Metro Edmonton
Real Estate Trends and Price Forecast
HIGHLIGHTS
Home values in Metro Edmonton have been flat. This is in contrast to Calgary, which has the hottest market in Canada.
Compared to recent years, Edmonton’s home purchase demand is high. Even more robust than Calgary’s.
A multi-factor analysis identifies Metro Edmonton as a moderate risk real estate market. Keep reading to find out why.
Budgets for home purchases are under strain due to the higher mortgage rates.
This article covers:
What is the current state of the property market?
Where are prices headed?
Should investors sell?
Is this a good time to buy?
1. What is the current state of the property market?
Home Price Overview
Metro Edmonton has a population of roughly 1.2 million and was ranked 76th among the best 100 cities in the world in 2021. However, it hasn’t made the top 100 cities since. Calgary, Toronto, Montreal, Ottawa, and Vancouver are on the top 100 list.
The pandemic turbocharged the Metro Edmonton housing market, driving up prices at a remarkable pace and causing aspiring homeowners to be pushed further away from their dreams. And just when they thought things couldn't get trickier, rising interest rates now force even more potential buyers to sit on the sidelines.
Yes, prices are rising again. This is partly due to more buyers but more so because of fewer sellers.
For those contemplating selling their homes, time might be of the essence. While prices have been rising this year, the data contains mixed messages, and the recovery might stall in autumn. Current conditions are leaving everyone uncertain about when markets will stabilise.
On the other hand, prospective homebuyers might consider waiting for a lighter mortgage burden. Mortgage rates are relatively high. Unfortunately, buyers will need patience because rates, even though they have begun to drop, are anticipated to remain higher than average until 2025.
The market fundamentals are riddled with risk and uncertainty as consumer sentiment has taken a substantial hit. But remember, consumer sentiment can be a volatile and unreliable predictor of future price trends.
Metro Edmonton Detached House Prices
Edmonton’s house prices are exploring uncharted territory but may be losing steam.
We believe politicians are hoping to guide the market toward a typical annual real estate cycle with price growth in the range of 1 to 3% annually – in line with income growth.
Edmonton’s house prices stand out against the declining trend in other major Canadian cities like Vancouver and Toronto. While several factors contribute to this disparity, three key elements play a significant role:
1. Supply and Demand Imbalance:
Limited Supply: Edmonton has experienced fewer active listings than other cities, leading to a shortage of available supply. On the other hand, Edmonton has record-high home construction. As these homes are completed, they could ease the supply shortage.
Steady Demand: Despite economic fluctuations, Edmonton attracts new residents due to its relatively affordable housing and job opportunities. This consistent demand puts further pressure on the already constrained supply.
2. Investor Activity:
Increased Investment: Assuming that the Canadian average of 20-30% of investor purchases holds true in Edmonton. These investors, attracted by higher rental yields compared to other cities, see Edmonton as a lucrative market. A rental in Edmonton generates twice the rental income per dollar spent on the home compared to Vancouver. Investor buying activity further reduces available housing for owner-occupiers and increases prices.
So, while other cities experience price corrections due to various factors, Edmonton’s housing market benefits from:
Solid demand from new residents arriving from other provinces and abroad.
Limited supply, creating competition and pushing prices up.
Higher rental yields compared to other markets attract investors.
However, it's important to note that:
The market might eventually face correction if supply significantly increases or demand weakens.
Affordability for residents could become a concern if prices continue to rise unchecked.
Overall, Edmonton’s housing market presents a unique picture within the Canadian context. While external factors can influence it, understanding the local supply-demand dynamics, investor activity, and price comparisons is crucial for deciphering its trajectory.
Metro Edmonton New Construction Home Prices
Prices of new homes have shot upward since May 2023. Based on economic fundamentals, they might hit a ceiling soon.
Does this concern you? Read the Pros and Cons of Buying Pre-sale Homes
There is a record number of homes under construction.
Market Risk
Based on Mortgage Sandbox Analysis, Edmonton is at moderate risk of a significant market correction.
Our platform matches you with local, pre-screened, values-aligned Realtors.
Shared values make better working relationships.
Metro Edmonton Condo Apartment Prices
Metro Edmonton condo apartment values are rising at a brisk pace. A December 2022 CBC news report said that Alberta has attracted the attention of many Ontario real estate speculative investors. Out-of-province investors are attracted by lower price-to-rent ratios and landlord-friendly tenancy laws.
