Have you noticed all the condo buildings popping up everywhere? 

I sure have, and there’s a lot more coming. This is primarily land-use-driven rather than market-driven.

Land-use-driven means that the city defines what can be built and where. If you’re a big developer, you must follow the rules on what can be built on each plot of land—single-family detached houses here, row houses there, and on that big chuck? Apartment buildings.

But why are so many condo buildings going up in the far extremities of the city? Sometimes, it’s because they’re close to a present or future C-Train line (lol), or they simply want more density and a variety of housing choices in every new community.

This makes sense—sort of—except when it’s counter to market forces and causes an oversupply of a particular type of housing—in this case, condo apartments.

The law of supply and demand dictates that increasing supply drives prices downward for everyone. And that’s exactly what’s happening in our condo market now.

The condo market was depressed, and prices fell steadily for years until the start of 2022. Since then, the market has been relatively strong, peaking just a few short months ago. However, that is changing… again.

Currently, the overall market is balanced with an absorption rate of 33% (three months of inventory). Below the $350K mark, it’s still a seller’s market, but above $400K? We’re already in a strong buyer’s market, and it gets tougher and tougher for sellers at higher price levels. Above $450K, the absorption rate is below 20%, and this trend looks to continue downward.

This is a massive change from even a few months ago, but keep in mind that the numbers can vary dramatically depending on location and numerous other factors. For example, if you’ve got a very nice 2-bedroom 2-bath, close to LRT in the Beltline, and you’re priced accurately to the market, you’re still okay.

However, with few exceptions, such as the above example, buying a condo above $400K in Calgary today is probably not a good investment. There, I said it.

If you’re a seller, just be aware that conditions have changed dramatically in the last few months, and you must be very mindful of price and presentation. 

Of course, there are other valid reasons for buying a condo. For many, it’s a lifestyle choice, and that’s fine. Just don’t do it thinking you will turn a quick profit. The opposite is probably true—you’ll lose money—just as so many did in the not-so-distant past.

In other major markets in Canada—Toronto and Vancouver in particular—the condo market is a disaster. Prices are in free-fall, and there’s no end in sight.

Do you think the folks at Calgary City Hall might learn from the mistakes made in other cities? 

Nope.

Calgary is still a booming city with thousands of people moving here, insufficient housing, and plenty of opportunities. Just be careful what you buy. Get yourself a REALTOR® with a firm grasp of our ever-changing market conditions—one who always has your best interests at heart and tells the truth, no matter what.

Until next month!