Condominiums remain a viable option when single-family homes scarce

By Peter Squire

While 2021 will go down as the third consecutive year the Winnipeg Regional Real Estate Board (WRREB) has yet again set a higher level of MLS® sales from any previous year, what has transpired in demonstrable fashion is the ascendancy of condominiums as the default property type if single-family housing is not in the cards for many keen buyers.

Former WRREB director Sherie Turek was right on the money in 2020 when she raised the specter of a nexus point in the offing where single-family home prices would increase significantly enough to cause buyers — first-time buyers in particular — to reconsider their preferred property type and opt to purchase a more affordable condo instead. This has clearly been the case in 2021.

Let’s start with the average sales price for the two leading property types on WRREB’s MLS®. As we close out 2021, the average price for single-family homes will finish in the neighbourhood of $380,000 — an 11% increase from the $341,000 average price in 2020. For condos, the average sales price will come in around $245,000, a modest 2% increase over last year’s $240,000 average price.

Moreover, when you consider where most sales are occurring in these two property types, condos are consistently most active in the affordable $150,000 to $199,999 price range every month with a larger sphere covering a range between $150,000 to $299,999.

As for single-family homes, in October 2021 the price ranges with the highest sales activity were from $250,000 to $399,999 — with the $350,000 to the $399,999 range being the busiest of them all.

So how has this sales activity in the various price ranges manifested itself to create a stronger surge in condo sales over single-family in 2021?

The numbers speak for themselves.

For the first 10 months of this year, condo sales have increased 45% over the same period in 2020 — well above their annual record set last year of 1,847 sales. There have been 2,241 condo sales transacted so far on WRREB’s MLS® and if November is any indication, sales will continue to outperform the second half of 2020 which was already exceeding expectations at that time. For the first three weeks in November, condo sales of 136 compares favourably to the 111 sold in 2020.

It looks like 2,500 may be a realistic year-end total based on how strong condo sales are continuing to excel in the fourth quarter of 2021. The previous 5-year average annual total for condo sales was 1,753. This year is indisputably a game changer in elevating condo sales to a higher level. The MLS® market share for condos is 14% year-to-date and was over 15% in October.

Single-family still dominates all MLS® market share sales but has fallen under 70% this year for the first time. This property type has also not been able to match or exceed sales compared to the second half of 2020 the way condos have. Year-to-date single-family home sales of 11,257 are up 12% over 2020.

An indicator of the unprecedented demand for condos this year is the fact the percentage of sales that have gone for above list price for the first 10 months has doubled from 8% to 16% and those selling for at list price have risen as well — from 9% to 13%. Having said that, single-family home listings are seeing far more selling for above list price at 52%.

Another distinguishing feature of condos compared to single-family is where sales are occurring within WRREB’s vast market region. A total of 85% of condo sales are happening in Winnipeg, whereas for single-family it is 66% as regional sales outside Winnipeg — in very active MLS® areas such as Steinbach — have eroded Winnipeg’s percentage share.

Not surprisingly, Osborne Village — with its much higher density than other neighbourhoods inside Winnipeg — leads the way in condo sales with 183 sales. Waverley West has the second most at 109 sales and River Park South is close behind at 106 sales. The most active rural MLS® area is Morden/Winkler at 76 sales.

Many MLS® areas are seeing significant increases in sales this year with Waverley West for example up 79% over 2020. It is interesting to note that some may think the increase in Waverley West sales is due to new condo project sales compared to resales, however, this is not the case as the vast majority of them are the former.

With mortgage rates set to rise in 2022, now might be the ideal time to opt into the condo lifestyle to get a foothold in the ownership market.

Peter Squire is the Winnipeg Regional Real Estate Board’s Vice-President, External Relations & Market