A busy spring is underway in the city
Familiar affordability struggles in pricey markets like Toronto and Vancouver have seen many homebuyers turn their attention to Alberta in recent years – and that’s a trend that shows little sign of slowing in 2024.
Even with little sign of a big imminent drop in interest rates, sales of residential units in the Greater Edmonton Area (GEA) surged by 25.6% in March compared with the previous month, and 35.7% on a year-over-year basis.
The total of 2,467 sales that month marked a clear sign that the spring homebuying market had begun, the Realtors Association of Edmonton noted – with prices also continuing to tick upwards.
The average price of a residential property in the region was $420,959 for the month, up 3.4% from February and 8% compared with a year prior.
That’s contributing to a busy market for mortgage brokers based in the city, who are also fielding calls away from the purchase side.
“We’re seeing a lot of renewals coming due,” Collin Bruce (pictured top), Edmonton-based broker and franchise owner with Dominion Lending Centres Mortgage Mentors, told Canadian Mortgage Professional. “We’re also seeing a lot of people who are feeling a bit of payment shock with higher interest rates.
“A couple of years ago, it was, ‘Hey, what’s the lowest rate? What can you renew me into?’ [Now] there’s a lot more, ‘Hey, can we look at consolidating debt or extending amortizations out to make things more affordable?’ So we’re seeing a lot more of that, that’s for sure.”
Rising property values are also giving homeowners access to equity for refinances, Bruce added, “which we haven’t had as much in recent years here in Edmonton.”
A new RBC poll suggests Canadians are increasingly confident about entering the housing market despite rising inflation, with 60% see owning a home as a good investment, up from 53% last year.https://t.co/Gn1OIKNiJb#mortgageindustry #mortgagetrends #homeownership #inflation
— Canadian Mortgage Professional Magazine (@CMPmagazine) April 25, 2024
Affordability challenges creeping up in Edmonton market
Still, one downside to the current market is that while it remains much more reasonably priced than Canada’s most expensive cities, price appreciation is beginning to push homeownership out of reach for some first-time buyers.
That’s been compounded by a familiar challenge: lack of supply. Realtors Association of Edmonton’s 2024 board chair Melanie Boles noted earlier in April that while listings had increased by over 30% during the previous month, overall inventory remained 15% lower than in 2023.
“It’s starting to get unaffordable [for first-time buyers],” Bruce said. “The nice thing is interest rates have come down a bit, so the stress test rate has decreased.
“But we’re seeing a lot of first-time homebuyers [who] instead of going for that single-family home, maybe right now they’re buying a condo or duplex or something so at least they’re in the market and then down the road, they can always upgrade.”
Calgary trends suggest hectic times ahead for Edmonton market
Calgary drew headlines as one of Canada’s hottest housing markets last year, with that strong performance continuing into the early months of 2024.
March sales were up 10% compared with the same month in 2023, to 2,664 units – a result the city’s real estate board said was “much higher” than long-term trends. The months of available supply in the city dropped below one month, with new listings below the level typically viewed for the month.
Ann-Marie Lurie, the Calgary Real Estate Board (CREB) chief economist, said 2006 was the last time conditions for the month had been so tight as sellers continued to enjoy the upper hand in the city’s housing market.
That could have big implications for Edmonton, according to Bruce. “Usually, Edmonton is about six months behind the Calgary housing market and real estate market and we’re seeing right now Calgary is multiple offers, unconditional offers,” he said. “So I think we’re probably in store for a busy summer and fall here in Edmonton.
“Usually, Calgary housing prices are around 10% higher than Edmonton – but right now, they’re around 26% higher. So because there’s been so many people that have moved to Calgary first and have bought, now we’re starting to see a trend of more and more people moving up to Edmonton because it’s more affordable here.”
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