Calgary’s housing market experienced a record year for luxury home sales in 2012 and the pace of transactions in January 2013 suggests the market is not slowing down.
According to the Calgary Real Estate Board, there were 34 MLS sales in Calgary of properties over $1 million in January — just shy of the January record of 36 luxury sales in 2007.
Calgary finished 2012 with an all-time record of 544 luxury home sales, eclipsing the previous mark of 458 in 2007.
The luxury home market in the city has rebounded following the recession dip of a couple of years ago.
Don Campbell, senior analyst and founding partner of the Real Estate Investment Network, said that during market corrections luxury homes are the first to drop off, after recreational properties, and the first to come back unlike recreational which is always last to recover.
“In Calgary, within the business world, confidence in business has come roaring back,” he said. “This has led those with capital and strong businesses to take the leap into the market.
“In a higher than average percentage, due to their more business orientation, those buying luxury homes have their finger on the pulse of economic direction and therefore with the resurgence of the Calgary economy over the last 14 months, they are identifying the fact that the luxury homes they want are not going to get any cheaper than they are now. They are seeing the underlying economic strength of the city and want to get into the market before it is reflected in the housing market. That is why you saw so much activity in 2012.”
Campbell said the large number of luxury home sales will push average sale prices up more than it is really being felt at the mid-market level.
“This will create un-supported expectations of mid-market sellers. Also, there are only so many luxury market homes in any given market and they are often the first to move,” said Campbell. “What we often see is a slowdown in these sales after 18 to 24 months and when this occurs it slows down the average sale price increase to lower than is being felt on the street.
“The other anomaly we are seeing in Calgary in the luxury market is the profile of the buyer. Compared to Toronto and Vancouver, whose luxury homebuyer demographic is made up of a large percentage of foreign/offshore buyers, Calgary’s luxury homebuyer profile is very local. People here in business have high paying jobs in Alberta. This is a much more stable cohort than the often fickle offshore buyer.”
Last year in January there were 16 luxury home sales in Calgary. After hitting a high in 2007, the market dipped to only six sales in January 2009.
“We have seen a 20 per cent increase in luxury sales in Calgary in 2012 over 2011 and are seeing tremendous momentum building already in 2013 this past month,” said Rachelle Starnes, realtor with Royal LePage Foothills in Calgary. “We have seen 10 sales over $1 million in Rocky View County in the past month, up 67 per cent over the same period last year. The Springbank area continues to be the busiest being one of the wealthiest areas in the country.
“Prices have dropped in the higher-end to reasonable levels, there is a dwindling supply and buyers have been out shopping the market for months. They have done their research and are ready to buy the minute the ‘perfect’ home hits the market. Calgary continues to be the ‘City of Choice’ for corporations moving West and the high salaries from the oil and gas market sectors allow for lots of ‘move-up’ buyers.”
The following are the annual sales in Calgary for homes priced at more than $1 million, according to the Calgary Real Estate Board:
2012 — 544
2011 — 446
2010 — 365
2009 — 337
2008 — 369
2007 — 458
2006 — 334
2005 — 138
2004 — 44
2003 — 36
2002 — 21
2001 — 14
2000 — 14