Supply levels improving for higher-priced homes

Posted on November 1, 2024 by Pras Krishnappa

Supply levels improving for higher-priced homes

OCTOBER 2024 HOUSING MARKET UPDATE

November 1, 2024

Supply levels improving for higher-priced homes

Sales gains for homes priced above $600,000 offset declines at the lower end of the market, resulting in October sales that were similar to last year. The 2,174 sales in October increased over September and stood 24 per cent above long-term trends for the month.

“Housing demand has stayed relatively strong in our market as we move into the fourth quarter, with October sales rising over last month,” said Ann-Marie Lurie, Chief Economist at CREB^®. “However, activity would likely have been stronger if more supply choices existed for lower-priced homes. Supply levels in our market are improving relative to the ultra-low levels experienced last year, but much of the gains have been driven by higher-priced units for each property type. This results in conditions far more balanced in the upper end of the market versus the seller's market conditions in the lower to mid-price ranges of each property type.”

The gains in new listings relative to sales over the past six months have supported inventory gains in the city. As of October, 4,966 units were available, a significant improvement over the near-record low of 3,205 units reported last October. While inventories are starting to reach levels more consistent with long-term trends, the inventory composition has changed as nearly half of all the residential inventory is now priced above $600,000.

Adjustments in supply are helping move the market away from the tight market conditions experienced in the spring. However, conditions remain relatively tight, with 2.3 months of supply and a 67 per cent sales-to-new listings ratio, and the months of supply does vary significantly by price range and property type. For example, detached homes priced below $700,000 are reporting less than two months of supply, while homes priced over $1,000,000 are reporting over three months of supply. This is likely resulting in different price pressures depending on price range and property type.

Overall, the total residential benchmark price was $592,500 in October, over four per cent higher than last October and on a year-to-date basis, averaging over eight per cent higher than last year's levels. The unadjusted benchmark prices did ease slightly over last month due to seasonal factors, as seasonally adjusted prices remained relatively stable in October compared to September.

Detached

Home sales rose to 1,071 in October, a gain over last month and nearly 10 per cent higher than last year. While new listings were higher than last year, they slowed over last month, causing the sales to new listings ratio to rise to 69 per cent and preventing any further monthly gain in inventory levels. With 2,199 units available, the months of supply remained near two months, a gain over the under two months reported last year at this time, but slightly lower than last month.

The unadjusted detached benchmark price was $753,900 in October, slightly lower than last month but still eight per cent higher than levels reported last October. Additional supply choices in the higher price ranges have taken some of the pressure off home prices. However, the recent monthly pullbacks are more related to seasonal conditions, as seasonally adjusted prices have remained relatively stable over the past three months.

Semi-Detached

Sales in October rose over last month and were over six per cent higher than levels reported last year at this time, contributing to the year-to-date growth of over three per cent. New listings for semi-detached homes have also been on the rise, supporting some steady gains in inventory levels. The shift in supply compared to demand has helped push the market toward more balanced conditions, especially for higher-priced properties. However, with only two months of supply, the overall conditions still favour the seller.

The unadjusted benchmark price was $677,000 in October, similar to last month and over eight per cent higher than last year. Year-to-date prices have averaged an over 11 per cent gain.

Row

Following a strong start to the year, sales activity has slowed since June. However, the pullback in sales is not due to a shift in demand but related to supply constraints. The declines in sales have been driven by homes priced under $400,000, the same segment of the market which reported a 35 per cent decline in new listings. Year-to-date sales have remained relatively stable compared to last year, as pullbacks in the lower range offset the gains in the upper price ranges. Over 70 per cent of the sales have occurred over $400,000, a significant shift from last year, where the upper end accounted for 47 per cent of all the sales.

Improvements in supply did cause the months of supply to push above two months in October, the first time that has happened since the end of 2021. Supply growth, especially in the upper price ranges, has helped take some pressure off prices. However, with an unadjusted benchmark price of $456,600, prices are still over eight per cent higher than last October and year-to-date, which have averaged an increase of nearly 16 per cent.

Apartment Condominium

While sales in October improved over last month, October marks the fifth consecutive month with a year-over-year decline. However, it is important to note that the 6,782 sales so far this year are only down slightly over last year's record high and nearly double the number of sales we have averaged over the previous decade. Higher lending rates, rising rents, and limited supply choices for lower-priced properties have fuelled demand for apartment condominiums. However, like other property types, sales declines were driven by pullbacks for lower-priced units due to a significant drop in supply. Inventory levels in October did rise over the previous year, with most of the gains occurring in the $300,000 - $500,000 range, supporting more balanced conditions in those price ranges. Meanwhile, conditions remained relatively tight for lower-priced condominiums.

