Calgary Real Estate: Shifting Trends and Promising Opportunities
Adrian C. Spitters FCSI?, CFP?, CEA? President, Author, Private Wealth Advisor
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Source Article: Calgary home sales jump in April, driven by lower-priced houses
Affordable Options Drive Home Sales Amid High Interest Rates
The Calgary Real Estate Board (CREB) recently released its April 2024 market report, revealing a 7.3% year-over-year increase in home sales. This growth was primarily driven by the demand for relatively more affordable, higher-density properties, as persistently high interest rates continue to shape buyer preferences.
According to CREB, a total of 2,881 units were sold last month, while the benchmark price across all home types reached $603,700 – up 9.9% from the previous year and 1% from March 2024. New listings also saw an 11.5% year-over-year increase, with 3,491 properties hitting the market.
Ann-Marie Lurie, chief economist at CREB, attributed the surge in demand for more affordable options to the prevailing high-interest rate environment. "Persistently high interest rates have driven demand toward more affordable properties in the market while contributing to the growth of listings for higher-priced properties," she explained.
The supply of homes priced below $500,000 has reported a 29% decline, while properties above $700,000 have experienced supply growth, further highlighting the shift in buyer preferences.
Properties were on the market for an average of 20 days before selling in April, a decrease of 14.4% compared to the same period last year, reflecting the strong demand for affordable housing options.
Multifamily Rental Apartments: A Promising Avenue
While the single-family housing market grapples with increased listings in higher-priced homes and a surge in sales of lower-priced properties driven by affordability concerns, the multifamily rental apartment sector continues to show promise. Unlike the owner-occupied market driven by fear of missing out, purpose-built multifamily properties are valued based on their net return on invested capital or CAP rates.
As populations surge and housing affordability remains a challenge, the demand for rental units is expected to remain robust. Investors with a long-term outlook and a disciplined approach can capitalize on this trend, benefiting from steady cash flows and potential appreciation in well-located properties.
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