When the Calgary home building industry was coping with the boom, high-rise condominium buildings sprung up like
weeds creating fear of a glut, and a new report from Canada Mortgage and Housing Corp. shines a light on the situation
three years after the building frenzy began.
The Housing Market Outlook for Calgary provides an overview of CMHC's expectations for the new and resale housing
markets next year, with a section detailing the condo apartment situation.
First, a little history.
At the beginning of 2006, the report shows there were no apartment-style condos in inventory in the Calgary CMA and
the inventory of available units did not go over the 100 mark until late 2008.
At the end of September this year, there were 349 complete and unabsorbed apartment condos in the CMA, which is
a lot, but not a glut.
There is more to the picture. My sense is there are more new condos purchased for the purpose of flipping when finished,
but the recession finished those plans.
Those units sold at higher prices than the current market and owners made the decision to put them into the rental pool
or take them off the market rather than lower prices and lose money.
This is borne out in CMHC's assessment of Calgary's rental vacancy rate, which at 4% is twice as high today as it was
at this time last year.
Many first-time buyers moved out of rental and into homeownership this year, which had an effect on the rate, but the
city census shows apartment vacancy rates in all but Ward 3 were higher than the city average in April. That means a lot
of condos were rented or are sitting empty.
Back to the future.
Even though a number of high-profile high-rise projects have been put on hold or cancelled, CMHC says there are still
more than 5,000 apartments under construction and those will hit the market over the next 12 to 18 months.
Has that raised the spectre of another glut? Maybe in the inner city, but not in the 'burbs, says Naum Shteinbah, general
manager of Streetside Development Corp.
"The inventory of ready-to-move-in stock is depleting faster than anyone had foreseen," says Shteinbah. "Considering
suburban wood frame apartments are depleting by 50 to 100 per month, we don't have that much left. The high-rise stock
is substantial, but the Calgary market is absorbing more than 7,000 new and used units a year."
If sales stay at that pace, we could be looking at a shortage of units in a year because builders are not in a hurry to
start new projects -- only 23 apartment building permits for just 352 units were issued by the city of Calgary to the end
of September this year.
"Everyone is waiting for the market to recover before starting new ones," says Shteinbah. "We believe there will be a
shortage in the ... future."
MYKE.THOMAS@SUNMEDIA.CA