunters shopping around for a new home in two of the Prairies’ biggest cities are likely to score better deals this year as homebuilders are saddled with a growing amount of unsold housing stock.
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ATB Financial, a Province of Alberta-owned Crown corporation, says a record number of new homes in Edmonton remain unsold, and Calgary inventory is approaching all-time highs as well.
There were 1,941 “completed but unabsorbed houses” in January, up a jaw-dropping 63 percent from the same time last year, according to an ATB economic report published this month. In Calgary, unsold new homes totalled 891, 39 percent higher than a year ago and near the record set in 2001.
“Those searching for new homes to buy are likely going to find more deals this year,” writes ATB’s research team in the report.
There are multiple factors that have led to the abundance of new homes in Calgary and Edmonton that have yet to attract buyers, ATB suggests.
“Several factors help explain the glut of new housing in the province including the uncertainty Alberta’s economy is experiencing, tough labour market conditions, stagnant wages, higher mortgage rates and tougher federal mortgage financing rules,” ATB researchers write.
In 2018, Alberta existing home sales dropped 7 percent, according to the Alberta Real Estate Association. Meantime, ATB notes prices were down close to 10 percent, and more declines are anticipated this year.
“With the number of completed but vacant homes touching record highs to start the year, it’s likely prices could drop further in 2019,” says ATB.
While homebuyers in Calgary and Edmonton may see discounted prices for newly completed dwellings, condo developers in Metro Vancouver are taking steps to increase appeal during the pre-construction phase.
Chart: MLA Advisory
“As buyers become more selective and remain patient, developers are offering large incentives and realtor bonuses,” reads a February report from real estate marketing firm MLA Canada’s research department, MLA Advisory.
Asked what some of these incentives might look like, MLA provided several examples, ranging from a 10-percent discount on units at one development, to $10,000 worth of upgrades at another.
It’s no surprise, then, that the MLA report went so far as to label 2019 “the year of the incentive.”
That should be welcome news to Vancouverites, who saw several years of explosive price growth preceding the recent downturn.
“Now is a great time for homeowners to take advantage of these incentives and enjoy a more relaxed buying decision,” the report says.