The additional supply choices, especially in the higher ranges of the condominium market, are taking some of the pressure off prices. In October, the unadjusted benchmark price was $341,700, down over last month but still 11 per cent higher than last year's levels. While much of the monthly decline can be attributed to seasonal factors, areas with a relatively high number of newly constructed and completed projects are impacting resale activity, resulting in a slightly higher monthly decline. Nonetheless, on average, year-to-date prices are nearly 17 per cent higher than levels reported last year.

REGIONAL MARKET FACTS

Airdrie

While both sales and new listings improved over the levels reported last October, the monthly pullback in new listings was enough to cause the sales-to-new-listings ratio to rise over last month, reaching 67 per cent. While this slowed the growth in monthly inventory levels, the 365 units in inventory is a significant gain over the exceptionally low levels of 213 reported last year at this time. Following three consecutive years of low inventory levels, recent gains are helping shift the market toward more balanced conditions.

A shift away from the extreme sellers’ market has reduced the pressure on home prices. The unadjusted benchmark price was down over last month in October, but it was still five per cent higher than last October. Some of the monthly decline is related to seasonal factors, as seasonally adjusted data indicates prices remained relatively stable over the past four months.

Cochrane

Sales this month improved over last year, keeping above long-term trends for the town. At the same time, new listings also improved, reporting the highest October total on record. Recent gains in new listings relative to sales have helped support some steady gains in inventory levels. However, with 178 units available in October, inventories are still below long-term trends, keeping the months of supply relatively low at 2.3 months.

While conditions are not as tight as in the spring, the shift is slowing the pace of price growth. The unadjusted benchmark price in October was slightly lower than last month but still six per cent higher than last year's levels. Overall year-to-date average benchmark prices are over nine per cent higher than last year's levels.

Okotoks

Sales in October improved over last year's levels as recent gains in new listings provided choices for many buyers struggling with supply options. While the sales gain relative to new listings prevented further monthly gains in inventory levels, the 103 units available in October significantly improved over the near-record low of 66 units reported last October.

With less than two months of supply, conditions continue to favour the seller. The persistent seller market conditions have driven price growth in this market throughout most of the year. While unadjusted prices did ease slightly over last month in October, levels are still over six per cent higher than last October and over eight per cent higher on a year-to-date basis.

Source: CREB

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Disclaimer:
The information provided in this blog is for general informational purposes only and should not be considered legal, financial, tax, or investment advice. While we strive to ensure accuracy, real estate laws, market conditions, and regulations change frequently. Readers are encouraged to conduct their own research and consult with qualified professionals such as real estate attorneys, financial advisors, mortgage brokers, or tax experts before making any decisions related to buying, selling, or investing in real estate. We do not assume any liability for actions taken based on the information provided in this blog.

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Essential Documents Every Buyer Should Review Before Purchasing a Condominium

Posted on November 1, 2024 by Pras Krishnappa

Posted in Condo Buying, First-Time Home Buyers

Essential Documents Every Buyer Should Review Before Purchasing a Condominium

Buying a condominium is an exciting investment, but before you commit, it’s crucial to review key documents to ensure you’re making an informed decision. These documents reveal critical details about the condo's financial health, governance, and potential red flags that could impact your ownership experience.

This comprehensive guide will help first-time buyers and seasoned investors navigate the paperwork required for a smooth and secure condo purchase.

1. MLS Listing: Your First Look at the Property

The Multiple Listing Service (MLS) sheet provides an overview of the condo, but don’t just take it at face value—verify the details!

✅ Key Things to Check:

Accurate Unit Details – Ensure the square footage, layout, and amenities match the listing.
Included Features – Does the price include parking, storage, or appliances?
HOA Fees & Inclusions – Understand what’s covered in your monthly condo fees.

🚩 Red Flags:

Discrepancies between the listing and reality.
Missing details on fees and inclusions.

2. Reserve Fund Study: Is the Condo Financially Stable?

A healthy reserve fund ensures the building can cover major repairs without imposing unexpected fees on owners.

✅ What to Look For:

Current Reserve Fund Balance – Is there enough money for upcoming repairs?
Planned Upgrades & Repairs – What major expenses are expected in the next few years?

🚩 Red Flags:

A low reserve fund could mean higher fees or special assessments in the future.
An outdated study may not reflect the true financial health of the condo.

3. Condo By-Laws: Know the Rules Before You Buy

Condo by-laws dictate what you can and cannot do as a unit owner.

