The Calgary real estate market experienced a notable shift in September, with total sales reaching 2,003 units. While this figure marks a 17 percent decrease from last year's record high, it's worth noting that it remains over 16 percent higher than the typical sales figures for this time of year. Rising activity in the upper price ranges hasn't quite been enough to offset a pullback in the lower price segments.

Ann-Marie Lurie, Chief Economist at CREB®, shared her insights: “We are starting to see a rise in new listings in our market. However, most of the listing growth is occurring in the higher price ranges. While demand has stayed strong across all price ranges, the limited choice for lower-priced homes has likely prevented stronger sales in our market. While the challenges in the lower price ranges are not expected to change, improved supply combined with lower lending rates should keep demand strong throughout the fall, but without the extreme seller market conditions that contributed to the rapid price growth earlier this year.”

New Listings and Inventory

September saw new listings surge to 3,687 units, marking the highest total for the month since 2008. This increase has contributed to a boost in inventory levels, which reached 5,064 units—nearly double the exceptionally low spring figures but still below the typical 6,000 units we expect to see in September.

As inventory continues to improve, the market is gradually shifting toward more balanced conditions. The months of supply in September climbed to 2.5 months, a positive shift from last year’s record low, though the market still leans in favor of sellers.

Impact on Home Prices

The added supply has alleviated some of the upward pressure on home prices observed in previous months. In September, the unadjusted benchmark price stood at $596,900, slightly lower than the previous month but over five percent higher than last year. Year-over-year gains varied widely, with detached homes seeing nearly nine percent growth and apartment condominiums experiencing close to 14 percent increases. These gains have outpaced the overall growth in residential prices, primarily due to the changing composition of sales.

Looking Ahead

As we move into fall, the real estate market in Calgary remains dynamic. With improved supply and lower lending rates, we can expect continued strong demand. However, the challenges in the lower price ranges are likely to persist. Keep an eye on the market as we navigate these evolving conditions!

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As we move into September, the Calgary housing market is showing notable changes from the intense sellers' conditions experienced earlier this year. Recent trends indicate a shift toward a more balanced market, driven by easing sales and an increase in supply.

Key Highlights:

1. Increased Supply: In August, the months of supply surpassed two, a level we haven’t seen since late 2022. With inventory reaching 4,487 units, this marks a 37% increase from last August, although it still sits nearly 25% below long-term averages for this time of year.

2. Shifts in Sales Activity: August recorded 2,186 sales, down 20% from last year’s peak but still 17% higher than the long-term average for the month. Notably, the decline was most pronounced for homes priced under $600,000.

3. Price Growth Slowing: Following a period of strong growth, the pace of price increases is starting to slow. The unadjusted residential benchmark price in August stood at $601,800, which is 6% higher than last year, though it saw a slight dip compared to July. Year-to-date, the average benchmark price has risen by 9%.

Insights from CREB®

Ann-Marie Lurie, Chief Economist at CREB®, notes that the uptick in new home construction and new listings is contributing to a better-supplied market. However, she emphasizes that supply levels remain particularly low for more affordable properties, indicating that achieving a balanced market will take time.

What’s Next?

As we head into the fall, it will be interesting to see how these trends continue to evolve. While the market is gradually stabilizing, prospective buyers should remain aware of ongoing supply challenges in the lower price segments.

Stay tuned for more updates as we navigate the changing landscape of Calgary’s housing market!

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Today, the federal government introduced significant reforms to Canada's mortgage system aimed at improving housing affordability and accessibility.

One of the most notable changes is the increase in the maximum value for CMHC-insured mortgages, raising the cap from $1 million to $1.5 million. This adjustment allows buyers to qualify for a mortgage with a down payment of less than 20% on homes priced up to $1.5 million, making higher-priced properties more accessible.

This policy change is intended to assist buyers in high-cost housing markets, where surging prices have made it difficult for many to secure insured mortgages under the previous $1 million limit.

Additionally, the government has extended the option for 30-year amortization periods to all first-time homebuyers. Previously available only for new constructions, this change is aimed at easing the financial strain on younger buyers by spreading payments over a longer period, thereby lowering monthly mortgage costs.

Both measures are set to take effect on December 15, 2024.

These reforms come in response to increasing concerns about housing affordability. Deputy Prime Minister and Finance Minister Chrystia Freeland highlighted that the changes are designed to make homeownership more attainable for Canadians and address ongoing challenges in the housing market.

"Building on our action to help you afford a down payment, we are now making the boldest mortgages reforms in decades to unlock homeownership for younger Canadians," she said.

