The real estate market for detached homes in Calgary continues to soar as buyers take advantage of unique market conditions and low interest rates. May was a record-setting month, with 2,989 homes sold. The month of April was huge, eclipsing May’s number with nearly 6,200 sales, making now a great time to sell your home.
Sadly, condo sellers are not among those celebrating. It’s been a rough few years for those who have invested in the condominium market. Condominium prices have been coming down every year since 2014, losing an average of 14% of their value. A condo priced at $248,500 is now worth $41,900 less than seven years ago – a bit of a blow to mortgage holders. That’s why it’s more important than ever to work to maintain the value of your condo through regular maintenance and judicious upgrades.
There are numerous reasons for the decline in the condo market. The pandemic didn’t help the situation much at all. Alberta reached Stage 2 of its reopening plan this week, which lifted the work-from-home order, but it is still recommended. As people have adjusted to working from home, many employers are leading towards continuing the practice. Hybrid models, where employees make their way into the office part-time, are seemingly the most popular among both employees and their managers.
Condo dwellers who are now working from home have begun to crave the space and flexibility that comes with a standalone property. Add that to the fact that Calgary’s downtown offices sit at a 30% vacancy rate. The core (where the vast majority of Calgary’s condos are located), is still struggling to rebound from the province’s economic misfortunes, leaving the downtown less vibrant, and unfortunately, less attractive to live in.
Another reason why people are either looking to get out of the condo market or are just not considering it in the first place is the volatility of the condo market, and in turn condo building insurance. Although personal condo insurance for your own unit and belongings is not hard to find, and still affordable, the envelopes of condo buildings (the buildings themselves), have been proving difficult to insure. There are stories of condo boards facing enormous hikes in premiums due to too many claims, the increasing cost of construction, and severe weather events. High insurance costs leads to high condo fees, which is also unattractive for potential condominium buyers.
Facing the predicament
Multi-storey buildings present their own specific types of risks to insurance providers. Water damage is common, as a simple predicament like a burst pipe or leaking dishwasher can cause serious damage to several levels. Maintenance and upkeep is an issue too. A condominium board is responsible for keeping the property up through the collection of condo fees, but the boards are only as good as the people who run them.
Individual owners may also fail to maintain their units, leaving others at risk of outcomes due to their lack of attention (think discarded cigarette in a planter scenario). As such, condo buildings insurers are offering less coverage, increasing risk identification, and coming up with far more strict guidelines for which buildings are even eligible for coverage.
What condo boards can do to reduce the risks in their building
Members of condo boards carry a huge responsibility in their role. They collect condo fees in order to manage the maintenance of your building, and if that is not handled properly a dreaded special assessment is on the horizon. Many condo building insurance companies will not provide coverage unless the building has contracted a professional property management company. Professionals take care of contracting details for jobs ranging from landscaping and snow removal to putting on a new roof. They also work with insurance brokers to assess where your building poses the greatest risk and take a lead role when property crimes happen.
Property management companies are also able to provide assistance with important communications. They will often provide services such as regular reminder emails with reminders about how to check a smoke detectors, avoiding water damage, and so on.
Condo owners need deductible insurance
To further illustrate the difficulties facing condo building insurance industry, and why buyers may be shying away from purchasing a condo, starting in 2020 the Government of Alberta enacted a major change to condo legislation. Condominium management companies can now require owners to pay the entire building’s deductible amount for claims where the damage can be proven to have originated in a suite or a private area, such as a storage unit or an owned parking spot.
Holders of condo insurance policies should ensure their coverage includes deductible insurance for up to $50,000, or whatever the deductible is on your condo building insurance. Ask your condominium corporation to provide a copy of their current certificate of insurance to ensure your deductible insurance covers the building’s amount.
Still thinking of buying a condo? Get a condo document review
When considering purchasing a condo it’s a very good idea to have a careful condo document review carried out by experts. They will study the bylaws, the reserve fund, the building expenses, the building’s insurance documents, and minutes from general meetings of the condo board, helping to discover persistent problems, structural deficiencies, deficiencies, and so on. After a condo document review you should be well-informed on your decision.
Keep your personal coverage top of mind, too
While you may not be able to solve all the problems associated with your condo building insurance, you can ensure your personal coverage is top notch by working with Lanes. We are a full-service brokerage that works for you, not the insurance companies. Our clients receive access to the lowest possible Calgary condo insurance rates provided by our partners, as well as attentive service and extensive claims support. Contact your local Lane’s Insurance office for more information.
