Feb. 1, 2021 - Written by Jamie Palmer

"It was the best of times, it was the worst of times...” This opening line from Dicken’s classic nicely encapsulates Calgary’s real estate market. If you own a detached single-family home in Calgary the market is hot with strong sales and rental demand, and limited supply. If you own a condo/apartment particularly downtown, you can hardly give the property away for sale or rent. So what is causing this dichotomy?

There are several factors impacting each market segment and they are almost mirror images of each other, what is heating up one sector is what is cooling the other.

1. Demand for detached homes is being fueled by record low-interest rates, with rates as low as 1.75% on a five-year fixed-term mortgage, this, of course, boosts affordability for buyers.

2. At the same time, there is a limited supply of homes on the market. January and February traditionally have a lower supply of homes as few people like to move in winter.

3. Additionally, many sellers are uncertain about their future and are content to sit tight rather than making a change.

This reduced supply coupled with high demand is giving a much-needed boost to Calgary’s housing market. The preference for detached homes is a result of Covid as buyers look to have outdoor space to socialize with friends and family, have separation from their neighbours, and enjoy more living space. 

Apartments and condos are difficult to give away, as buyers and tenants want to leave small spaces behind, have outdoor living space, and the benefits of living downtown such as a vibrant nightlife, and being close to work are no longer valid (bars and restaurants are closed due to Covid, and the province has mandated working from home for everyone if possible). Using elevators is causing stress for many people as they are faced with being in tight quarters with strangers or waiting in the lobby (with strangers) for a free elevator. On top of that most apartments are not designed with separate areas to work from home so people’s work is taking over their kitchen table, which could be “okay”, but it creates stress for people if they have to share the kitchen-office with their spouse or roommate. These factors are influencing the apartment sales and rental market, but there is additional pressure on the rental market as several brand new purpose-built rental buildings are entering the market, and discouraged condo sellers are moving their properties into the rental market, flooding what was an already over-supplied market. 

While it is difficult to predict how long the difference in the detached and apartment market will last, my expectation is that there will be continued weakness in the condo/apartment market for the next twenty-four months. Without international immigration and with high unemployment, the absorption rate for the excessive supply of apartments is very low and will take a prolonged time period to work its way through the available inventory.