The government will soon introduce regulatory amendments to implement these changes, with further details to be released in the coming weeks.

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Big update! The Bank of Canada just announced its third rate cut of the year, lowering the policy rate by 0.25% to 4.25%. 💰

Banks will likely adjust their prime rates within a few days, so keep an eye out! 👀

The next rate decision is set for October 23—will we see another cut? Stay tuned!

#BankOfCanada #InterestRates #MortgageUpdate #FinancialPlanning

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Introduction

Calgary’s real estate market has seen significant evolution in recent years, with pre-construction condos becoming increasingly popular among first-time buyers and investors alike. The appeal of purchasing a Calgary pre-construction condo lies in the potential for customization, modern amenities, and the promise of owning a brand-new home. However, as with any real estate investment, there are both benefits and drawbacks to consider. This blog post will explore the pros and cons of buying a pre-construction condo in Calgary, helping you make an informed decision.

1. The Pros of Buying a Calgary Pre-Construction Condo

1.1. Potential for Appreciation

One of the most significant advantages of purchasing a Calgary pre-construction condo is the potential for property appreciation. When you buy a property before it's built, you're essentially locking in the current market price. As the construction progresses and the project nears completion, the value of your condo may increase, especially in a growing city like Calgary. This can result in substantial financial gains if the market remains favorable.

1.2. Customization Options

Another attractive aspect of buying a pre-construction condo is the ability to personalize your living space. Developers often offer buyers the opportunity to choose finishes, fixtures, and layouts that suit their tastes. Whether it's selecting the type of flooring, kitchen cabinets, or bathroom tiles, you can create a home that reflects your style. This level of customization is rarely available in resale properties and is a significant draw for those looking to design their ideal living space.

1.3. Newer Amenities and Modern Living

Pre-construction condos in Calgary typically come with a range of modern amenities that appeal to today’s buyers. These can include state-of-the-art fitness centers, rooftop terraces, swimming pools, and communal lounges. Additionally, newer buildings are often more energy-efficient and built to the latest building codes, reducing maintenance costs and ensuring a more sustainable living environment. For buyers interested in the latest conveniences, a Calgary pre-construction condo is a compelling option.

2. The Cons of Buying a Calgary Pre-Construction Condo

2.1. Uncertainty and Delays

One of the main drawbacks of purchasing a Calgary pre-construction condo is the uncertainty associated with the construction timeline. Delays are not uncommon in the building process due to various factors such as weather conditions, labor shortages, or supply chain issues. These delays can be frustrating, especially if you have a specific move-in date in mind. Additionally, there's the risk that the developer might not deliver on all promises, leading to potential disappointments upon completion.

2.2. Financing Challenges

Financing a pre-construction condo can be more complicated than purchasing a resale property. Lenders may require a higher down payment, and mortgage rates might change between the time you sign the contract and when the condo is ready for occupancy. Furthermore, since the property doesn’t exist yet, some buyers might find it challenging to secure a mortgage. It’s crucial to work with a knowledgeable mortgage broker who understands the intricacies of financing a Calgary pre-construction condo.

2.3. Limited Negotiation Power

When buying a pre-construction condo, your ability to negotiate the price or terms is often limited. Developers usually set fixed prices and are less inclined to offer discounts or incentives, especially in a hot market. This lack of flexibility can be a disadvantage compared to purchasing a resale property, where there's often more room for negotiation. Additionally, while developers might offer incentives like upgraded appliances or a parking spot, these may not compensate for the higher upfront costs associated with pre-construction purchases.

3. Financial Considerations and Risks

3.1. Market Volatility

Real estate markets can be unpredictable, and purchasing a Calgary pre-construction condo comes with the risk of market volatility. If the market declines before the project is completed, you might end up paying more than the condo’s market value. This situation can be particularly challenging if you plan to sell the property shortly after completion, as you might face a loss. Buyers need to carefully assess market trends and consider the long-term potential of their investment.

3.2. Deposit Structure

When buying a pre-construction condo, you’ll typically be required to make a series of deposits throughout the construction period. These deposits can add up to a significant amount, often 15-20% of the purchase price. While this staggered payment schedule allows for better financial planning, it also ties up a substantial amount of your capital for an extended period. Additionally, if you decide to back out of the purchase, you may forfeit your deposits, depending on the terms of your contract.

3.3. Potential for Additional Costs

There are often hidden costs associated with purchasing a Calgary pre-construction condo that buyers may not initially consider. These can include development charges, occupancy fees, and adjustments at closing. It's important to budget for these potential expenses and consult with a real estate professional who can help you navigate these additional costs. Failing to account for these expenses can lead to financial strain and diminish the overall profitability of your investment.

