Managing through today’s market conditions
I’m sure most, if not all of you, are aware of the factors impacting the current real estate market conditions in Calgary, those being persistent inflation, increased interest rates, and the expectation of the economy entering into a recession. These factors usually result in a pause in demand, as buyers choose to wait and see what happens before making a real estate purchasing decision. The team at Cardel understands that as we have seen many different market conditions over our 50 year history as a home building company. I wanted to reach out to clarify how we will be managing our new home sales during this period. Let’s look at pricing and product design.
First, let’s discuss pricing. Cardel prices their homes based on three components. These components usually vary to some extent each month. First, the cost base, then the projected level of demand, and lastly, the supply within the marketplace. The cost base has stabilized somewhat vs. what we have been experiencing for the last couple of years. However, we firmly believe, that components related to land development, construction materials, and skilled labor will continue to rise in cost for the foreseeable future. Therefore, our ability to pass on cost reductions to buyers is very limited. Even though the demand has dropped due to the economic factors discussed, we anticipate that the Calgary region will experience a continued population increase, expanded economic growth, and relatively attractive prices vs. larger markets such as Toronto and Vancouver. Calgary was recently recognized as the 3rd most livable city in the world, by the Economist Intelligence Unit’s annual ranking of the world’s most livable cities.
Many of us are not surprised by this because we know that Calgary is a great place to live. The supply in the resale market is tighter in some areas vs. others but there is no indication of the market being drastically over-supplied at this point. All said, we will be holding our prices at their current levels but we will be offering some sales incentives on a limited month to month basis, so look for future communication from Cardel going forward on those opportunities.
Next, let’s take a look at product design. Market conditions are beyond the control of Cardel. However, product design is within our control. Cardel is known as a very innovative new home product designer. Even though market conditions may cause buyers to wait and see what other buyers do, we will continue to enhance our product design offering to provide exceptional value to those buyers ready to move forward. Below is a summary of some of the unique product design options available with Cardel today:
- Authentic single family character homes, including a double garage, and landscaped yards, starting in the low $600’s, in a premium location. These homes are extremely low in supply within Calgary, at this price.
- Multi-generational family floorplans that offer main floor bedrooms and secondary suite options, covering a variety of different price points. These homes address larger family needs and offer extended future rental investment options. We expect this trend to continue long into the future.
- Traditional homes that offer the valuable separate home office, which we agree is a trend that is here for the long term.
- Large, single family estate homes, offering both double and triple garage options, in premium locations, starting under $1M. $1M doesn’t buy you what it used to, but we have opportunities that will impress you at very competitive prices. In addition, the supply of triple garage homes will always be in short supply. We have experienced exceptional success in this market. Not because buyers select these homes for three cars, but because of the added valuable storage space and added resale market value.
- Innovative single family bungalow models, in premium locations, positioned to respect affordability, yet are big on style and don’t become labelled as “just another commodity home” within the marketplace.
Market cycles always change and it’s always challenging to time a new home purchase perfectly. We understand that you may want to wait before you decide on the purchase of a new home but I would encourage you to reach out to our sales team to learn more about what Cardel has to offer. Our customer referral rate is currently over 90% so we know we are doing something right. We look forward to providing continued communication to those considering Cardel for a new home purchase. We will do our best to provide valuable information to help you with your decision.