As in most major Canadian areas, the key segments of Edmonton’s real estate market – re-sales, new builds, condos and rentals – continue to be a roller coaster, with various reasons for the highs, the lows and the plateaus.
The impact of everything from spiking mortgage rates, consumer jitters, affordability, shifting housing trends and increasing demand for rentals have a ripple effect on every segment of Edmonton’s real estate market and particularly on Edmonton’s condo market.
There’s a critical domino effect when it comes to real estate. Mortgage rates affect affordability and affordability is a key driver of consumer confidence. With housing in general, including condos, Edmonton buyers are more price conscious than before. Consumer’s belts are tightening and rising inflation continues to broadside household budgets.
According to national real estate stats, spiking mortgage rates continue to take a toll. In Alberta, average monthly mortgage payments for first-time homebuyers were bumped 33 per cent in the past year. Analysis of the numbers also shows the caution that, combined with the other effects of inflation, the spiking interest rates are also creating stress for families with variable-rate mortgages or those who have recently renewed.
What a typical family might have been able to afford two or three years ago may not be the same in 2023. While the affordability of Edmonton’s detached homes has gone up, the reality is that while it is still an affordable option in comparison to markets like Vancouver or Toronto, it is still out of reach for many buyers in Edmonton.
The median Edmonton condo price dropped by a slight 0.4 per cent year-over-year to $183,100. Provincially, the median condo sale price was up 8.6 per cent to $255,600. The median monthly rental in Edmonton was $1,300, an increase of nearly 12 per cent, year over year.
The REALTORS® Association of Edmonton (RAE) numbers show the average benchmark price of resale residential homes sold across Edmonton this June was $429,500. While it was a 1.8 per cent increase from the month before, it was down nearly 8 per cent from last June.
Although Realtors and other real estate professionals usually crunch numbers, percentages and scroll through reams of stats and trends, the bottom line about the Edmonton condo market – particularly compared with some hot markets like Vancouver, Toronto and Calgary – shows that, despite some lingering real estate wrinkles, the Edmonton condo market is reasonably strong and steady.
While everything from spiking mortgage rates to affordability continues to impact real estate, the numbers crunching shows that, for various bread-and-butter reasons, Edmonton condos are becoming more and more popular.
“During the pandemic, there was a preference for more space and less demand for more central locations, with more people working from home and needing home office space,” says Nathan Mol, Realtor and licenced associate at Liv Real Estate. “Record-low interest rates allowed buyers to make that move up in livable space and the price that came with it was very achievable for many people. Since May of 2020, the benchmark home price has increased 10.9 per cent for single-family homes and almost 5 per cent for townhouse-style condos but it has dropped almost 3 per cent for apartment-style condos.”
He notes that Edmonton prices pulled back in the fall of 2022, mostly due to the rapid increase in interest rates. In the past six months or so, there has been a percentage increase in the prices of condos, higher than that of single-family homes.
According to Melanie Boles, RAE board chair and associate broker with RE/MAX Real Estate-Central, “Edmonton’s most recent market stats, released in early June, show that year to date we have had 2,930 new listings hit the market in the greater Edmonton area and 1,344 sales.
“Apartment condominiums overall are selling for 95 per cent of listing price and average prices have been holding steady for most of 2023, around the $193,000 mark. Edmonton’s condo market has stayed relatively busy, when compared to this time last year.”
She adds that although the average price of an Edmonton apartment condo has decreased from last summer, sales were up almost 4 per cent, year over year.
Realtors and real estate specialists underscore important condo market factors like affordability, young Edmonton demographic first-time buyers and the growing impact of migration, both inter-provincial migration and immigration from outside the country.
“Interest rates continue to play a role in the rise and fall of the real estate market,” Boles points out. “Many had hoped to see the rate start to come down, but with the recent increase to the Bank of Canada’s benchmark interest rate, many prospective home buyers may be hesitant to enter the housing market at this time.”
Mortgage rates aggravate affordability in the condo market but the stats show that Edmonton has lots to offer in terms of condo price points.
“A majority of our sales are in the $100,000 to $199,999 price bracket. However, there is still lots of activity and sales under $100,000 as well as the $200,000 to $299,999 price bracket. Migration into the province is also another consideration that is impacting the housing market. According to Alberta’s latest economic spotlight, Alberta has attracted 37,123 in-migrants from Ontario and 36,063 from BC. These migration trends continue to support Edmonton real estate activity and demand, and an important factor for real estate, especially condos, is that Alberta also has the youngest population in the country, with an average age of 39,” she adds.
“More than half of Alberta’s population is between the ages of 25 and 54. This happens to be the age group in which most household formations occur. Alberta’s population is keeping demand high, especially for first-time homebuyers and new renters.”
Mol dissects Edmonton’s condo market numbers and explains that the price and demand vary, especially for new or re-sale condos.
“Although some new condos are being marketed and sold and the prices are higher, Edmonton demand for new condos has been soft over the past 5-10 years. So many developers have shifted their projects to purpose-built rentals.
“This may be changing with higher interest rates. We are seeing condo demand increase because Edmonton condo affordability levels are very attractive versus single-family detached homes and compared with condos in most other parts of the country.”
Despite some festering speedbumps in the Canadian real estate market, Edmonton, particularly Edmonton’s condo market, is strong and holding steady.
Mol admits that, for a few years, he has been professionally cautious about condos mostly because prices were in a slow decline.
“But with supply of housing severely stretched across Canada,” he now says, “condos in Edmonton are some of the most affordable dwellings in the country.”
Boles cites the 2023 RAE Annual Housing Forecast, “In the last half of the year, we will see how the most recent interest rate change affects the market, as well as any other increases or changes. However, we expect Edmonton to continue as a strong market in apartment condos, driven by affordability and migration into the province, combined with low unemployment rates and the young population in Alberta and in the Greater Edmonton Area.”