Edmonton’s condo market still lags while Calgary’s recovers

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Resales of condominiums in Edmonton are not gaining popularity even though the segment has taken off in Calgary in recent months, reflecting how the capital’s market differs from its neighbor to the south, local real estate agents say.

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July market stats from the Edmonton Realtors Association show condominium sales fell about 2% from the same month last year, compared to sales in all segments, which fell around 10% year over year.

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The less steep decline could be an indication that the cheaper segment is gaining strength amid rising mortgage interest rates, says Wally Fakhreddine, realtor at Sterling Real Estate in Edmonton.

« My experience among my clients has been that sales of townhouses and condos have generated more interest. »

Still, condominium sales fell about 22% last month from June, alongside falling sales in other segments led by single-family homes, down about 24%.

Condominiums in Calgary followed a different trajectory due to higher single family home prices, weak supply and higher borrowing costs.

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Calgary Real Estate Board figures for July show its apartment segment was up 49% year over year with 513 sales and its benchmark price rose 10% to $278,800.

The resale apartment market in Edmonton, however, saw more sales overall last month with 537 units sold.

Moreover, its average price was only around $229,000 in July. Yet the price has actually fallen about 4% from July of last year.

Royal LePage Noralta Real Estate broker/owner Tom Shearer explains that one of the reasons Edmonton’s condo market is relatively cold compared to Calgary’s is « the difference between the average prices of single family homes individual”.

The average price of a single family home in Calgary is over $640,000, while in Edmonton it is around $490,000.

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“People can stretch a little more here to afford this single-family home,” Shearer says.

Still, as higher borrowing costs weigh on the market, apartments and rows – both less expensive than single-family homes – should attract more interest, he adds.

Already, condominiums are seeing relatively strong demand from certain demographic groups.

“A lot of people are downsizing where they are at a point in their lives where they don’t need a 2,500 square foot house anymore and they want something smaller,” says Fakhreddine.

Another group are young professionals working downtown, he adds.

He further notes that condominium prices could bottom out after falling for several years with an average cost of $248,000 in July 2018, nearly $20,000 more than last July.

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Realtor Beverley Hasinoff notes that among condominiums, townhouses are more popular than apartments because they offer a single-family home feel.

“Additionally, a good portion of buyers are also worried about monthly condo fees or the risk of special appraisals,” says Liv Real Estate’s realtor.

Fakhreddine says even modest high-rise condos can have monthly fees of $800 to $1,000 per month, « due to inflation and increased utility rates. »

Yet buyers often forget that these fees can act as a buffer for repairs and maintenance that they would otherwise pay out of pocket with a single-family detached home.

“They don’t think about those incidental costs for a single-family home, which can be up to $1,200 a month,” he says.

Shearer adds that it’s likely the condo market will see more activity from investors and first-time buyers in the coming months, especially as rents rise.

« A lot of people will want to control their own destiny, owning property, instead of constantly dealing with rising rents, » he says.