Edmonton Real Estate Market
Bill Mah April 5, 2011 edmontonjournal.com EDMONTON - Edmonton is on the verge of another real estate boom, says real estate expert Don Campbell. Robust growth in the region’s gross domestic product and labour market will set off a chain of events over the next few months that will heat up housing again, said Campbell, president of Real Estate Investment Network and the author of the best-selling 97 Tips for Canadian Real Estate Investors. “Alberta is uniquely positioned in the world to be a stable, consistent and growing source of the four things that the world is going to need over the next decade — food, fuel, fertilizer and forestry,” Campbell said during a stop Monday in Edmonton. Jobs will attract more people to Edmonton from across Canada. That will push vacancies down and drive rents up.“The jobs are already starting and the in-migration is already beginning,” Campbell said. “Eighteen to 24 months from now we’re going to see multiple offers. We’re going to see vacancy rates down as low as 2007, we’re going to see rental increases and we’re going to see the market turn back into a seller’s market.“I’ve studied this for 19 years and I have not seen this strong of a perfect storm before.”Campbell didn’t want to forecast prices or rents, saying it would be a guess, but “you can easily see 10- to 12 per cent increases in rents. Rents will go up first and values will go up second.” His tip for homebuyers: “I suggest that you don’t wait until the frenzy is here because then you’ll be frustrated, putting in multiple offers.
Home sales plunged as interest rates continued to rise in May
On a seasonally adjusted basis, home sales slumped 8.6% from April to May, bringing the level of sales slightly below its 10-year average for the first time in 24 months. This decline also represents a third consecutive decrease, with sales down a cumulative 23.0% between February and May. The downward trend is now well established in the country as 75% of the markets have seen their number of transactions decrease during the month. We believe this market moderation should continue in the coming months as the tightening of monetary policy should push variable rates higher and make the stress test even more biting for buyers. Indeed, the stress test uses the higher of 5.25% or the contractual interest rate +2%. Until now, only customers opting for a fixed rate had to qualify with a rate of more than 5.25%. With the Bank of Canada policy rate increase expected in July, the qualification for a variable rate will also exceed 5.25%, a development that should cool the market further since over half of new mortgages are at variable rates.
According to CREA, new listings rose 4.5% in May, the first increase in three months. With the reduction in sales and the increase in new properties for sale, the number of months of inventory rose from 2.3 to 2.7 months in May, its highest level since July 2020. Based on the active-listings-to-sales ratio, market conditions loosened in almost every province during the month, but the housing market continued to be tight in the country as a whole. There are now 3 provinces out of 10 in balanced territory; B.C., Saskatchewan, and Alberta (the latter switched this month). The others continued to indicate market conditions favourable to sellers mainly due to lack of supply.
On a year-over-year basis, home sales fell 21.7% compared to the strongest month of May recorded in 2021. For the first five months of 2022, cumulative sales were down 17.8% compared to the same period in 2021.
Housing starts in Canada increased for a second month in a row by 21.SK in May to 287.3K (seasonally adjusted and annualized), the strongest print since November 2021 (at 305.9K). Starts were well above consensus calling for a 255K print in May while building permits remained high on a historical basis and housing supply continues to be tight. As interest rates rise and demand in the resale market declines, we expect housing starts to also moderate in the coming year.
The Teranet-National Bank Composite National House Price Index increased 2.0% in April compared to March and after seasonal adjustment. On a year-over-year basis, home price increased by 18.8% in April. Ten of the 11 markets in the composite index were up during the month, with Edmonton being the exception.
Canada’s Housing Supply Shortages: Estimating what is needed to solve Canada’s housing affordability crisis by 2030
Were in a housing crisis. This report looks at the overall affordability for the entire housing system in Canada. The report has taken steps to estimate how much additional housing supply is required beyond current trends to restore housing affordability by 2030.
CMHC projects that if current rates of new construction continue, the housing stock will increase to close to 19 million housing units by 2030. To restore affordability, CMHC projects Canada will need an additional 3.5 million units.
Two-thirds of the 3.5 million housing unit gap is in Ontario and British Columbia where housing markets are least affordable.
Additional supply would also be needed in Quebec, a province once considered affordable. It has seen a marked decline in affordability over the last few years. Other provinces remain largely affordable for a household with the average level of disposable income. However, challenges remain for low-income households in accessing housing that is affordable across Canada.