Sotheby’s forecasts tougher year ahead for Calgary’s luxury real estate market


Times are tough all around for Calgary’s real estate market, including high-end homes, according to a recent report on Canada’s luxury markets.

The Top-Tier Report: 2018 Year End Real Estate Report by Sotheby’s International Realty found the higher priced segment for all major Canadians cities struggled last year (with the exception of Montreal, which saw sales grow by 20 per cent over 2017).

While sales in the Calgary’s high-end market fell year over year in 2018, the drop was not as significant as those seen in Toronto and Vancouver.

“One could argue that’s because the market has been challenged already for a number of years because of the reduction in oil prices,” says Brad Henderson, president of Sotheby’s International Realty Canada.

Overall, sales for homes priced at more than $1 million fell 10 per cent in the city in 2018 compared with 2017. By comparison, Vancouver’s top-tier market fell by 26 per cent and in the Greater Toronto Area, sales dropped by 31 per cent.

Although sales for luxury homes dropped in Calgary year over year, the numbers varied greatly depending on the style and price range. For instance, single-family home sales over $1 million fell nine per cent year over year, but condominium sales increased 142 per cent compared with 2017.

Yet these statistics paint a misleading picture of the health of the city’s luxury market, Henderson cautions.

“When the number of transactions is small, one or two sales can move the market one way or the other.”

Consider that the strongest segment for growth, the condominium market priced between $1 million to $2 million saw sales increase of 189 per cent. But this segment makes up a tiny sliver of the overall real estate market in the city with 26 units selling in 2018 compared with nine in 2017.

He further notes one reason for the strength in sales in 2018 was because 2017 was so sluggish by comparison due to high inventory levels for top-tier multi-family. Consequently, sellers who wanted to move their unit were forced to drop prices significantly to meet offers from buyers.

More broadly, activity in Calgary’s top-tier market for 2018 was disappointing for observers like Henderson, who had higher expectations given the economic improvement seen in 2017, which had begun to translate into stronger activity in the top-tier segment. Year over year, sales rose by 11 per cent in 2017 compared with 2016.

As Henderson explains, stalled oil pipeline development, a no-vote on the Olympic bid, continued high unemployment and falling energy prices depressed sales in the top-tier in 2018 as much as any other segment of the market.

“We’re not surprised the statistics exemplify what people may be feeling about the Calgary market,” he says.

“It’s a case of one step forward last year and one step back.”

As for what lies ahead, the report is forecasting that 2019 is shaping up to be another tough year, noting that while potential investors may find long-term value in the top-tier market in the city, they should remain “wary of the city’s current market conditions.”

As Henderson says, “There are just so many headwinds pushing back against that the Calgary market right now.”