Home Month and Year March 2024 “The Most Affordable City”

“The Most Affordable City”

Edmonton’s hot draw

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Well into Q1 of 2024, Edmonton is still benefiting from the recent bragging right! Last year, the Canadian Home Builders’ Association (CHBA) declared Edmonton as Canada’s most affordable city. It is a hard-earned rank and credential, both in business terms and community excellence terms.

“The CHBA study looked at three elements that determine housing affordability, based on municipal protocols:” explains Aziz Bootwala, board chair of the Edmonton Chamber of Commerce, “getting housing approved, expediency of approval and government charges carried by renters or buyers. Edmonton also ranked number one for planning features.”

He points out one of the big reasons why housing costs are lower in Edmonton than in other Canadian markets. Alberta does not have a provincial sales tax (PST) or harmonized sales tax (HST), “So, homebuyers keep more money in their pocket to spend on rent or purchasing a home. Also, Alberta does not have a land transfer tax like some provinces, making home ownership more affordable and saving homebuyers thousands of dollars. Housing cost is largely tied to supply and demand and historically, Edmonton is known to be a balanced market with no major negative or positive increase in housing cost year over year. Residential developers in Edmonton have focused on building great products for the public including access to amenities.”

The CHBA ranking also credited the streamlined and efficient bureaucracy of Edmonton’s development contributing to affordability. Edmonton provides clear and predictable regulations and quick timelines to home builders and developers.

“The initial cost of land and land development in Edmonton, the City’s permit approval process, access to building materials and construction crews are all factors that play into maintaining a balanced real estate market,” Bootwala says.

When it comes to housing and community growth, affordability is a key factor. According to Alberta government stats, Edmontonians spend a smaller share of income on home ownership costs; 31 per cent in Edmonton versus the Canadian average of 63 per cent.

Melanie Boles, chair of REALTORS® Association of Edmonton (RAE), notes, “One key factor is availability of inventory. Edmonton has more inventory available than other Canadian markets, and Edmonton’s lower population (less than 2 million) puts less pressure on the market and prices. Edmonton also has lower rental market prices and people aren’t as motivated to buy if rent remains affordable.

“Average income levels and industries are also important,” she notes. “Alberta’s average income level is much higher than other provinces, which creates migration to the province, affecting inventory and affordability. Edmonton is going to see some big long-term net-zero projects start up in the region during 2024 and beyond, which will bring more people for employment and add pressure to the market.

“Compared to Calgary, Edmonton has a younger workforce and more ‘blue-collar’ opportunities.” She adds that Edmonton’s affordability is also a potent draw due to mortgage rates. When interest rates are high, people are priced out of more expensive markets like Vancouver, Toronto and even Calgary.

According to Taylor Pardy, CMHC’s lead economist for the Prairies and Territories, when looking at affordability, comparables are a reliable source.

“When looking at large cities in Canada with over 1 million residents, Edmonton certainly has an affordability advantage at the moment. The specific stats are quite telling. Looking at pricing for existing homes, as of November 2023, the average home price in Edmonton is significantly lower than many other regions of the country.

 

  MLS HPI Benchmark Price, Total Residential Edmonton Average Price Difference (%)
Edmonton $378,200 NA
Calgary $566,300 -33%
Vancouver $1,206,100 -69%
Ottawa $647,000 -42%
Toronto $1,108,100 -66%
Montreal $523,800 -28%
Source: CREA, figures are seasonally adjusted

 

The trending confirms that affordability is a key factor for migration.

“It is definitely a selling point for the Chamber when selling Edmonton to the rest of the country to attract businesses here,” Bootwala admits. “Affordable housing definitely impacts how many people move to Alberta and Edmonton. Housing affordability is a top, if not the top, issue facing Canadians today.

When it comes to the migration momentum of the Edmonton region, he also credits the dynamic “Alberta is Calling” promotional campaign, especially in overheated Canadian markets. The bold and blunt recruitment initiative from the Alberta government touted lots of job opportunities and housing affordability, particularly compared to Toronto and Vancouver housing prices.

“Post pandemic, migration to Alberta is high and that is based on a number of factors such as economic and quality of life, including housing affordability. The fact that Alberta doesn’t have a provincial sales tax also helps. Our economy is growing again and that helps attract people and businesses to our city,” he says. “In fact, the city’s real GDP is expected to grow by 2 per cent this year and by 1.9 per cent per year for the next five years. It is very promising when people look at moving to Edmonton.”

Nationally, trends show young adults aged 25-44 are leaving cities like Vancouver and Toronto due to a combination of unaffordable, unsuitable or insufficient housing options and thousands are landing in Alberta – and, for various reasons, particularly the Edmonton region.

Pardy crunches the CMHC numbers and echoes the credential of Edmonton being “the most affordable city.” Between the second half of 2022 and the first half of 2023, Alberta gained 168,807 people through both international and interprovincial migration. Net international migration totaled 112,562 people, while net interprovincial migration totaled 56,245 people.

“This represents a record pace of overall migration into Alberta with the majority ending up in either Edmonton or Calgary. As a result, demand for housing across all segments of the market is quite high at the moment and we have seen existing home inventories and new home inventories being drawn down. Vacancy rates in the rental market are also expected to come down in the near term.”

Boles is positive and enthusiastic about the residual impact of Edmonton being acknowledged as “the most affordable.” She notes that it is good for business and good for the region because it is good for growth.

“Alberta’s population is expected to grow to 5 million by 2025. Larger urban areas in our region will see higher growth and become more concentrated, especially along the Edmonton-to-Calgary Corridor.

“Edmonton’s affordability attracts investors and people who want to afford homes, grow a family and get more for their money. This is due to several factors including a strong energy sector and investment activity as well as good employment numbers and new projects to support them. According to numbers, projections and trending, the affordability momentum is already happening and 81 per cent of Albertans are expected to live in the Edmonton region by 2051.”

For the Edmonton Chamber, the affordability ranking is just a cherry on top.

“The diverse, rich and vibrant culture of Edmonton, along with access to post secondary education, healthcare and a growing innovation market has enabled Edmonton to not only attract new immigrants but sustain an over 85 per cent retention of new immigrants after one year of moving to Edmonton,” Bootwala concludes.

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