✅ Must-Check Rules:

Pet Policies – Are there breed or size restrictions?
Short-Term Rentals – Can you list your unit on Airbnb?
Renovation Restrictions – Can you remodel your unit freely?

🚩 Red Flags:

Strict rental restrictions could limit your investment potential.
Excessive restrictions on daily living (noise, decor, visitor policies).

4. Financial Statements: Is the Condo Well-Managed?

The condo corporation’s financial statements give you a snapshot of how well the building is managed.

✅ What to Review:

Annual Budget – Are condo fees being used effectively?
Debt & Deficits – Is the condo running at a loss?
Recent Expenses – Are funds being spent wisely on maintenance?

🚩 Red Flags:

Consistently rising condo fees with no clear reason.
Debt or unpaid vendor bills indicating poor management.

5. Status Certificate (Estoppel Certificate): The Condo’s Report Card

A status certificate is essential to confirm there are no financial or legal issues affecting your potential purchase.

✅ What to Look For:

Outstanding Fees – Are there unpaid condo fees from the current owner?
Pending Lawsuits – Is the condo involved in any legal disputes?
Planned Fee Increases – Are monthly condo fees expected to rise soon?

🚩 Red Flags:

Legal battles with contractors, past owners, or the city.
Surprise assessments that could cost you thousands after purchase.

6. Property Condition Disclosure: Any Hidden Issues?

This document helps you avoid unpleasant surprises by listing known defects in the unit.

✅ Things to Verify:

Past Repairs – Have major issues been addressed?
Water Damage & Mold – Any history of leaks or infestations?
HVAC, Plumbing & Electrical – Are the systems in good condition?

🚩 Red Flags:

Undisclosed repairs or past issues (like water damage).
Signs of neglect that could lead to costly repairs.

7. Title Deed: Confirm Legal Ownership

A title search ensures the unit’s ownership is clear and free of legal complications.

✅ What to Check:

No Liens or Claims – Ensure there are no debts attached to the unit.
Legal Description Matches – Confirm the unit details align with official records.

🚩 Red Flags:

Previous disputes or unresolved legal claims on the property.
Errors in ownership records that could delay closing.

8. Parking & Storage: Titled vs. Assigned—Know What You Own

Many buyers assume they own a parking stall or storage locker, only to realize later that it's either shared or subject to condo board rules.

✅ Parking Considerations:

Titled Parking – You own it, and it appears on the title deed.
Assigned Parking – The condo board assigns and can reassign spots at any time.
Leased Parking – You don’t own it; you pay a fee for use.

✅ Storage Lockers:

Titled Storage – Legally yours, included in the title deed.
Assigned Storage – The condo board can reallocate or remove access.

🚩 Red Flags:

Unclear ownership – Is your parking or storage space actually yours?
Restrictions on usage – Some buildings don’t allow oversized vehicles or additional shelving.

💡 Tip: Always request confirmation in writing regarding parking and storage ownership before finalizing your purchase!

9. Condominium Declaration: What Are You Actually Buying?

The condo declaration defines what’s yours and what’s shared within the building.

✅ Understand:

Common vs. Private Property – Know your responsibility for repairs.
Shared Amenities & Rules – What’s included in your fees?
Voting Rights & Decision-Making – How much say do you have as an owner?

🚩 Red Flags:

Confusing maintenance responsibilities (who pays for window repairs?).
Unexpected restrictions on how you can use the property.

10. Insurance Certificate: What’s Covered?

Condo insurance varies between buildings, so you need to know what’s included and what’s not.

✅ Verify:

Building vs. Unit Coverage – Does the condo’s insurance cover interior damages?
Liability Coverage – Are accidents in shared spaces protected?
Special Assessments Protection – Are you covered for unexpected fees?

🚩 Red Flags:

Lack of proper insurance coverage for major disasters.
High deductibles or gaps in coverage that could leave you financially exposed.

Final Thoughts: Buy with Confidence

Purchasing a condo is a big financial decision, and reviewing these key documents will help you avoid costly mistakes.

🔍 Before you sign, ask yourself:
✅ Is the condo financially stable?
✅ Do the by-laws align with my lifestyle?
✅ Are there any red flags in the status certificate?
✅ What extra fees or assessments might come up?
✅ Is my parking and storage titled or just assigned?

By doing your due diligence, you can protect your investment and enjoy stress-free condo ownership.

Your Trusted Partner in Real Estate

Are you thinking of Selling or Buying your dream home? Connect with our expert team and learn how we make every real estate decision a confident one.

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