Photo: Alexander / Adobe Stock
Calgary’s new multi-family property market reported high levels of demand during the first quarter of 2022, partly thanks to a greater number of Ontario investors in the marketplace.
In its Calgary Multi-family Take report for Q1-2022, Zonda Urban reported that the market “experienced extremely high levels of demand,” last quarter while the presence of Ontario investors grew significantly, an increase that impacted sales volume and inventory levels.
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The heightened number of investors caused released and unsold inventory, as well as move-in ready supply, to drop in Q1-2022. Multiple projects released more inventory, which quickly sold out, a trend that caused a supply shortage and for new home prices to rise. Over time, this trend could lead to local buyers being priced out of the Calgary new multi-family home market, Zonda Urban explained.
“Investor demand was so high that multiple sales representatives reported teams of Realtors from Ontario flying to Calgary to visit projects and purchase large quantities of new units,” said the quarterly report. “Though this extent of investor demand is not expected to be sustained for a prolonged period, overall demand levels should remain high given Calgary’s positive migration and affordability relative to other major Canadian Cities.”
New multi-family sales shatter records
Last quarter, the Calgary new multi-family market reported a total of 1,746 sales, the highest sales total on record and a 141 per cent increase from Q1-2021, when 723 sales took place. This marks the fifth time in the last six years that first-quarter sales have grown on a yearly basis.
Compared to Q4-2021, Calgary sales have doubled from the previous quarter’s 849 transactions. The number of sales recorded in Q1-2022 equals half of the 3,505 total transactions recorded in all of 2021.
Seventy per cent of the Q1-2022 sales came from the Outer sub-markets, with the Outer North sub-market recording 407 more sales this quarter, up from 252 transactions in Q4-2019. The Downtown market recorded at least 40 transactions for the first time since Q2-2019 as sales rose 400 per cent between Q4-2021 and Q1-2022.
By product type, a record-high of 970 townhomes were sold, up 87 per cent on a quarterly basis. Forty-four per cent of total sales in Q1-2022 came from new condos, and represented the second-highest quarterly total since 2014.
Calgary inventory falls to around 1,460 units
In Q1-2022, the quantity of released and unsold inventory continued to fall, dropping 43 per cent quarter-to-quarter as the number of available units decreased from 2,585 to 1,462 homes.
This marks the lowest number of units since Zonda Urban began monitoring the Calgary market in 2014.
Released and unsold inventory dropped the most in the Outer South market, falling 63 per cent between Q4-2021 and Q1-2022 from 894 to 331 units. Meanwhile, inventory in the Downtown area increased from 45 to 91 units quarter-over-quarter, a 102 per cent jump.
Standing inventory fell to a total of 193 move-in ready units in Q1-2022, a 52 per cent decrease compared to Q4-2021 and the fifth consecutive quarter of decreases. Half of the existing standing inventory was accounted for within three developments.
New homes rise 19 per cent in price from 2021
Across all product types, the average unit price increased 3.4 per cent quarterly and 19 per cent annually to $400,067. The overall price-per-square-foot average for all product types jumped 4.4 per cent compared to the previous quarter
Quarter-to-quarter, the price of a new townhome rose the most, rising 4.85 per cent from Q4-2021 to $377,917. By comparison, prices for wood frame units increased 2.15 per cent over the same period to $337,615, while the average prices for a concrete unit dropped 3.59 per cent to $583,025.
As sales activity rises and inventory falls, Zonda Urban noted that incentives being offered by Calgary developers have continued to drop. However, some available incentives for new multi-family homebuyers include furniture allowances, design credits and discounts off of specific units or layouts.