How is the real estate market in Edmonton doing? Things have been better.
“While new listings on a month-to-month basis were comparable to previous years, longer days on market caused the total inventory to continually rise. June saw a record high of more than 10,000 active end-of-month listings for the Edmonton census metropolitan area (CMA). The ripple effects of the heightened inventory impacted sales, prices and days on the market,” says Michael Brodrick, chair of REALTORS® Association of Edmonton.
“Supply is in abundance, and demand is dropping. We assumed many sellers who did not have urgency to sell would hold off and wait out the buyer’s market and high inventory levels; however, this was not the case as listings continued to increase.”
Supply and demand are not the only issues.
“Policy from Ottawa continues to stress the Alberta economy,” informs Brodrick. “Rising interest rates, coupled with the mortgage stress test, which was designed to cool the real estate market in Toronto and Vancouver but was implemented as a national policy with total disregard for regional differences, have had a significant downward impact on the price point at which buyers can qualify and purchase. This has lowered prices and negatively impacted home equity.
“Tightened regulations are expected to reduce the number of first-time buyers who qualify for mortgages, particularly in pricier markets. There is also a growing expectation gap between buyer capacity and seller willingness to move on prices. Patience is a virtue for sellers, but also for REALTORS® as we persevere through yet another year of stagnant sales growth.”
A frustrated Brodrick explains that issues are also tied to the energy sector. “The federal government’s inability or unwillingness to assist in getting our oil to tidewater has affected our workforce and deterred outside investment in our province. This is hurting Alberta, hurting Albertans and hurting REALTORS®.”
While single family homes are still the main purchase of choice in the Edmonton CMA, buyers are increasingly turning to condos, townhouses and duplexes as a more affordable option. However, that doesn’t mean the condo market is robust at the moment.
“The condominium market struggled throughout 2018 with the glut of inventory driving prices lower and lower. In 2018, only 3,967 condominium units sold – the lowest in more than a decade. This trend is likely to continue in 2019 as the condo market struggles to stabilize,” says Brodrick.
Nathan Mol, REALTOR®, Liv Real Estate, agrees that the market has been tough, but he sees a silver lining – for a select group of buyers.
“Last year was challenging for home sellers but for some buyers, there were real opportunities,” says Mol. “With lots of selection, 2019 will have great opportunities for buyers with good jobs, but only for certain areas, neighbourhoods, and property types. It will be a market where buyers who get strategic advice from their REALTOR® and make informed decisions will be rewarded.”
Mol also sees the oversupply as good news for those looking to invest in income properties, explaining, “For the first time since 2014 we are starting to see rents move up, so it may be the right time for investors to look at rental properties again, but carefully. There are great deals on the market but also plenty of mediocre and subpar properties.”
No matter the market conditions, Mol stresses the importance of working with a REALTOR® to get the best possible results.
“With my buyer clients, my focus is on real ground-level insight into the specific markets, neighbourhoods, and property types to create value for my clients,” he says. “Working with sellers is a full-effort strategic approach – staging, identifying possible upgrades/repairs, pricing correctly for the neighbourhood. A strong web-focused marketing plan to reach the right buyers and demonstrate the property’s value is key to setting the groundwork for a strong negotiation.”
The City of Edmonton’s Economic Indicators (January 9, 2019) report notes one area of growth: home builders have increased their volume.
“Builders in the city of Edmonton broke ground on a total of 1,717 housing units in Q4 2018, representing an increase of 4.3 per cent year-over-year from 1,646 units in Q4 2017,” cites the report. However, “The moving average inched higher in Q4 2018, solely driven by the multi-family segment which includes semidetached, row and apartment starts.”
Morrison Homes, a homebuilder with more than half a century of experience in delivering expert craftsmanship, has deep roots in Alberta.
“Our legacy – hard work, a devotion to quality and exceptional customer empathy – was built from humble beginnings and one simple idea: treat every customer as you would a friend,” says Morrison’s Brenda Delurey, marketing lead for Edmonton. “No matter your home building dream, Morrison is by your side. We deliver an unparalleled customer service experience and have some of the highest customer satisfaction levels in the industry.”
With Morrison Home’s experience and reputation, the company has some advice for first time homebuyers; advice that is prudent for this, or any real estate market.
“Arranging financing is number 1. Ensure that you have a down payment of at least 5 per cent of the purchase price. Of course, a bit more of a down payment is always in your best interest,” counsels Delurey. “Speak with a mortgage specialist to receive a comprehensive pre-approval and to know exactly what you can afford when you start shopping. Speaking with a mortgage specialist at the beginning of your home buying journey will ensure a happy ending, with a house you love and can afford.”
She points out that it’s more than just affordability. Location is also key, as is knowing if you want a move-in ready home or one you can customize.
“What amenities do need or want to have near you? What would your daily drive look like? Thinking about your lifestyle will help determine and narrow down the community that you want to live in.
“Working with a new home builder, you have the option to purchase either a ‘spec home’ or ‘build’ home. Many spec homes are completed and move-in ready. Morrison Homes does allow changes to our spec homes that are under construction, so this may be a great option for you if you are looking to make some minor changes. If you want to be in control of all the finishes, a pre-built home is the route for you. Keep in mind this buying experience is generally a longer process taking anywhere from 6-9 months depending on the size and style of home chosen. That said, the home you choose will be finished how you’d like.”
Despite the circumstances, homeowners should always maintain their property’s equity. Regardless of market conditions, when it’s time to sell a well-maintained home will always have a higher resell value and be more competitive than one that has fallen into disrepair – something to remember if you wish to climb the property ladder.
“Ensure that your home is kept in tip top shape,” agrees Delurey. “Curb appeal is very important as this is the first introduction of your home. Maintain the grass, bushes, garden and trees. Paint the trim, or the front verandah. Wash your siding and windows.
“Stay on trend with your interior. Paint is inexpensive and can make a huge difference to the overall feel of your home. Depending on the age of the home and how long you’ve lived in it, you may want to consider updating the bathroom or kitchen. These are generally deemed the most important rooms in a house.
“Stay on top of routine maintenance (HVAC, etc.). Book inspections or cleaning based on the manufacturer’s recommendations. Some materials have a shelf life and need to be updated to maintain their overall integrity.
It is easy to get discouraged in a down real estate market but despite the numbers, homes are still (slowly) selling and builders are still building. Buying, selling, or going with a builder, the best advice to get the most out of any market is to rely on the professionals.
For buyers looking for a new build, those professionals are the builder’s representatives. “If considering a new homebuilder, Delurey says, “Research the builders in the area. Read testimonials and drive through the community to see the homes under construction. Are the sites clean and organized? Visit the show homes and speak with the area managers. Visit the completed spec homes in the area; this will help to determine your style.”
If buying or selling a previously-owned home, that professional is a REALTOR®. “Both buyers and sellers can trust that their REALTOR® will ensure the transaction is completed competently and professionally. You will get advice from someone with an intimate knowledge of the local housing market and you can count on the help of a professional who has committed to serve with integrity and competence,” says Brodrick.
Brodrick summarizes the year ahead: “2019 is likely to mirror 2018 with higher than normal inventory, lower sales and downward pressure on price. Sellers will need to remain patient and expect their homes to take longer to sell. Buyers will benefit from more choice but will be challenged by mortgage qualification rules.”