Is Edmonton real estate the last affordable market in Canada?
Like much of Alberta, the Edmonton real estate market had been hit hard by COVID-19 and the crash in crude oil and natural gas prices in a slumping economy. While the broader Canadian housing market rebounded quickly after the initial first wave, Edmonton and the rest of the province were slow to respond.
Over the last year, with historically low interest rates and lower prices compared to the rest of the country, prospective homeowners dipped their toes in the Edmonton real estate market. Fast forward to the present, and the Edmonton housing market is booming without any sign of slowing down.
“People began to see the interest rate dropping and their purchasing power increase,” Tom Shearer, the past chair of the Realtors Association of Edmonton, told Global News. “They saw some of those higher-end properties start to come down to a range where they felt comfortable moving into them.”
Although prices are skyrocketing in the major urban centre, conditions are still relatively affordable compared to other large areas in Canada, such as Toronto or Halifax.
But this level of affordability could be fading fast, with the western municipality experiencing a record-breaking real estate market to kick off 2022. Is this the new normal in Edmonton for the rest of the year?
Edmonton Real Estate Market Breaking Records in March
Is this a sneak peek into Edmonton’s spring and summer seasons? If winter, which is historically quiet in Edmonton, led to a spark in home sales and price growth, then the coming months should be impressive for the area.
According to the REALTORS Association of Edmonton, residential sales advanced at an annualized rate of 45.4 per cent in March. All property categories witnessed robust sales activity in March:
- Single-Family +21.2%
- Duplex / Row: +54.2%
- Condominiums: +67.1%
In addition to swelling transactions, price growth was notable, especially for detached homes. The MLS® Home Price Index (HPI) composite benchmark price climbed 9.4 per cent year-over-year to $369,700. Here is how the different properties performed in March:
- Single-Family: +9.9% to $503,711
- Duplex / Row: +11.8% to $389,321
- Condominiums: +6.7% to $245,070
“The Greater Edmonton and Area market continues to surprise us as we enter into what is normally the start of the busy season of real estate,” said REALTORS® Association of Edmonton Chair Paul Gravelle. “Although we are seeing slightly lower increases for average sale prices across all categories, there has been a huge increase in the number of listings hitting the market as well the number of sales in the month of March.”
Indeed, new residential listings increased 7.6 per cent year-over-year and a stunning 47.7 per cent month-over-month. Meanwhile, days on market declined in March, with single-family homes typically listed for only 27 days, down from 42 days the month prior.
On a positive note, new housing construction activity has remained strong so far this year. According to Canada Mortgage and Housing Corporation (CMHC), housing starts totalled 2,641 in the first three months of 2022, up slightly from 2,511 unit starts in the first quarter of 2021.
Overall, the benchmark price trend is going up for Edmonton, which has been the case since the end of last year. But can this notable growth keep going for the rest of 2022? This is the question for Edmonton and many other housing markets that have experienced exceptional growth and activity.
According to the RE/MAX 2022 Canadian Housing Market Outlook, the Edmonton real estate market is expected to see the average sale price advance seven per cent by the end of 2022, while the number of sales is estimated to increase five per cent.
Other Noticeable Trends in Edmonton
Throughout much of the coronavirus pandemic, many homebuyers from across the country purchased houses in Atlantic Canada without even seeing them in person. The same type of development is unfolding in Edmonton as out-of-province buyers and investors scoop up tightening supplies, which is in turn driving up the price.
Public policy could also play a factor in the Edmonton real estate market. The city is reportedly homing in on property taxes and basing them on density with potential cuts for rental property owners and hikes for single-family homes. Many property developers and officials contend that the city’s present tax structure limits housing growth.
As more people continue working from home, space will still be a high priority for prospective homebuyers. A recent survey from the Realtors Association of Edmonton found that 61 per cent of homebuyers said a home office is an essential feature when choosing a residential property.
Due to heightened demand, Edmonton is seeing a myriad of factors come to the surface in the housing sector: buyers are bidding over the asking price, and offers with no conditions are winning. This is further impacting housing inventory, and Edmonton’s pendulum is swinging in favour of sellers.
