Considering Canadian real estate jitters about inflation, spiked mortgage rates, affordability and sagging consumer confidence, Edmonton is proving to be a bit of a Canadian anomaly. Stats and trends show that Edmonton’s housing market is steady, strong (a bit cautious) and mostly positive.
According to respected and knowledgeable Paul Gravelle, associate broker at Edmonton’s MaxWell Progressive, “In the wake of increasing interest rates across Canada, the real estate landscape has witnessed a notable deceleration. Fortunately, Edmonton has managed to weather this shift and is showcasing its robust real estate market. It is positive and encouraging. As consumers recalibrate their preferences due to reduced purchasing power, Edmonton stands out as a city that has adapted while maintaining its market strength.”
Realtors Association of Edmonton (RAE) numbers confirm some of the Edmonton market’s positives. The demand for housing is increasing, partially due to net migration. Alberta’s population growth shattered records in the third quarter of 2022 with 58,203 added residents, posting a growth rate of 1.28 per cent, the highest rate in the country. Particularly people are moving to Edmonton for job opportunities, affordable homes and a higher quality of life. All this is driving demand for housing.
Throughout the country, affordability has become a thorny real estate issue. Edmonton’s housing market continues to be relatively affordable, particularly compared to other major markets, like Vancouver, Toronto and even Calgary.
“Housing affordability is a huge issue affecting Canadians,” notes Melanie Boles, Realtor at RE/MAX Edmonton and RAE chair. “The Edmonton region offers a high quality of life for less than many other Canadian provinces. Although Alberta has been regarded as an affordable place to call home, with interest rates and inflation on the rise, housing affordability issues are becoming more prevalent. What a typical family might have been able to afford 2-3 years ago may not be the same in today’s housing market.”
She adds that the housing affordability situation in Edmonton is like the rest of the country. “A typical entry-level home may look different for the average buyer in 2023. For example, what used to be a family looking for a detached home may be a family looking at a semi-detached, rowhouse or apartment condominium.
“It is important to understand that prospective homebuyers are not necessarily going anywhere. They may just be looking at a different product. This could affect the types and prices of Edmonton homes selling, as people may start to be priced out of the market, which is not necessarily something they would have been dealing with even a year ago.”
Sales and listing numbers show that 2023 home prices are stable, with mostly balanced conditions between buyers and sellers. Potential homebuyers have a wide range of options to choose among, including single-family homes, townhouses and condominiums.
Boles highlights RAE facts and figures. Q1 saw large growth for the Greater Edmonton Area (GEA) in total residential sales, starting at 986 in January and doubling to more than 1,800 in March. The start of Q2 continued the upward trend. By May, a month-over-month decline in residential sales began. By June, there was a drop in new listings heading into the summer market. By July, residential unit sales in the GEA reached 2,323, a difference of almost 15 per cent compared to July 2022.
Although the Edmonton real estate market is having positive momentum, no one is suggesting that Edmonton is insulated from the national housing crisis.
Boles explains that no city is completely insulated from broader economic trends, including housing crises.
“While some markets, like Edmonton, might be less affected than others, due to their specific economic conditions or local policies, housing affordability and attainability are still top of mind for many Edmontonians, as average prices do continue to rise and inventory levels are not keeping pace with the demand.”
In Edmonton, as well as throughout Canada and even in the U.S., spiked mortgage rates are an urgent, hot topic about housing and consumer moods. Like other areas in the country, the market has definitely been brought down by mortgage rate hikes. The experts suggest, now that the Bank of Canada seems to be holding rates steady, it may be translating out to a steady appreciation in prices.
Unarguably, high mortgage rates may be the biggest challenges faced by homebuyers. The Bank of Canada paused rate hikes, hoping that inflation declines. Besides, economists point out that, while current rates may be a crunch and seem high for buyers new to the market, rates are much lower than the 1980s when they peaked at around 18 per cent and even in the 1990s, when rates were around 12 per cent. They suggest short-term financing by taking out a two- or three-year fixed rate mortgage to help reduce the amount of interest that needs to be paid over the life of the loan and make it easier to manage monthly payments.
Edmonton’s late summer, hardcore real estate stats, especially compared with other markets, showed trends and slight fluctuations. Total residential average prices hit $409,986, a 2 per cent decrease from July 2022. Detached homes averaged $503,542, slightly less than a 1 per cent year-over-year drop but a slight increase from the month before. Semi-detached sold for an average of $378,902, a 2.3 per cent increase year-over-year. Row/townhouse prices were up 3.8 per cent, selling at $264,128. Apartment/condominium average prices hit $194,823 which is a fractional drop.
What’s in store for Edmonton real estate for the balance of this year and 2024? According to Boles, “While we do not have a crystal ball, we don’t anticipate that we’ll see quite the level of activity that 2022 brought to the local housing market. There are a lot of factors that will impact the remainder of 2023, including interest rates, inflation and level of available inventory.
“Overall, we anticipate that most categories, including average price, listings and sales across all property types will report modest declines in both month-over-month and year-over-year numbers.”
While forecasting real estate markets is not even close to a perfect science, Gravelle is enthusiastic about Edmonton’s rank as a Canadian anomaly. “The city’s allure extends beyond affordability. Boasting a wealth of high-paying employment opportunities, quality schools and desirable lifestyles, Edmonton continues to attract young families and individuals alike. The diversification of offerings positions Edmonton as a city with a promising future for both residents and investors.
From much Edmonton experience, he adds professional caution about navigating broader influences.
“Edmonton’s comparatively lower housing costs do not render it immune to broader economic and housing trends on the national scale. Economic indicators, fluctuations in interest rates and shifts in governmental policies could collectively exert an influence on the local real estate market. While the city is shielded to a certain extent, vigilance remains essential to comprehend the evolving dynamics of the Edmonton market.”