jump to navigation

A Tale of Two Markets August 23, 2008

Posted by DustinRJay in Calgary real estate, supply and demand.
Tags: , , , ,
trackback

A split has occurred in regards to the single family home and multi family home construction environment.  The following article address the differences in supply-side characteristics for each market.

Calgary single family home market:

  • Correction in starts largely historical, capacity to overbuild looks minimal, last couple data points may point to a bottom approaching as housing construction returns to historical rates, orderly unwinding likely

Calgary multi family home market:

  • Construction has continued unabated, capacity to overbuild in place, projects such as Gateway Midtown being suspended point to major trouble signs ahead, long way to drop for construction starts to return to historical rates, disorderly unwinding possible

Advertisements

Comments»

1. Chris - August 23, 2008

Interesting stats. I think that in some of the other SFH metrics we’ve seen indications of more stability, or at least more predictability in terms of the future.

2. Harry P. Ness - August 24, 2008

Sounds to me like MFH’s are going to be in the doghouse for a long time yet, and SFH’s may or may not follow. As MFH’s become cheaper and cheaper, it is only logical that many buyers will choose them over SFH’s unless SFH’s become cheap enough to lure buyers away from cheap MFH’s.

3. RJT - August 25, 2008

I think you’re right the condos will be the most overbuilt.

However, the vast majority of middle class purchases depended on capital appreciation from their condo or starter home to buy the “median priced” Calgary home. If condo prices tank, it is likely that that prices will have to drop on SFHs in order for “move-up” buyers to purchase.

House prices are a pyramid on the way up, and I don’t think it’s fair to say that prices for sfh’s and condos are unrelated. I agree that the relationship is not linear, but it clearly exists.

Show me a market contracting in the US where condo prices are dropping but SFHs are going up.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: