As the calgary market appears to be balancing after a long stretch of hot sales and rising prices, real weakness is showing in some sectors. This is most noticeable in the over $1 million semi detached infill. Due to the escalation of land values, these well known sw and nw infill communities have become very expensive to work in. The main product type is the semi detached on a 50 ft lot. Each old house fated for demolition results in two new units to be sold. Every new builder entering to the market will inevitably build this product, driving up supply to sell and driving demand for the raw land. Buyer unwillingness in the past to pay seven figures for an attached home was significant. Now, the homes need to be sold for well over that sum so the builders can recover their vast input of costly land and labour. Essentially the builders are bringing in large quantities of supply where there is a finite and unlikely to grow buyer pool, driving up months of inventory. In this segment, the months of inventory is kept artificially low as many of the builders only list one of the two new sides as they approach completion. This masks the true number of houses that need to be sold. There are plenty of reasons why the most likely to get built product type is a mismatch to the buyer aspiration, and, given news from city hall, the situation is likely to grow worse. The city is seeking ways to improve and speed up permitting in sprawl communities, this will result in more supply being built in the outer ring road areas. As more supply is available it reduces the cost of new single homes in those greenfield areas and highlights the growing disparity in price between sprawl and infill. As a result the infill semi will drop in a relative value comparison for what those same purchasing dollars can buy farther out (mainly size and space). Since I’ve abandoned the commodified sector of 50 foot lots I don’t have much of a stake in this market, other than i don’t like it, and haven’t liked it for quite a few years. if it becomes a buyers market bloodbath as too much product gets built on land that was bought at too high of a value, I will be glad to have sat out the entire cycle. Adding in basement suites is a recent trend that appears to make financing easier, but it also impacts the livability and quality of living spaces for a family who purchases these homes (all the layouts are functionally identical). All this information basically means is these semi d infill houses are just not a great value anymore. They were originally created as a cost effective new build in established areas where new 4 bed 3 bathroom homes were needed but massive footprints were unnecessary. Now the homes are costing so much there is justification to upgrade further into a detached with a laneway unit, especially given cmhc changes announced this week. Not surprisingly I’ve got one of those ready to start - just waiting on the fell set of permits and perhaps we can dig a basement before Christmas.
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