What's driving new home market activity in Calgary?

Calgary home buyers want more space, and as a result, there has been stronger demand that has been focused almost entirely on the suburban markets. A sharp rise in activity in the resale market preceded the increasing rate of new home sales as Calgarians seek to take advantage of favourable borrowing conditions.

Calgary currently has an abundant supply of new home inventory available for sale and that has kept prices relatively in check. Until the existing stock is absorbed, it is likely that conditions will continue to be a buyers’ market, with more product likely to be launched later in 2021.

Sales activity has the potential to be eroded down the road with the change to the stress test for both insured and uninsured mortgages, potential interest rate hikes, which are not likely until 2022, and the substantial increase in construction costs facing developers which may cause some projects to be delayed.

According to Altus Group’s latest multi-family market monitor report, total new home sales in the Calgary market area were robust in Q1 2021, up 74% over the mostly pre-pandemic Q1 2020. This represents the highest total of any quarter since Q1 2018 as the Calgary market begins to shake off the impacts of the pandemic. The condominium apartment sector and the townhouse sector contributed equally to the increase, as the region moves closer to reopening, buyers are looking at a variety of housing options.

One place purchasers aren’t looking for housing, however, is downtown, as Calgary Centre was the only area to see a decrease in sales year-over-year, even with activity already depressed in the area in 2020.

On the other side, each of the suburban sectors saw a substantial increase in activity, led by the South which saw more than double the number of sales in the first quarter over the previous year.

As Alberta moves forward with its reopening plan and restrictions are lifted and a return to semi-normalcy follows, it is possible that an increase in interest in the downtown core will follow as companies start to reopen their offices and amenities such as restaurants and retail shopping return.