4. Understanding the Legal Aspects

4.1. Review the Purchase Agreement

The purchase agreement for a pre-construction condo is a complex legal document that outlines your rights and responsibilities as a buyer. It’s essential to have this agreement reviewed by a real estate lawyer who can explain the terms and conditions, including the developer’s obligations, the deposit structure, and the potential for delays. Understanding these legal aspects is crucial to protecting your investment in a Calgary pre-construction condo.

4.2. Cooling-Off Period

In Alberta, there is typically a cooling-off period after you sign a pre-construction condo purchase agreement. This period allows you to back out of the deal without penalty if you change your mind or if your circumstances change. This cooling-off period provides some peace of mind, but it’s important to be aware of the exact timeframe and any conditions that apply. Discussing this with your real estate lawyer will ensure that you fully understand your rights during this period.

4.3. Tarion Warranty Protection

New condos in Calgary are often covered by the Tarion Warranty, which provides protection against defects in workmanship and materials for a specified period after completion. This warranty offers peace of mind, knowing that if any issues arise with your Calgary pre-construction condo, they will be addressed by the developer. However, it’s essential to familiarize yourself with the warranty’s terms and coverage limits to understand what is and isn’t covered.

Conclusion

Buying a Calgary pre-construction condo offers both exciting opportunities and potential risks. From the chance to customize your living space and benefit from property appreciation to the challenges of financing and dealing with construction delays, it's important to weigh the pros and cons carefully. By understanding the financial, legal, and practical aspects of this type of investment, you can make a more informed decision that aligns with your long-term goals.

Whether you're a first-time homebuyer or an experienced investor, the decision to purchase a pre-construction condo requires careful consideration. I hope this blog post has provided you with valuable insights to help guide your decision-making process. If you have any questions or would like to share your thoughts, please leave a comment below! I'd love to hear from you.

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As a first-time homebuyer in Calgary, you may be wondering whether now is the right time to take the plunge into homeownership. With fluctuating real estate markets and economic uncertainties, making the decision can seem daunting. However, understanding the current market trends, economic factors, and your personal circumstances can help you make an informed choice.

Current Market Trends in Calgary

At the beginning of 2024, Calgary’s housing market was highly competitive, characterized by a strong seller’s market. Homes were selling quickly, often with multiple offers, driving up prices. However, over the last three months, we’ve seen a notable shift. An increase in home inventory, supported by new home builds, has eased some of the competitive pressure.

This influx of new properties has led to a more balanced and stable market. Buyers now have more options to choose from, and the frantic pace of bidding wars has slowed down. While it’s no longer strictly a seller’s market, the market remains healthy, offering opportunities for both buyers and sellers.

Economic Factors to Consider

Calgary's economy has been resilient, with growth in sectors like technology, healthcare, and education. This diversification has provided a stable foundation for the real estate market. Furthermore, the city’s population continues to grow, driven by both migration and natural increase, which sustains demand for housing.

However, it’s essential to consider your own financial situation. Assessing your job security, savings, and long-term financial goals should be part of your decision-making process. While the market may present favorable conditions, it’s crucial to ensure that homeownership aligns with your personal circumstances.

Advantages of Buying Now

Interest Rates: Although the interest rate is currently at 4.5%, which isn’t on the lower end, it’s still a reasonable rate historically. Additionally, there are expectations that it may either decrease or remain stable, which could make this an opportune time to secure a mortgage.

Stable Home Prices: With the market stabilizing, there’s less risk of significant price drops after your purchase, making it a safer time to invest.

Equity Building: Instead of paying rent, owning a home allows you to build equity, contributing to your long-term wealth.

Potential Challenges

Down Payment: Saving for a down payment can be challenging, especially with rising living costs. However, there are programs available for first-time buyers that can assist with this.

Market Uncertainty: While the market is currently stable, unforeseen economic changes could impact home values. It’s important to be prepared for potential fluctuations.

Conclusion

Ultimately, whether now is the right time to buy a home in Calgary depends on a combination of market conditions and your personal readiness. If you have a stable income, sufficient savings, and are ready to settle down in Calgary, now could be an excellent time to take advantage of the current market conditions.

As a real estate professional with CIR Realty, I’m here to help you navigate these decisions. If you’re considering buying your first home, I’d be happy to discuss your options and guide you through the process. Reach out today, and let’s find your dream home together.

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