With more people working-from-home, we expect developers will begin marketing larger (i.e., 2 and 3 bedrooms) apartments to meet buyer preferences. As the supply of more generous floor plans comes to the market, it may depress the values for small floor plan condos.
At Mortgage Sandbox, we would like developers to build 4 and 5 bedroom condos because:
Not everyone can afford to buy a house for their family.
Canadians who work from home need more room to segregate workspace from living space.
Many Canadians with longer working hours find it challenging to stay on top of necessary house upkeep (i.e., mowing lawns, clearing eaves, shovelling sidewalks).
Many people prefer to live in higher-density neighbourhoods with all the essential amenities within walking distance.
Metro Edmonton Townhouse Prices
Very affordable for first-time homebuyers
Edmonton’s home prices are very affordable. A first-time homebuyer household earning $94,000 (the median Metro Edmonton household before-tax income) can get a $380,000 mortgage. That’s more than enough for a first-time homebuyer to buy a condo, but buying a house is now out of reach for at least 1 in 3 Edmontonians.
What about the rest of the West?
Read the Vancouver Home Price Forecast, Okanagan Valley Home Price Forecast and Calgary Home Price Forecast.
2. Where are prices headed?
There is a lot of uncertainty in the forecasts for 2024, 2025 and 2026. Many of the forecasters we've surveyed have different expectations for:
Will the federal government achieve its aggressive immigration targets?
There is no consensus among economists.
How do we arrive at our forecast range? Check out our full assessment of the five factors that drive these forecasts. These five forces help explain why several forecasters are anticipating price drops.
Need a Realtor?
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At Mortgage Sandbox, we provide a price range rather than attempting a single prediction because many real estate risks can impact prices. Risks are events that may or may not happen. As a result, we review several forecasts from leading lenders and real estate firms, and we then present the most optimistic estimates, the most pessimistic prediction, and the average forecast. Want to learn more about real estate risk? We've written a comprehensive report explaining the uncertainty level in the Canadian real estate market.
Our forecast inputs:
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3. Should Edmonton investors sell?
From a seller’s perspective, the Edmonton market provides sellers with a negotiating advantage, and the annual real estate cycle usually favours sellers in the first half of the year.
Sellers should always consult a mortgage broker early to prioritize flexible loan conditions and reduce the risk of mortgage cancellation penalties. Find out more about the benefits of a mortgage broker.
Planning to Sell? Check out our Complete Home Seller’s Guide.
Fixed or Variable rate mortgage?
Find out where mortgage rates are headed before you start to negotiate.
4. Is this a good time to buy a home in Edmonton?
It’s hard to say. Prices keep rising, so there is a risk of being priced out of the market. At the same time, there is a risk that the Edmonton market could weaken due to the impact of the rest of Canada. It's almost impossible to time the market. If you are buying your forever home and don't plan to sell for ten years, then the risks of buying now are lower.
Regardless, the annual real estate cycle usually favours buyers in late summer.
If you are considering buying, drive a hard bargain and pay as close to market value as possible. Also, don't bite off more than you can chew when it comes to financing.
Are you planning to Buy? Check out our Complete Home Buyer’s Guide so we can walk you through the end-to-end process and get you ready to buy your new home!
How much home can you afford?
Our mortgage calculator takes uses up-to-date mortgage rates and calculates the price of a home you could afford.
Here are some recent headlines you might be interested in:
Calgary home sales decline 10% in July from last year, prices rise | Global News
Rising home prices is top concern for buyers | Calgary Herald
Inflation 'eroding' the ability of Albertans to buy a home: RBC poll | CTV News
Price of Calgary townhomes growing fastest in Canada | Global News
Calgary sees record home sales as supply returns to market: real estate board | CTV News
National home sales in April up 10% compared with year ago, but monthly sales slow | City News
Home sales and new home construction both drop in April | CBC News
CMHC reports annual pace of housing starts in April down 1% from March | City News
Hesitant home buyers tap the brakes on April sales drive | The Globe and Mail
Majority of aspiring homeowners awaiting rate cuts before buying | BMO
GTA home sales down in April but new listings surge: board | CP24
New condo sales in the Toronto area hit low not seen since financial crisis | CP24
Active real estate listings rise in Metro Vancouver | CTV News
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