Price Relief within the Edmonton Housing Market?

By the end of 2019, the Edmonton real estate market was defined by “big bargains” and “bank breakers,” meaning that the Alberta capital had its share of highs and lows. The housing market’s luxury segment was booming, but sellers in the lower end of the industry had a rough time. Heading into 2020, housing experts anticipated a decent year, with the economy still performing well.

Then the COVID-19 public health crisis trickled across Canadian borders, sending the country into a tailspin.

Unlike other major urban centres, the Edmonton real estate market failed to soar in the aftermath of the first wave of the coronavirus pandemic. A crash in crude oil prices and a coronavirus-induced recession hemorrhaged the Alberta capital in a plethora of ways. By midway through summer 2020, the Edmonton economy began to recover, allowing the housing sector to join other municipalities in the Great White North, finally.

Overall, how was 2020 to the Edmonton housing market? Did the city end the year on a high note, or was it a disappointing finish to a disastrous year? Better yet, what will happen in 2021? Let’s explore.

Canadian Real Estate Price Relief within the Edmonton Housing Market?

December turned out to be a tough month for the Edmonton real estate market, according to new data from the REALTORS® Association of Edmonton.

Residential retail sales tumbled 20.65 per cent month-over-month in December, but they did surge 31.47 per cent from the same time a year ago. All residential average prices fell 3.77 per cent, with all property types sliding in the final month of 2020.

  • Single Family: down 2.32 per cent to $428,900
  • Condominiums: 5.57 per cent to $217,843
  • Duplexes: down two per cent to $331,034

The number of new residential listings plunged 29.59 per cent. Many residential properties are being scooped up at a quicker pace. For example, single-family homes averaged 53 days on the market, a 11-day drop from last year; while duplexes averaged 62 days on the market, an 18-day decline from December 2019.

Overall inventory levels in the Greater Edmonton Area decreased 19.34 per cent from November 2020.

“The Edmonton market in December saw an increase in year-over-year unit sales, compared to a decrease in month-to-month sales,” said REALTORS® Association of Edmonton Chair Tom Shearer in a news release. “There have also been more sales of single-family homes, condos, and duplexes compared to December of last year, while we’ve seen decreasing month over month sales in all markets, which is typical for this time of year. Total year-to-date residential sales for 2020 came in at 17,036 – a 2.94% increase compared to 2019.”

So, how did 2020 as a whole compare to previous years? One word could best describe the Edmonton housing market in 2020: modest. Last year, the prairie city enjoyed a modest price growth of 4.24 per cent to $428,000. Residential sales activity was way above the ten-year average, while new listings also climbed just above the decade average.

But, perhaps during a time of such uncertainly and economic volatility, modest isn’t such a bad thing! The city may not have experienced the record-crushing highs experienced in other urban centres across the country, but there has been healthy growth nonetheless, with more of this activity projected over the next few months.

The Edmonton Real Estate Market in 2021

The Edmonton real estate market is anticipated to have another modest year, with conditions forecast to remain balanced in 2021, according to the RE/MAX Edmonton Housing Market Outlook (2021). Prices are projected to rise two percent to approximately $372,116.40.

With prices relatively stagnating, and interest rates parked at historic lows, there may be no other better time to enter the Edmonton real estate market. In 2021, the biggest drivers of the Edmonton housing sector will be move-up buyers, first-time homebuyers, and luxury housing buyers.

For households that enjoy condo living, there is an oversupply of apartment-style condos in Edmonton. This is a trend that could lead to a temporary drop in prices until this segment of the market recovers. On the other hand, luxury housing prices are climbing, with average prices beginning at $1 million.

Industry experts contend that the hottest neighbourhoods this year will be Anthony Henday Zone (West), North Central Zone and Southwest Zone. If accurate, it would be a continuation of last year’s stellar performance in these Edmonton hot-spots.

The sector will be monitoring new-home construction as housing stocks fell in December. While apartment condos are oversupplied, new or like-new single-family houses and townhomes are undersupplied.

A Trifecta for the Housing Sector

The broader real estate market in Canada will benefit from a trifecta of trends.

The first benefit is that interest rates are at historic lows, and the Bank of Canada (BoC) has signaled that it is ready to ease monetary policy further if the economy weakens. The lower rates are, the cheaper borrowing will be, giving homebuyers more options at their disposal.

The other aspect is that households are saving like never before. It is estimated that Canadian households are sitting on approximately $200 billion worth of savings. They are putting a record amount of money aside since they cannot spend their hard-earned loonies and toonies on restaurants, vacations, or retail. This translates into more capital that can be allocated towards homebuying.

Finally, according to Statistics Canada, Edmonton’s 2020 population growth was 1.8 per cent, lifting the provincial capital’s total population to just below 1.5 million. Since housing supplies are tightening, the higher demand should force upward pressure on prices.

For homebuyers, there might perhaps be no better time to buy a property in Edmonton than today. The housing sector is recovering, but prices are not serving as a barrier to entry. They remain competitive for new entrants. The words of Tom Shearer, the chair of the Realtors Association of Edmonton, should instill confidence in consumers, telling Global News:

“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. I don’t foresee a major spike or a major drop happening.

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