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December 09, 2004

Condo sales soar

Multi-family Market Driven by Consumer Demand

Bob Beaty

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We have hit the milestone of condos making up 30 per cent of all home sales this year,” says Calgary Real Estate Board (CREB) president Don Dickson. “Thirty years ago, you couldn’t give them away,” Dickson added. My, how times have changed.

Up to the end of October, CREB recorded 5,962 condominium sales, a 13 per cent increase over the corresponding period last year.

That 13 per cent increase in condo sales compares to just a 6 per cent increase in single-family homes for the same corresponding periods.

And despite warnings from some sage market watchers that next year’s condo market will shrink, Dickson said he is boldly predicting another record buster for condo sales in 2005.

Kimberley Batemen, 26, says she and her husband Erik, 28,  joined the throng moving into condos in the inner core because she and her husband have an active lifestyle.

As a result, they like using the bike paths and walking to work, as opposed to the hair-pulling morning and evening rush-hour traffic that lurches its way to and from the suburbs.

Batemen says they also like to be near the downtown’s many varied restaurants and unique pubs “that are not all located in (suburban) strip malls.”

For some of the same reasons, a middle-aged couple, Maxine Wilder and her husband, Barry, decided they would sell their suburban home to buy a condo near the Talisman Leisure Centre.

Maxine, 49, and Barry, 58, became empty nesters after their two adult sons left the family home. They took the leap to move into smaller quarters that were closer to the downtown action. In addition,

Barry wanted to be close to the Talisman Centre that he uses for his home base as a long-distance runner.

“We decided we didn’t like making this long drive all the time,” Maxine says.

“The city core was also central for Barry and his work to go from one point to the other …  and we treated it as an adventure when we sold our bigger furniture to downscale it for the condo,” Maxine says.

The two couples – first time nesters and empty nesters – are typical of those flocking to the central city sector that is bordered by Glenmore Trail in the south, Crowchild trail in the west, 16th Ave. to the north and the Bow River to the east.

To accommodate them, 42 per cent of all multi-family construction projects started this year came to life in that central city core, says Richard Corriveau, senior market analyst for Canada Mortgage and Housing Corporation.

Throughout the city there were 4,293 condominium starts in 2003.

Up to the end of October this year, there were 3,282 starts and Corriveau expects starts will easily exceed the 2003 benchmark when the 2004 closing bell rings on New Year’s Eve.

“Calgary was absolutely dominated by single-family construction for such a long period,” Corriveau says.

“But now, with the latest string of net migration over the last ten years that saw people from larger, denser cities moving here, condominiums are the housing of choice for a growing sector.”

Nevertheless, Corriveau warns there are some unsettling developments that should make giddy condo developers think twice about letting the lifeboat drift off while their big projects sail effortlessly through calm and sunny seas.

Net migration to Calgary has fallen from a peak of 20,962 in 2002 to just 2,253 for the 12-month period ending April of this year.

Job creation is low and landlords, faced with the third year in a row of slumping tenant numbers, are aggressively pursuing new bodies to place in their apartment towers while pampering their current tenants in order to keep them out of the home market.

Given all of the above, Corriveau expects next year’s multi-family starts to drop by roughly 10 per cent.

Calvin Buss, owner of Millennium Condo Gallery Ltd., agrees with Corriveau’s warnings. Buss, a realtor specializing in home and recreational condominium sales, predicts that some developers will be hit hard by any slump in sales next year, especially if some large and sexy projects like East Village hit the market.

Buss says the quality of the condominium, its location and its targeting to a specific market will be keys to success.

The failure of a developer to use all of the above keys will result in slow to no sales, which in the end will be good for condo buyers in that they should have some wiggling room when it comes to negotiating prices and upgrades, Buss adds.

“Still, it won’t be an all-buyers’ market next year.

Even though we might be down 10 per cent next year, that is just 10 per cent off a record market, so that means you are still flying with all guns loaded.”

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