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The Canadian condo rental market: Challenges and market states

Alberta real estate markets stand out in Canadian real estate as economic headwinds are cooling off condominium sales in most other major centres.

“The cost of living is out of control in larger centres and even the most affordable housing now carries a pretty substantial sticker price,” says Christopher Alexander, president of Re/Max Canada. 

“Earnings have not kept pace with housing costs and inflation continues to stretch household budgets thin. Taxation is also an issue, with the City of Toronto gearing up to introduce an even more punitive municipal land transfer tax in January 2024.”

Alexander feels it’s no surprise that buyers are heading west to Calgary and Edmonton or east to more affordable markets like Halifax.

Here are some interesting numbers about MLS sales and prices for the first three quarters of the year.


Calgary and Halifax – the outliers


Nationally, until the end of September, there were 356,912 MLS sales, down 13.6 per cent year-over-year. Calgary’s market was down 13.8 per cent to 27,935 sales while Halifax was off 18 per cent to 3,836 sales.

But, Calgary condominium sales of 6,824 rose by 21.1 per cent from a year ago. Halifax had 457 sales, a decrease of 8.8 per cent.

Prices in both Calgary and Halifax are rising this year, going against the national trend. For total residential sales in the first three quarters of this year, the average sale price in Canada was $684,202, which was down 4.7 per cent from a year ago. But, Calgary prices rose by 2.8 per cent to $550,256 and Halifax increased 2.1 per cent to $562,778.

Specifically in the condominium market, year-to-date Calgary was up 7 per cent to $306,140 while Halifax rose by 1 per cent to $468,795.


Record-high condominium sales in Calgary


Ann-Marie Lurie, Chief Economist with the Calgary Real Estate Board, says sales in the city’s condominium market have been really strong.

“It’s the only category where sales are higher than they were last year. We’re at new record highs. Last year was a record as well for sales and we’ve surpassed that. Exceptionally strong sales,” she says. “This market was different because there was more supply choice at the start of the year. We are starting to see inventories falling in the apartment/condo sector. (Supply) is tightening now too.”

Lurie mentions they’re also seeing strong price growth.

“Prices finally recovered earlier this year and now they’ve increased above that. It’s taken a long time. The segment struggled right up until last year when we started to see a turnaround.”


Available options in lower price points


Lurie says affordability has been fueling the condominium market in Calgary this year. The higher lending rates have been driving people to consider alternatives.

“This is the one sector where there still is product availability in some of the lower price ranges. It’s harder to find things in those lower price ranges for other property types,” she notes. “There has been some anecdotal (evidence) that it could be some investors too. I can’t verify that. With rental rates being as high as they are, anecdotally people are saying it could be that we’re seeing much more investment activity.”

She points out that much of the growth is driven by choice in supply of lower-priced product, which doesn’t exist for properties in higher price ranges.

“If we think of detached homes, there’s pretty much nothing available under $400,000. But in the apartment sector, there’s still quite a bit there that will go under that.”

Lurie expects demand to continue to be relatively strong for condos considering that higher interest rates are expected to persist well into next year.


Low inventory in Halifax


Matthew Dauphinee, President of the Nova Scotia Association of Realtors, says the resale market in Halifax is experiencing a lack of inventory.

“The stuff that is available is at the higher end. Anything that comes on, say, under $500,000 (or) $400,000 goes pretty quick. And there’s not a lot of new development of condos happening right now,” he notes.

“I think the condo market picked up steam in probably 2022. We’ve always had sort of a steady condo market but it’s never been a real strong investment vehicle. The rate of return on a condominium in Halifax wouldn’t be close to that of a residential single-family home. That’s going back years ago. You probably saw a decent return on a condo but not the same as if you were to buy a single-family home.

Dauphinee recalls an uptick in the city’s condominium market around 2021. “Prices went up in that time frame. But in 2020, people didn’t want to be in condos. They wanted to get more land, they wanted to get out of the city, they didn’t want to be stuck in a building with an elevator that they had to share or wait for someone else to use before they could use it.”

The association president says condos have maintained that higher price point but it’s now become a supply issue for the market. 


State of the condominium market across Canada: Affordability still an issue


According to the recent Re/Max 2023 National Condominium Report, which examined close to 100 communities in seven major centres (Greater Vancouver, Fraser Valley, Calgary, Edmonton, Greater Toronto Area (GTA), Ottawa and Halifax-Dartmouth), stronger condominium sales in May, June, July and August of this year were no match for year-to-date 2022 levels, given the strength of home-buying activity in the first quarter. 

Overall, sales in the condominium segment fell in all but two markets in the first eight months of 2023, with Calgary climbing a substantial 22 per cent, and sales edging up a nominal 3 per cent in Edmonton year-over-year. 

Meanwhile, average prices held steady in three markets – Greater Vancouver, Calgary and Halifax-Dartmouth – while slipping in the Fraser Valley, Edmonton, the GTA and Ottawa. 

“There was certainly a lot of investment that happened in the condo sector, especially during the pandemic years,” Alexander comments. “While the rental market has been strong and performing well, it’s proved difficult for a lot of investors to carry units.”

He notes that pre-construction sales have mostly slowed because the average resale unit is less than what builders are trying to sell for, at least in the GTA. “However, what I’m watching for is they’ve always been the kind of entry-level point for first-time homebuyers and what we’ve seen is a lot have a wait-and-see approach because of uncertainty with the Bank of Canada (interest rates). But, certainly, a lot softer than it was a year ago.”


Affordability remains a top concern in most markets across the country. 


“We do anticipate a softer end to the year, as economic conditions erode buying power and impact consumer confidence,” Elton Ash, executive vice president of Re/Max Canada, notes in the report.

He continues, “The signs are already evident with inventory building and new projects being delayed or cancelled. Savvy buyers will find some opportunity in larger markets, and although some further softening in values is anticipated in most centres, the impact will be somewhat tempered by the tight rental market and continued population growth. Look for condominium sales to rebound in the second or third quarter of 2024, as quantitative tightening eases, re-invigorating home buying intentions.”