I was on News Talk 770 this morning speaking briefly with Bruce Kenyon about the luxury home market in Calgary.
Some of what we covered is found in the Q1 Luxury Home Market report from last week. Below are other points we spoke about:
- Last July, the latest mortgage rule changes implemented meant that buyers of $1M+ homes have to put a minimum of 20% down. That means these luxury buyers in Calgary have a down payment of at least $200,000. They have some “skin in the game” and reflects their long-term confidence in Alberta.
- Short-term confidence is less optimistic. Yesterday, PwC released the Business & Consumer Confidence Index which showed that confidence in Alberta’s economy is at the lowest level in years. Albertans are concerned with oil prices & projects and provincial government budget deficits. March figures showed a rise in the unemployment rate.
- Is the rest of the market performing as well as the high-end segment? Not in terms of sales. Affordability is stretched and many are turning towards the condo market – prices haven’t recovered there like the SFH segment. Low inventory levels are also dampening sales. It’s more difficult for buyers to find their dream home and at the same time helping sellers keep prices elevated.
- Mr. Kenyon referred to the BMO report about first-time homebuyers. Where are these first-time buyers getting an average down payment amount of $48,000? (16 per cent) Some save to avoid paying CMHC insurance premiums or are gifted money from their parents.
What do you think about the disconnect between low confidence in Alberta’s economy and steadily rising (and record breaking) luxury sales?