Calgary’s luxury residential real estate market, which had gained steady traction since the start of the year, evolved into a true sellers’ market over the summer and is poised for more balanced market conditions this fall, says a new report released Wednesday by Sotheby’s International Realty Canada.
“With the recovery of the oil and gas industry and provincial economy, as well as the re-opening of the province, strengthening consumer optimism, residential sales over $1 million increased 50% year-over-year in July and August. The city’s market-dominant single family home segment saw sales over $1 million increase 53% year-over-year during this time; meanwhile, condominium sales over $1 million in this well-supplied segment saw sales double from previous year’s levels to six units sold over the summer months,” said Sotheby’s.
The real estate company said Canada’s metropolitan luxury real estate markets continue to reflect unprecedented circumstances leading into fall 2021. Following record-shattering sales across major markets through the first half of 2021, pandemic-related influences continue to motivate consumer housing activity, driving new demand for urban real estate as downtown cores revitalize and consumer confidence in higher density, city living continues to rise, it said.
However, the supply of available top-tier real estate is deficient in relation to housing needs, constraining sales across multiple market segments, limiting housing mobility, and accelerating price gains as a result. With an unsatiated undercurrent of demand across every major market and a new wave of prospective real estate consumers imminent, rising prices and steady activity is forecast for fall, added Sotheby’s.
“Canada’s luxury real estate market has seen an extraordinary level of demand since the start of the pandemic, and in 2021 to date, that pressure has resulted in levels of sales activity and price acceleration that made history across almost every major metropolitan market. With the re-opening and revitalization of so many of our cities and downtown cores over the spring and summer, we’ve seen any lingering hesitancy about the future of urban living dissipate; instead, we are in the heart of a vibrant urban real estate revival,” said Don Kottick, President and CEO of Sotheby’s International Realty Canada.
“The challenge is that the levels of activity we’ve seen since the start of the year are simply not sustainable in markets where we have such an extreme and deeply entrenched imbalance of demand and supply. Toronto, Vancouver, and increasingly Montreal, are facing such a deficit of top-tier housing, that we are already seeing this gap undermine potential sales activity. These pressures are only going to increase this fall.”
Kottick said Canada’s metropolitan luxury real estate market, while positioned for healthy activity overall, will see supply shortfalls frustrate strong undercurrents of local and global demand. This will increasingly drive price acceleration and discourage real estate mobility across the conventional and luxury housing market.
Sotheby’s predicted there will be a balanced top-tier real estate market in Calgary in the coming months, albeit tenuously.
“While ongoing economic gains will continue to support sales activity, recent concerns surrounding rising public health risks have tempered local sentiment. Previously heated segments of the market have also come into better balance, with a decline in bidding wars and multiple offers compared to the summer months,” it said.
In July and August 2021, 316 properties sold over $1 million, up 50 per cent from the same period in 2020. Of these, 279 properties sold between $1–2 million, up 47 per cent year-over-year and 36 units sold between $2–4 million, a 100 per cent gain from 2020. One property sold over $4 million over the summer months on Multiple Listings Service (MLS), down from two units sold during this period in 2020. As in 2020, there were no sales reported in the ultra-luxury $10 million-plus price point during this time, said the report.
“Of particular note was Calgary’s condominium market, which outperformed industry expectations over the summer months. The city saw the highest condominium sales for the month of August in the last six years, according to the Calgary Real Estate Board; this underscores resurging confidence in the downtown core and refutes the narrative that suburban living is exclusively the new norm following the pandemic. Instead, a fresh cohort of buyers and investors are seeing the appeal and potential of urban living and seeking out the liveliness of a bustling downtown after over a year of pandemic-induced stagnation. Reviving condominium demand trickled into the luxury market: in July and August, condominium sales of over $1 million doubled from previous summer’s levels to six properties sold, all within the $1–2 million price point. In the first 15 days of September, condo sales over $1 million were up from 2020 with three properties sold, compared to two units sold in the first half of September 2020. Despite strengthening condominium sales, an oversupply of inventory relative to demand kept prices in check; in August, Calgary saw 332 condominium sales and 1,786 units of inventory – equating to roughly five months’ worth –and the healthiest amount of inventory across all housing types in the market.
“As the market recalibrates from sellers’ conditions to a more balanced fall, the performance of the City of Calgary’s luxury real estate market will remain closely tied to the province’s economic fortunes, which is forecast to post a Canada-leading gain of 7.2% in GDP this year, according to the Conference Board of Canada. Despite the still uncertain outcome of the city’s municipal election, as well as escalating risks with COVID-19 public health management, current top-tier inventory levels and steady consumer confidence set the stage for cautiously optimistic and balanced conditions, in what remains one of Canada’s most affordable luxury markets.”