The condos of today are considered the sound investment for tomorrow and the condo market in 2006 saw some tremendous increases which don’t appear to be levelling out much in 2007.

Lai Sing Louie, Senior Market Analyst with the CMHC says that our city is attracting more people every day; and not just tourists. “Many people are moving to Alberta because you can find work in a relatively short period of time if you’re not too picky,” says Louie. “Calgary represents a tremendous amount of opportunity for young people. We’re seeing increases in wages and a very high level of job creation which is very attractive to those seeking work.” Almost 26,000 people moved to our city last year, and Louie says that number will probably increase in 2007. This means that more people will be looking for a place to live, which will also keep the average vacancy rate below one per cent. Those condo-buyers who are currently renting and intend to live in their condo once it’s built are experiencing some possession delays because of the tight labour market, and some are staying where they are for now. After all, they can’t move out until they can move into their new condo. However, Louie says that the condo market will eventually provide quite a source for the rental market as those units purchased as investments will inevitably become rental units. Unfortunately it will take time for those properties to affect the rental vacancy rate and Louie says that we can expect the rental market to remain tight in 2007.

With rental vacancies so low and the rise in rental costs in 2006, it’s not surprising that an increasing number of people wish to leave the rental market and enter into the home-buyers’ market. It used to be that the purpose of most rentals was to save up to buy a home, but with rents being so high, why not pay a mortgage instead of rent? However, with the prices of condominiums soaring so high, it will take renters even longer to save up a deposit on a condo; thus making it even more difficult to leave the rental market. Until last year the average condo price increased by increments each year, but in 2006 the average condo price jumped and condo price gains outpaced even the single-detached home. In 2006, the average price of a condominium increased by a whopping 41 per cent, and although this kind of jump is not expected in 2007, this year could still see approximately another 10.4 per cent increase in condo prices. The increase in itself is not exceedingly high – slightly less than seen in 2005 – but on top of the increases from last year it’s still a drastic two-year increase.

Christina Hagerty has specialized in inner-city condos for 15 years.  Last year she was ranked top realtor for Re/Max Realty Professionals, so she has a very good idea what Calgary’s condo market looks like.  You could say that she has her fingers on the pulse of the condo market.  Hagerty says that around last September and October we experienced a ten per cent correction in the market as it became saturated with listings; late comers – people waiting for the market to peak and then realizing that the peak was gone.  “There was lots of uncertainty in the market,” says Hagerty.  With a lower supply of listings on the market and consistent demand, November grew increasingly unstable.  “For us the market was most active  in December and we were run off our feet.” However, it would appear that things are a little calmer going into 2007.  “The beginning of 2007 has shown a healthy, more balanced market,” says Hagerty.  “If a condo is the right price, then it’s gone.” She says that condo prices will still increase due to the influx of people coming to our city, but that will be a healthy increase of around ten per cent, which is much more manageable.  She says that last year prices sky-rocketed by around 50 per cent, then dropped down ten to 15 per cent, which was still incredibly high.  “Last year was actually very stressful for realtors, sellers and buyers alike,” says Hagerty.  “It was hard to have to say ‘it’s now or never’ to a buyer, but it was necessary or the property was just gone.”  Hagerty says that this year has begun slow and steady and is showing a more balanced market, making it easier to spend quality time with her clients, without that desperate edge that last year’s market inspired. Hagerty tells us, “It has been a good start to the year; busy but not crazy.”

So it would appear that although the price of condominiums is still destined to experience some increases, they won’t be anything like what we experienced in 2006. Condos will still be snapped up quickly if the price is right, and there will still be some bidding competitions, but at a healthy level. Of course it may be harder to come up with that deposit, but condos are, and will continue to be, a sound investment.