The brand new Edmonton condominium market has seen a decline in gross sales as a consequence of a scarcity of choices

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Many new condominiums have been converted into rental apartments in recent years, which has resulted in a dent in new apartments for sale

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Joel Schlesinger for the Edmonton Journal Row houses are still a popular form of living. Row houses are still a popular form of living. Photo by David Bloom /Mail media

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The demand is there, but the supply is not.

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A new report shows that sales of new condominiums in the city have gotten into a rough patch in the past few months. However, it notes that the market is not suffering from a shortage of buyers. Rather, the new condominium market is facing limited revenue growth due to a lack of new condominiums.

“Due to the oil and gas downturn (several years ago), developers re-evaluated their projects and converted many existing new condominiums into rental apartments,” said Jackson Cornelius, Alberta director of advisory services at Zonda Urban.

Zonda’s report for the third quarter of 2021 (July 1 to September 30) found that year-over-year sales fell from 282 units to 257 units – the lowest for the past five years.

But the picture is better than it seems, because existing new condominiums are selling well, says Cornelius.

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“We have just got to the point where the remaining condominium product is sold out without it being able to take its place.”

He adds that most of the new multi-family projects in recent years have been for purpose rentals as developers shift focus amid economic uncertainty and overall declining home sales. “Now we are seeing a small niche in the market that shows in slower sales as fewer products are available for purchase.”

COVID-19 has fueled demand for low-interest home purchases in recent months, but has also challenged the new multi-family market, says Jeremy Amyotte, vice president of sales at Dickson Amyotte Group in Edmonton with Sotheby’s International Realty Canada.

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“Builders were more conservative with their plans at the beginning of the pandemic, and now that they are feeling secure in the face of increasing demand, the new problem is both the rise in material prices and the ability to get them at all” scarcity, particularly in wood and skilled workers .

Of all new multi-family houses, the demand for row houses is still the strongest.

“Townhouses have always been more appealing to Edmontons,” says Amyotte. Townhouses are a popular option for families who cannot afford a single family home. “We are also seeing that the baby boomers are finally switching to bungalow row houses as a downsizing option.”

In turn, row house sales made up the lion’s share of new condominium sales in the third quarter, accounting for 153 sales, compared with 50 for timber frame units and 54 sales for concrete, the report shows.

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By region, sales in all areas with the exception of the inner city fell by 186 percent compared to the previous year and St. Albert by 180 percent. However, both areas make up only a very small part of total sales in the region, as the report shows.

Investment and development in apartment buildings is on the rise and should accelerate and increase supply through 2022, says Amit Grover, Alberta director of apartment buildings at Avison Young.

“The past few months have included announcements from developers laying the groundwork for the first time since the pandemic began with major projects at the core of both Edmonton and Calgary, demonstrating continued investor confidence.”

Overall, Edmonton’s multi-family market is in good shape, says Cornelius, citing the report’s results, which show that condominium prices have increased about four percent per square foot year over year in recent months.

“It was a pretty strong quarter beyond the level of units handled,” says Grover.

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