Will luxury homes sales in Calgary rise as prices fall?
There’s always a silver living, isn’t there? Last year, as reported here in this blog, Calgary luxury homes valued in excess of $1 million fell by 41% in 2015 over the previous year. That’s old news.
The good news is that as a result of the drop in list prices, or correction as some would like to call it, sales activities in the luxury home segment of the housing market is expected to rise.
Recently, a home in the Calgary area which was originally valued at $8 million plus in 2011 sold for approximately $3.5 million. It was all over Facebook. This example is the extreme and not all luxury homes in Calgary are expected to see such dramatic decreases in value.
Some Calgary real estate experts believe that luxury property owners, observing the buyer’s market conditions which began last summer, chose not to sell. In the first few months of 2016, the motivation to sell may be higher. That will shift the market by summer, when it becomes critical for many luxury home owners toput their properties on the market despite current conditions. With the increase in the number of $1 million plus homes, a marked adjustment in price is sure to follow.
Despite being a buyer’s market right now in Calgary, some buyers are playing wait and see. Not only local buyers, but those in Vancouver and Toronto, even American investors, watching our economy in Calgary as well as around the world.
Investors, real estate and otherwise, know that smart money watches the market and buyers when prices are trending downward.
That time may be coming, as sales slowed in the last six months of 2015 when a significant shift occurred in Calgary following a long period of record-breaking sales growth.
The previous price adjustment period in 2008 saw bigger drops in more moderately priced real estate, something that didn’t happen in this market segment last year. The market for luxury homes has been the sector most impacted by plunging oil prices, influenced by consumer confidence and an escalated level of uncertainty. Last year, 511 luxury homes traded hands in Calgary, compared with 2015 when 846 luxury homes were sold. Compare this with 2005, when a paltry 139 luxury homes were sold in Calgary. Pretty wild.
As we look into the crystal ball, the luxury market in Calgary and surrounding area may be very desirable for investors that are in for the long haul or making lifestyle adjustments in lieu of congestion and inflated prices in other parts of the country.
Where are Calgary’s most expensive homes
Some of the most expensive homes within the city limits can be found in Aspen Woods in Calgary’s South West corner. This is followed by Bel-Aire, Eagle Ridge, Mayfair, Pump Hill, Elbow Park and inner-city Mount Royal. Certainly every quadrant of the city now has real estate in the $1 million plus category, particularly since redevelopment of our older neighbourhoods is rampant. But the South West has the lion’s share of expensive real estate, followed by areas surrounding the city where the land value of acreage homes contributes to the overall price.