The city's affordability has caught the eye of many out-of-province buyers of late
High interest rates and home prices are continuing to pose affordability challenges for many homebuyers across major Canadian markets in 2023 – and with that crisis unlikely to ease anytime soon, could Edmonton be poised to benefit from an influx of new buyers?
Alberta’s capital city continues to see prices hover at levels well below those of Canada’s most expensive markets, with total residential average prices sitting at $396,550 in October – barely changed on either a yearly or month-over-month basis.
The price of a detached home in the city averages at $486,751, according to Edmonton’s real estate association, up just 1.8% compared with the same time in 2022 and lower than September’s figure by 1.4%.
That’s a sharp contrast to other major urban markets – and while Calgary has emerged in recent years as a prime choice for buyers who’ve seen affordability squeezed in pricier cities such as Toronto and Vancouver, Edmonton is a solid option for certain buyer cohorts, according to an Alberta-based broker.
Max Singh (pictured top) of TMG The Mortgage Group in Calgary told Canadian Mortgage Professional that many younger Canadians, new immigrants and first-time buyers who might not have ample savings were beginning to view Edmonton as an increasingly viable market because of its high affordability.
“These folks, due to the inventory concerns here especially in Calgary are having a real challenge on locating properties which would better their situation from where they’re coming in from,” he said.
Some brokers and realtors in Calgary have had an “epiphany” for those borrowers weighing up a move to the city but still find their budgets squeezed by high homebuying costs, Singh said. “In Edmonton, you can live in quite a nice neighbourhood for around the $350,000 mark,” he explained.
“So the conversation now has shifted to, ‘Let’s partner up with real estate individuals in Edmonton and try to [direct] these individuals there,’ because they’re getting such a great product in comparison to the purchase in Calgary.”
The Canadian federal government plans to allocate approximately $20.8 billion over six years to incentivize the development of housing supply and address affordability challenges.
— Canadian Mortgage Professional Magazine (@CMPmagazine) November 22, 2023
Read more: https://t.co/D9lgDIdqgl#mortgageindustry #housingmarket #housingsupply #affordability
Buyers getting bang for buck in Edmonton market
While buyers on a certain budget might be able to afford a starter condo with a family in Calgary, the same amount could land a backyard and front yard in Edmonton, Singh said. Rather than siphoning buyers away from the Calgary market, he believes the situation has served to bring even more options in Alberta to out-of-province Canadians.
“Luckily in Alberta, we have those two cities in very different circumstances: Edmonton’s market is rather stagnant, or hasn’t been posting the massive growth that Calgary has,” he said. “So [that’s] an interesting phenomenon that’s transpiring.
Still, with low inventory prevailing in both the Edmonton and Calgary markets, the former is expected to see prices tick upwards at a decent clip in the final quarter of the year, according to the latest housing market forecast by Royal LePage.
The company said year-over-year price growth in Q4 is anticipated to hit 3% as the real estate market continues to gather steam – and while overall price appreciation in the Edmonton market was mild in October, two property types in particular saw sizeable price upswings.
The average cost of a semi-detached home in the city was $385,895 last month, up by 4.2% compared with the same time last year and spiking by a surprising 9% over September’s average.
Apartments and condos, meanwhile, also saw prices surge. Their average price of $203,663 in October was up 11.8% compared with the previous month and 8.9% over 12 months prior.
Competition in Calgary heating up
Nonetheless, that growth remains milder than in Calgary. The unadjusted benchmark price of an apartment or condo last month in Calgary was $316,600, up 16% on a year-over-year basis, while semi-detached homes saw their average price balloon by 13%, to $628,700.
Singh said the continuing supply shortage in the Calgary market meant many buyers were finding their ideal property hard to come by – with that price growth also proving problematic.
“The affordable, new, well-maintained and well-developed [home] seems to be a unicorn at present,” he said. “Right now, it’s a scramble and dash for whatever you can get your hands on: be it a condo, a townhouse, single-family detached, there’s a lineup at present.
“People are still happy, they’re getting an accepted offer, but there’s certainly a remorse factor: ‘Look at the pricing compared to what I’m getting.’”
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
