Multi-family Market in Calgary Adjusts to Inventory Overload
Duplex homes and townhouse units may be affordable options for many, but in Calgary there’s too much of a good thing even with slower starts predicted in 2017.
Canada Mortgage and Housing Corporation (CMHC) recently issued its 2016 report, taking stock of multi-family developments in the Calgary census area. Last year there were just over 5,700 starts in the multi-family sector, a dip of 35% over the 8,800 starts reported in 2015. These figures take construction in Cochrane, Airdrie and Chestermere.
At the risk of sounding like a broken record, CMHC market analyst Richard Cho reiterated what we in Alberta know all too well. The price of oil, employment slow downs and fewer people moving to the Calgary area contributed to slowing demand in housing across all sectors in 2016.
Cho says in his report that the number of multi-family units on the market continued to grow throughout the year outpacing demand which caused developers to ease up on new starts.
In its 2017 forecast, CMHC predicts that the number of new starts will continue to decline to 5,100 or as high as 5,500. Cho believes that there will be a definitive pullback in the construction of new apartment condos as dictated by high inventory in Calgary.
The federal housing agency has extended its forecast to 2018 and predicts new starts on multi-family projects to be around 5,600 to 6,000 units.
Figures from the Calgary Real Estate Board
CREB says that its sales figures match CMHC’s estimation of high inventory in Calgary last year in the resale sector.
There were 15% more apartments for sale in Calgary in 2016 than 2015 and 25% more townhouses on the market last year than the previous year.
In terms of new construction, develops pared back from 5,745 units in 2015 down to 3,701 units in an effort to help the marketplace catch up.
It wasn’t all bad news in 2016 in Calgary as activity in the inner city ramped up in Calgary’s reemergent downtown core and in the blossoming Beltline neighbourhood. In fact, in 2016 there were 862 new starts downtown, nearly double the 461 starts in 2015. The same story in the Beltline district, were the construction of new apartment units shot up from 373 in 2015 to 618 last year. Impressive.
Outside of the city centre, the only other Calgary area where 2016 starts on apartments exceeded 2015 numbers was the North West, with 584 starts over 500 the previous year.
CMHC noted in its report that in 2016, there were 804 unabsorbed apartments in Calgary, built and ready for buyers, which is 220 more units than were unabsorbed by the end of 2015.
The number of new starts in the townhome sector also fell dramatically from 2,072 in 2015 to 1,103 in 2016. Construction in Calgary’s North West quadrant seemed to outpace all other areas of the city with 284 new starts last year. Builders active in this area of the city are Morrison Homes, Jayman Built, Trico, Brookfield, Cedarglen, Cardel and Landmark to name a few.
Outside of the North West, a few neighbourhoods in the vicinity of Fish Creek saw triple-digit starts.
Attached homes were also in demand in 2016 with the South East leading the way followed by new builds in the North East followed by the North West. There was a higher volume of quick possession or spec homes on the market last year over 2015, a boon to buyers looking to move in right away rather than waiting for a new duplex to be built.
CMHC noted that last year the number of new construction unabsorbed townhomes was 171. The 2015 figure was 102 so not as dramatic a difference than what was experienced in the apartment sector.
By all accounts, it looks like 2017 will continue to be a good year to get into an attached home in Calgary no matter what type.Posted by on
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