Affordability becomes key to Calgary real estate during oil downturn

THINK OUTSIDE THE BOX:  Price it right and they will come.

If there is one overriding element to maintaining market share in Calgary’s new-home sector during a downturn, it’s affordability. Several builders have suggested homes priced below $500,000 have the best chance of being snapped up by a still-interested consumer segment.

The most recent example was this past weekend, when people lined up overnight Friday to put $500 deposits down on apartment condominiums by Brad Remington Homes that haven’t even been built yet.

The queue had hardly diminished well into the afternoon. By end of day Sunday, 56 of the available 66 units – ranging in size from 463 square feet to 1,001 square feet and priced between $129,000 and $271,000 – had deposits on them.

“This development is our response to $40 oil,” Bryan Logel, vice-president of sales and marketing for the builder/developer, said. “And this is our response to affordability issues. We are most definitely cognizant of the downturn.”

Heather Merricks and her parents, Paul and Debbie, were at the front of the line, camping out since 8 a.m. Friday morning to make sure Ms. Merricks would get the 543-square-foot unit she had chosen.

“It was affordable enough that it was within my budget,” Ms. Merricks, who currently lives with her parents in High River, said. Mr. Logel said possessions at Legacy Park could well begin in late 2016, about the time he feels the downturn could be just a bad memory.

“I think we’re at the bottom of this thing,” he said. “With Legacy Park, we have the opportunity to be the first project to market when this is all over.”

Mr. Logel said much time was spent in designing the units to ensure not only affordability, but also quality and value.

“We talked extensively about how to satisfy the needs of people who want something affordable at a time when the economy is not at its best – and Legacy Park was our answer,” he said.

Legacy Park is the second multifamily project undertaken by Brad Remington Homes in less than ideal economic times. A similar-sized development called Copperfield Park rose from the ashes of the 2007 to 2011 downturn and found immediate success.

“We have experience with working in a weakened economy, but we also have a blueprint created with Copperfield Park to follow,” Mr. Logel said.

He said the idea behind Legacy Park and Copperfield Park was to create high-quality, stylish condos that are affordable.

“We also understand the need for them to be affordable, and in Calgary that need is very real. The success of the launch showed us the need is even greater than we anticipated,” Mr. Logel added.

The housing industry as a whole has been responding to the need to provide more affordable homes by making adjustments to the types being offered.

The most popular style is the townhouse since it answers questions about size, location and affordability, said Anita Bustos, area sales manager for Homes by Avi.

Whether it is a first-time home buyer or someone moving up or down in the marketplace, price and value are key elements in the decision-making process, she said.

Homes by Avi has responded to this demand with its Legacy Street Towns concept – clusters of four and five attached homes that have caught the attentive eyes of mostly first-timers and a smaller proportion of those downsizing with their change in lifestyle.

Fully 80 per cent of those who purchased in the 55-unit, street-front, two-storey townhouses are making their initial jump into ownership, said Ms. Bustos. The townhouses range in size from 1,210 square feet to 1,414 square feet and are priced from $340,000.

“[The buyers are] from the rental sector, mostly between 25 and 28 years old, who have done their homework and, based on price and the fact there are no condo fees attached to this development, they’ve found it’s cheaper to buy than to rent,” she said.

Don Barrineau, president of Mattamy Homes’ Calgary division, said the company focuses on homes priced from the mid-$200,000s to about $500,000, and in the Calgary marketplace there seems to be a “softening” above the $500,000 mark.

Marty Hope      The Globe and Mail      October 23, 2015

 

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