Unlike other major urban centres in Canada, the Edmonton real estate market failed to catapult its way to record-setting sales activity and prices in 2020. With the impacts of the coronavirus pandemic, a deep but short recession, and a collapse in crude oil prices, Edmonton and the broader province struggled to stay afloat during the first wave of the COVID-19 public health crisis. This being said, the housing sector in Alberta’s capital did show some hopeful signs of recovery towards the end of last year.
Prior to the coronavirus-induced financial crisis, the Edmonton real estate market – both residentially and commercially – had been healthy and stable. The number of homes sold in 2019 hit an all-time high, while housing starts came in better than what market analysts had anticipated. This all changed when COVID-19 brought an abrupt pause to the city, province, and country. However, a year later, the Edmonton housing industry has stabilised, oil prices are back on the rise, and all the indicators point to modest growth in 2021.
Here is the state of the Edmonton housing market at the end of 2020, according to the December data from the REALTORS® Association of Edmonton:
- Total residential unit sales: +31.47 per cent year-over-year | -20.63 per cent month-over-month
- All residential average prices: +2.61 per cent year-over-year to $362,447 | -3.77 per cent month-over-month
- New listings: -29.59 per cent month-over-month
- Overall inventory: -17.29 per cent year-over-year | -19.34 per cent month-over-month
What do these numbers suggest for the Edmonton real estate industry in 2021?
Edmonton Starts 2021 With a Balanced Real Estate Market
According to the RE/MAX Edmonton Housing Market Outlook (2021), the west coast city is projected to remain balanced in 2021, with average prices to jump two per cent to $372,116.40. This is essentially unchanged from last year when the average residential sales price rose one per cent to $364,820.
The biggest drivers of the Edmonton housing sector will be first-time homebuyers and move-over buyers. They are predicted to take advantage of historically low interest rates and the oversupply in the condominium market, which is quite popular with single homebuyers and young couples.
But market analysts will also be monitoring new-home construction. Early data suggest Edmonton’s new-home construction sales are already strong as buyers search for new or “like new” homes in a wide variety of price ranges, to meet their need for greater home office space options (and greater square footage, in general). Developers are taking advantage of ultra-low borrowing costs to help meet this rising demand.
Another factor that may sway the recovery of the Edmonton housing market is time. Homebuyers might be willing to wait a few additional months if they think that there is a chance that real estate prices come down even further. With so much uncertainty in the broader economy and new developments forming in the housing industry, Edmonton’s homes could turn on a dime. And many Albertans share this sentiment.
Are Albertans Insecure About the Real Estate Market?
A new survey by the Royal Bank of Canada found that Albertans are less enthusiastic about the Canadian real estate market and the economy than the rest of the country. The study revealed that just eight per cent of Albertans indicated the economy was in good shape, and 32 per cent were optimistic about real estate. Comparatively, on a national scale, 18 per cent said the economy was in good condition, and 45 per cent thought the housing sector was strong.
Despite Edmonton’s housing prices being more afforadable than other large Canadian cities, Albertans are not convinced that valuations are affordable. Thirty-seven per cent of Albertans thought real estate prices were unaffordable in their area.
“We’re starting to see the picture emerge around why, even though there are still impacts of the pandemic, Canadians believe there is opportunity in real estate,” said Amit Sahasrabudhe, the vice-president of home equity financing, products, and acquisitions at RBC, in an interview with the Edmonton Journal.
2020 Trends Will Extend Into 2021
Industry experts stated that the Edmonton real estate market was kept afloat by households that were continually employed throughout the coronavirus pandemic. In addition, families that needed the extra space, whether it is because the mom or dad needed more home office space or the kids were participating in remote learning, facilitated the modicum of expansion.
While the Bank of Canada (BoC) has ruled out subzero interest rates, it has indicated that it could embrace additional easing with a micro rate cut of less than 25 basis points. The benchmark rate is already at a historical low, but policymakers say that if the economy needs extra monetary support, they are willing to provide it. And this would make borrowing even cheaper, giving households additional capital and options.
Overall, optimism is reigning supreme in the Edmonton housing market, with industry leaders not expecting a major spike or a substantial decline.
“Despite all the things that have happened in our region, I think we’ve seen a real stable real estate market and I think that Edmonton will experience stability in the future too,” said Tom Shearer, the chair of the Realtors Association of Edmonton. “I don’t foresee a major spike or a major drop happening.”
We’re all holding on to these glimmers of hope on the horizon as we inch closer to defeating COVID-19 and returning to some semblance of pre-pandemic normalcy within our communities and local economies – hopefully within 2021!