Alberta’s boom and bust economy has left Calgary with record numbers of newly built homes and condos that sit vacant as a massive stockpile of housing goes up for sale at the end of a recession.
More than 2,000 new housing units were unoccupied in the Calgary area last month, the biggest inventory on record, driven largely by construction of apartment-style condos, according to the Canada Mortgage and Housing Corp.
This inventory of newly built homes and condos that haven’t been bought has been steadily growing since the recession began, having ballooned by more than a third, or 500 units, so far this year, CMHC data show.
Since pre-recession March 2014, the stockpile has nearly quadrupled in size.
Todd Hirsch, chief economist at ATB Financial, said the major housing glut shows “we’re not quite out of the woods” after a bruising recession, though he noted other indicators, from retail sales to employment, suggest the economy is improving.
“Things are moving in the right direction,” Hirsch said. “That’s not to say all of that unoccupied inventory gets absorbed right away; it could still take a year.”
Many of the residential developments causing the glut broke ground in 2014, which marked the end of a boom with a dramatic slide in oil prices, triggering a prolonged recession.
Construction began on a record 17,000 housing units in Calgary in 2014, including 6,700 apartment-style condos, according to the country’s national housing agency. A year later, the city posted another 13,000 housing starts.
The result is 144 empty units downtown and in Eau Claire. The largest concentration of new, unsold homes and condos are in 10 northeast neighbourhoods, from Skyview Ranch to Sunridge, where a total of 420 units are vacant.
While apartment-style condos account for more than half of the current housing surplus, there are large clusters of new, unsold homes in south Calgary suburbs.
Across a swath of 24 southern neighbourhoods, from Evergreen to Legacy and from Douglas Glen to Cranston, there are 400 newly built, unoccupied homes, according to Canada’s housing agency.
About 465 new single-family homes in the Calgary area haven’t been sold, well above the five-year average of 400, housing data show. Another 360 new semi-detached and row houses remain on the market.
Still, CMHC analyst Richard Cho said he believes homebuilders are preparing for the spring buying season, noting there are fewer homes on the resale market than there were a year ago.
Cho expects new construction of multi-family housing, such as condo towers, will decline this year allowing buyers to take some oversupplied units off the market.
Still, CMHC forecasts construction of single family homes will rise slightly this year and again in 2018.
Home builders broke ground on a total of 1,150 new units last month, well over the 411 housing starts reported a year ago, but below the 1,640 starts in 2015.
“The economy has been moving up so we expect demand to also climb higher,” Cho said.