Edmonton boasts a vibrant urban area with almost 1.2 million people. Current Edmonton housing trends make it difficult for homeowners and experts to predict when the best time to make a purchase is.
Edmonton has avoided an economic meltdown while other provinces were trying to stay afloat. Edmonton has survived the storm because of its largely diverse economy says KANETIX. Real estate investors and Albertans are trying to keep a close eye on the housing market to decide when the best time to take advantage of housing prices is. Although Albertans are trying to predict housing market trends, it is proving to be a difficult task, more so than other Canadian cities.
Real estate is often viewed as a lagging indicator of the economy, and in Edmonton, this is no different. The economy in Edmonton is rather diverse, and it is largely based on oil and gas, petrochemicals, trade, commerce, and other industries. In fact, several thousand new jobs have been created within the last year in the Edmonton area. It is important to note, however, that while other areas of Canada may have an economy that is improving after the recession, the economy in Edmonton did not take a serious hit during this time. Therefore, while there is a strong economy in place, there is technically no economic recovery that is driving housing prices.
Unlike other Canadian provinces, Edmonton did not benefit from low interest rates. In fact, across Canada, interest rates are considerably lower now than they were in the mid-1980s and 1990s. Consider that the 25-year mortgage during the early to mid-1990s was in the double digits. Even in December 2000, the interest rate for a 25-year mortgage was 7.81 per cent. In December 2012, the same loan program has a 4.15 per cent interest rate. When interest rates are lower, homeowners may also be more inclined to refinance their property and stay in their home. However, homebuyers may also be able to afford to buy larger and more expensive homes, making it more affordable for renters to move into homeownership.
The Edmonton metropolitan area experienced a large increase in single family starts in 2012 and early 2013. In the metropolitan area, the number of new starts in December 2012 was about 12 per cent higher than the number in December 2011. Inside the city limits, the increase for this same time period was close to 20 per cent. In addition, in December 2012, the number of new construction homes available for sale on the market decreased slightly over the available inventory for December of the prior year. This reflects an increase in the demand for newly built homes in the area.
In December 2012, the average price of a single, detached home in Edmonton was close to $543,000. In December 2011, this same average price was $519,000. Reports indicate there is a narrowing gap between the average and median sales price of homes in the local area. As a result, more lower priced homes are being sold. While home prices are increasing overall in the local area, the demand for lower priced homes may be higher than the demand for higher priced homes.
A look at trends in the Edmonton resale market indicates strong demand for resale homes. During the last quarter of 2012, sales of these homes edged down slightly, but there was a one-per cent increase in the number of resale units sold between December 2011 and December 2012. This may be driven by the robust economy as well as positive net migration into the area during this period of time. While the number of resale units sold increased slightly, the number of new listings of resale homes actually decreased (between the fourth quarter of 2011 and the fourth quarter of 2012, the number of listings dropped by approximately four per cent). However, the average sales price of resale residential homes moved up by about three per cent during this period of time.
The housing market in Edmonton appears to be promising for 2013. In fact, Huffington Post Canada reports that according to the Canada Real Estate Association, “Edmonton was the only large urban market in Canada that surpassed last year’s numbers.”
Trying to time the real estate market can be stressful, and it is hardly done with certainty. Given the signs that the housing prices may continue to rise, sellers may benefit from holding onto their property for a slightly longer period of time to take advantage of rising real estate prices. Those who are interested in buying real estate in Edmonton, however, may want to consider the benefits associated with acting quickly.
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- mls-E3346378-215_54_ST_SW_Edmonton_Alberta (yegrealestate.wordpress.com)
- Market Stability Evident in Mid-year Housing Review (yegrealestate.wordpress.com)
- mls-E3348208-10859_92_ST_Edmonton_Alberta (yegrealestate.wordpress.com)
- New home prices up in June: StatsCan (globalnews.ca)
- Canada’s invisible housing correction (brighterlife.ca)