Is the Edmonton real estate market setting itself to be one of the most attractive housing markets in Canada? Unlike some of its major urban centre counterparts, Alberta’s capital city has had a rough 2020. From the economic downturn to the crash in crude oil prices, Edmonton’s recovery in housing and the broader economy has only recently started. Incredibly, despite the economic volatility of this year and the recent market recovery, it has been able to strike a fine balance between competitive real estate prices and housing affordability.
The Canada Mortgage and Housing Corporation (CMHC) recently published an interesting report that concluded the Edmonton-area real estate market is at low risk of massive price hikes and other imbalances that could affect buyers and sellers. The CMHC stated that Edmonton is unlikely to experience overvaluation, overheating, and price acceleration anytime soon.
Despite the rapid rate of demand outpacing supply levels – rising 6.9 per cent from the previous assessment to 56.7 per cent – Edmonton is poised to record a balanced housing market. This is due to renewed sales activity and an increase in new listings that offset tumbling inventory levels.
“We’re looking at the price, we’re looking at the inventories, we’re looking at supply and demand in the market and then assessing all of that against our metrics,” said CMHC senior analyst Christian Arkilley in a statement. “We’re (also) looking at sales-to-new-listings, how that is moving and we have a threshold for that. We have that at 85 per cent. Anything that falls below that is seen as low (vulnerability).”
What does this all mean for the Edmonton real estate market now and moving forward for the next several months?
Cooling Activity in the Edmonton Real Estate Market
According to the REALTORS® Association of Edmonton, total residential unit sales in the Edmonton Census Metropolitan Area (CMA) tumbled 16.23 per cent in November. Single-family home unit sales fell 19.41 per cent from October, and condo unit transactions slipped 8.38 per cent.
All residential average prices dropped 1.42 per cent month-over-month in November to $376,636. Single-family properties dipped 0.86 per cent to $439,103, while condominiums slid 0.4 per cent to $230,688.
New residential listings decreased 31.57 per cent month over month, and overall inventory levels slumped 10.94 per cent from October.
REALTORS® Association of Edmonton Chair Jennifer Lucas does point out that while the Edmonton market has witnessed a decline in month-to-month sales and prices, the city’s housing sector has enjoyed year-over-year gains.
Is this the beginning of the slowdown in Edmonton that Altus Group, a software and independent advisory services firm to the global commercial real estate industry, recently predicted? In its quarterly forecast for housing across Canada, researchers anticipated that Edmonton’s market would struggle amid slumping demand due to the economic fallout from the coronavirus pandemic.
Does the recent coolness present a buying opportunity for anyone in the market for a property?
Value for New Homebuyers in Edmonton
The COVID-19 discount, no matter how temporary, brought some new homebuyers to the marketplace.
Families and real estate investors who were sitting on the sidelines were nudged into the housing sector when the Bank of Canada (BoC) slashed interest rates to historic lows, making borrowing cheaper than ever before. Plus, with the state of work evolving to be more remote, homebuyers have greater options of where they can live since they are no longer confined by proximity to their workplace.
These factors are beneficial for cities that want to attract households from across the country. And, surprisingly, this has been the trend in today’s real estate market. Thanks to realtors who are utilising digital tools and virtual tours, a family of four can move from Montreal to Calgary to buy a property without ever stepping foot inside. This trend has facilitated cross-country treks or the big city exodus, lifting demand for smaller towns halfway across the country, and stimulating housing markets that previously didn’t see much action.
Indeed, every potential customer might ask this question: does Edmonton offer value for new homebuyers, in comparison to the country’s other major urban markets? Based on a diverse array of metrics, Edmonton remains one of the most livable and affordable places in Canada, and this is likely to continue to be the story in Canadian real estate news heading into 2021. Property taxes are low, borrowing is cheap, and various industry projections for the next six to 12 months suggest stability in a chaotic world.
This past fall, Jennifer Lucas told the Edmonton Journal that consumers have built up enough confidence that homebuyers are now prepared to dive into the Edmonton real estate market. Considering that 23 per cent of non-homeowners are likely to purchase a home in the coming year, it is projected that despite any current housing market cooling, Edmonton will continue to feature as a top destination for homeowners for the foreseeable future.