Buyers are steadily adapting to the new normal
Stricter mortgage stress test rules along with rising interest rates have taken approximately 20% off the purchasing power of prospective home buyers in Edmonton, which has led to sales in the market’s multi-family home segment increasing by a miniscule 1% quarter-over-quarter in Q2 2018.
This according to the latest findings by market research and advisory firm Urban Analytics, which added that the townhouse market priced under $350,000 has seen increased popularity recently.
“The loss in buying power resulting from the mortgage stress test caused some prospective detached home purchasers to look for a new townhome,” UA senior market analyst Annalise Boytinck said.
“Townhomes are an appealing option for price-sensitive young family purchasers or downsizers seeking more living space than most condominiums offer. Townhomes were the strongest performing product in Edmonton in Q2-2018 with a 19% increase in sales. This was also the only sector to experience an increase in sales in Q2 compared to first quarter.”
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Sales activity in Edmonton’s wood frame condo segment shrunk by 7% quarter-over-quarter and by 19% from Q2 2017. Meanwhile, sales of concrete condos fell by 36% on a quarterly basis and by 42% annually.
UA also pointed at the “lack of any significant project launches combined with a limited number of completed move-in ready units in the downtown core” as contributing factors to the Q2 2018 sales slowdown.
However, “UA anticipates sales activity will improve as the year proceeds and buyers and developers adapt their expectations for the new normal in Edmonton’s new multi-family home market,” Boytinck concluded.
