First-time homebuyers, investors compete for condos

Condominiums, the new ‘starter homes,’ are now the top choice in Calgary for first-time buyers.

Article content

The condominium in Calgary has become the new starter home for many first-time buyers, amid higher interest rates and rising prices for single-family detached homes increasingly out of reach.

“Traditionally, Calgary has been a single-family home kind of place,” says Tarek Hageahmad, real estate agent with eXp Realty in Calgary.

“Back before 2021, that was usually first on the radar when you could get a house in the $300,000s.”

Advertisement 2

Article content

Today, single-family detached homes are often unaffordable for many first-time buyers with the average price at more than $834,000 in late June, according to Calgary Real Estate Board data.

High demand and low supply for affordable single-family homes have been forcing first-time buyers to look at other housing types for the past two years, especially with higher interest rates on mortgages. Yet row homes and semi-detached homes — often first-time buyers’ second and third choices — also have become increasingly expensive with average prices at nearly $485,000 and more than $648,000, respectively.

In turn, apartment condominiums — with an average price of about $352,000 — are increasingly the “starter home” in Calgary, Hageahmad says.

Then again, many clients are even taken aback at how much prices have climbed for condominiums.

“Parents, helping their kids, are the most shocked — especially if they haven’t been buying or selling for the last few years.” For the benchmark price, first-time buyers would be looking at a two-bedroom, two-bathroom, 800-square-foot apartment in Calgary, he adds.

Article content

Advertisement 3

Article content

While prices may shock and even dismay local buyers, condo prices are a pleasant surprise to out-of-province buyers, given they remain significantly less than Toronto and Vancouver. A recent Zoocasa report found Alberta is one of the most affordable condominium markets in Canada.

The study posited how many averaged-priced condominiums could be purchased in each market for the national average price for a detached home, about $736,000 in May.

In Calgary, buyers could purchase two average-priced condos with money left over. Although cold comfort for local first-time buyers, the study’s findings illustrate the value in the city’s market that investors see relative to Canada’s two largest cities.

In Greater Vancouver, for example, the average price of a condominium is about $776,000 while in Toronto, the average price is about $731,000, the study notes.

Despite rising demand, Calgary realtor Julie Dempsey says the city’s condominium segment remains very much within reach for first-time buyers — even in the inner city, which has more high-end, concrete high-rises.

Advertisement 4

Article content

“With a price point in the mid $300,000s, you can be in a newer high-rise in a beautiful one-bedroom condo,” says the realtor with Royal LePage Benchmark.

“This would give you view lines and underground parking in a very central location, walking distance to everything a downtown lifestyle has to offer.”

Buyers seeking more space can find larger two-bedroom units with two bathrooms built in the 1980s — though these can come with higher condo fees, she adds.

While the most affordable segment in Calgary, condominium prices have come a long way from the bottom five years ago.

Since May 2019, the benchmark price has increased about 37 per cent, based on CREB statistics. The gain is less than other housing types, including single-family homes with the benchmark rising 57 per cent over the same span. But rising apartment values is good news for existing owners, who endured price declines over much of the previous decade and are now more apt to list, Hageahmad says.

“For a long time, there was a big X on condos,” he says. “But that’s changed to the point where first-time buyers are asking, ‘Maybe we can afford to buy a condo at a decent price?’”

Article content