Layoffs and Stalled Condo Projects

Thanks to Jim A. for emailing in that comic!

I haven't posted in a while because of heavy work commitments. Thanks for your patience and understanding. Since my last post, not much has changed in the local real estate market. Much that was predicted by "doom and gloomers" has come to fruition. The market continues to soften heading into the Fall. Prices are falling and inventory levels are still at record highs. Many condo projects are stuttering to the financial finish line. Things are soon to get interesting.

While burning the midnight oil this evening (morning), I was listening to QR77 news talk and sports radio. The hourly news reports that there are soon going to be layoffs in residential construction as the Calgary real estate market further cools. An official with Jayman was interviewed and a short clip was played outlining the change in their employment outlook. I'm sure that other developers and builders in the city are soon to follow the same inevitable path. This was bound to happen as housing starts have decreased substantially as compared to Calgary's boom years. The same thing happened in the US. But yet Calgary is different. This morning, the following article in the Calgary Herald was available: Layoffs strike Calgary's once-booming homebuilders. These type of layoffs are just the beginning.

In addition, an elite-multimillion downtown condo project has ground to a halt in construction. Gateway Midtown has stopped construction and has also laid off 41 employees in the process. Watercooler talk has it that many purchasers have walked away from their deposits while demand has significantly dwindled. As condo prices and demand continue to decline, many of these million dollar projects are at risk. Even if they are in a excellent location such as downtown Calgary (where all the head offices of oil companies are situated). The only way the project can continue its construction I would imagine that it would take all the suites to be completely sold out at peak prices. The reality is that's not going to happen. Strangely, Gateway Midtown is very close in proximity to many other beltline condo projects currently underway or completed. The suspension of this condo project proves that inner city fundamentals in a healthy economic environment are sometimes out of touch with reality.

But of course, Calgary is different than the rest of the world.