A Steady Summer for Edmonton Real Estate!

The Edmonton real estate market might one of the few housing sectors in Canada to strike that delicate balance between growth and affordability.

Since the early days of the coronavirus pandemic, most Canadian real estate markets, from the major urban centres to cottage country, have achieved record-setting sales and price growth. Shrinking supplies, strengthening demand, ultra-low borrowing costs, and evolving consumer trends have been major drivers of the housing boom. But there was another component contributing to the gains in the Edmonton housing sector: the recovering energy sector.

Indeed, the past 18 months have been a roller coaster ride for the city of Edmonton. At first, many jurisdictions throughout the nation had soared in the months following the first wave of the COVID-19 public health crisis. Edmonton was ostensibly exempt. But it was not until the fall of 2020 that the Edmonton housing market would experience immense growth.

But is Edmonton sustaining this momentum in the dog days of summer? It is a mixed story, which is good news for both buyers and sellers. Here is what the latest figures from the Edmonton real estate market are showing:

A Steady Summer for Edmonton Real Estate!

According to the REALTORS® Association of Edmonton, residential unit sales rose at an annualized rate of 2.1 per cent in July. However, on a monthly basis, total housing transactions in the Greater Edmonton Area tumbled 18.9 per cent.

The types of properties performed at different rates in July on a year-over-year and month-over-month basis:

• Single-Family: -2.1% (YoY) and -20.9% (MoM) to 1,325
• Duplex/Rowhouse: -1.1% (YoY) and -14.2% (MoM) to 745
• Condos Units: +11% (YoY) and -19.6% (MoM) to 868

While sales activity appears to have reached balanced levels, residential average prices remained higher. But industry experts assert that valuations too could begin to balance soon.

The MLS® Home Price Index (HPI) composite benchmark price, which is considered to be a more effective measurement than average or media, surged at an annualized rate of 7.2 per cent to $349,600. The HPI in the Edmonton real estate market was down 0.2 per cent from June 2021.

Here is a look at how the different property types performed based on CREA figures:

• Single-Family: +6.8% (YoY) and 1.3% (MoM) to $466,901
• Duplex/Rowhouse: +7.6% (YoY) and +0.5% (MoM) to $357,064
• Condominiums: +6.7% (YoY) and -0.8% (MoM) to $240,096

Overall, all residential average prices advanced 5.4 per cent year-over-year in July to $389,756. This is also down 2.1 per cent from June.

On the inventory front, new residential listings increased 9.3 per cent in July compared to the same time a year ago. But new residential listings fell 16.9 per cent month-over-month. Moreover, all residential listings averaged 39 days on the market, down by 15 days from the previous year.

Fresh supply could be coming the Edmonton real estate market, too. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts rose to 1,017 in July, up from 940 at the same time last year. In the first seven months of 2021, housing starts totaled close to 6,900.

“The Edmonton market in July saw a balance in residential unit sales,” said REALTORS® Association of Edmonton Chair Tom Shearer in a news release. “The year-over-year residential unit sales were only slightly higher than July of last year, while we have started to see the monthly activity cool as we get later into the summer season. Pricing has also begun to balance – with nominal year-over-year increases and little change in month-over-month figures. We are still witnessing a strong market, with some balanced activity for July.”

Has Buyer Fatigue Come to the Edmonton Real Estate Market?

Housing affordability has become a critical issue in the broader Canadian real estate market. For years, many hopeful homebuyers fled major urban centres in search of cheaper alternatives in small towns, suburbs, and rural communities. But even this decades-old strategy is no longer feasible, considering that prices outside the large cities have skyrocketed, too. This has led to a unique trend: buyers are disappearing faster than sellers, although Edmonton is beginning to witness a balance since its sales-to-new-listings ratio has declined to 58.6 per cent, down from about 65 per cent last year.

The fact that Edmonton is posting average property prices that are well below many other urban markets from coast-to-coast is a big lure for new homebuyers. The city offers great opportunity for young families and first-time homebuyers to get in on the booming national housing market before Edmonton witnesses further gains, borrowing becomes too expensive, and the federal government lifts the mortgage stress test slightly higher.

Sources:

• CREA
• CMHC
• Better Dwelling