The Q4 2023 Edmonton Housing Market Update and 2024 Forecast

Are you looking for a real estate market prediction for this year? Here is what Shaun Cathcart, the Director and Senior Economist, Housing Data and Market Analysis at the Canadian Real Estate Association, had to say at this year’s Edmonton Real Estate Forecast.

(Summary provided by the Realtor’s Association of Edmonton)

In the reported forecast from CREA, the expectation of growth for Canadian home sales in 2024 and 2025 is 10.4% and 7.3% respectively. This significant jump is attributed to the expected interest rate decreases and actual figures at the end of the year that could be higher. Alberta, deemed an outlier in respect to its potential to break records for home sales in the next couple years, is forecasted to experience an 11% increase in sales in 2024, and an 8.1% increase in 2025. Regarding home prices, predictions are conservative for now, estimating 2.3% in 2024 and 4% in 2025 . Overall in Canada the price growth is estimated at 6.3% in 2024. Meanwhile Alberta, which is currently more affordable in comparison to other markets, will increase in price by 6.3% in 2024, and 8.8% in 2025, influenced by high demand and sufficient inventory. The leading factor that could impact CREA’s modeling for future prices is a larger increase in expected sales.

What is fueling the acceleration of the housing market? Here is what Catherine Rothrock, Chief Economist at the Alberta Treasury Board had to say.

(Summary provided by the Realtor’s Association of Edmonton)

Alberta’s economic landscape is closely tied to oil prices. Recent trends indicate a decrease from previous estimates, raising concerns about demand amidst geopolitical tensions. On a positive note, progress on the Trans Mountain expansion is anticipated, promising benefits for the province’s oil producers. Alberta has marked a significant milestone by surpassing 4 million barrels per day in oil production, ranking among the top global producers. The weaker Canadian dollar, especially in the first half, proves advantageous for Alberta’s revenues and exports.

The housing market and income gains have been pillars of support for Alberta’s economy. A strong labor market and an upswing in the housing market during the second half of the previous year have contributed to overall economic activity. Notably, income gains, particularly in nominal GDP, have seen substantial growth. Positive signs emerge in business investment, with major projects like the $6.5 billion net zero ethylene project by Dow. Efforts toward economic diversification beyond oil and gas extraction are gaining momentum.

A surge in immigration, including non-permanent residents, temporary foreign workers, and students, has been a defining trend. Labor market dynamics have shifted from concerns about shortages to high job vacancies and robust performance. Consumer spending, particularly on goods, has slowed, reflecting concerns about finances and job prospects. Inflation, projected to be around 3% this year, is expected to taper slightly in the following year.
 

From this Realtor’s Perspective

Multiple offers are common right now, although not close to what we saw when interest rates were between 1 and 2%. But still, for a market that was in free fall up until 2020, our sales and prices look fantastic. Edmonton remains in a seller’s market. Sellers can capture a bit more money in a bit less time. It is a good time to sell and looks to be that way for the foreseeable future. Apartment style condos are the only asset class not selling well. Granted, there is a slight increase in more condos selling than they have in the past five years, however, prices are still declining. There is a blurb towards the bottom of this report as to why the condo market refuses to recover.

The Details

Total residential sales in Q4 of 2023 outpaced the total number of residential units sold in Q4 2022 by 19% or 888 units. Total residential sales year over year dropped from 24,644 to 22,662 or by 8%. Remember, 2022 and 2021 saw record sales, as interest rates were as low as they have ever been in Canadian history. A decrease in the number of total sales and a decrease in asset prices was inevitable. Thankfully, Edmonton did not see the price swings observed in larger Canadian markets, although we did see a huge jump in sales and our sales remain relatively high in comparison to pre-pandemic years.  In December, the average sale price for a detached single-family home in Edmonton was $489,392. Down approximately $4,000 from September, but up almost $20,000 from this time last year from $471,700 to $489,382. December 2023 was a hot month country wide. Year over year the average price of a detached single-family home fell by almost $8,000, from $500,060 to $492,283.

New listings to market slightly outpace what we saw in Q4 of 2022, but only by 110 listings. Edmonton sales to new listing ratio continues to climb. December showed a hot sellers’ market at 82%, while year over year we’ve seen a 1% increase from 64-65%, signalling the market from sellers is marginally better than the previous year.

As predicted, townhomes and apartments are making up a greater number of their proportion of listings sold in 2023. Typically, these two home types make up 22-26% of the market sales. This year, however, apartments and condos now make up 30% of total residential sales, while detached home sales fall to 59% of the market. Townhome values continue to gradually rise, while apartment-style condo prices continue to decline.

Supply and Demand

Most of the people I have worked with as of late have been interprovincial migrants, those divesting themselves of investment properties, and those purchasing them. Selling and purchasing primary residences for locals is daunting, as most of us are locked into sub 3.5% mortgages which makes current rates and housing prices unappealing.

Investment Properties

If you have been holding investment properties for the last few years, hoping the market changes for the better, this year is likely going to be a lucrative year to divest from them. Watching the resale market for townhomes and suited properties, not many last more than a few days on the market, and are selling for 5-10% greater than they have in previous years.

Strategies for Sale

Buyers, local or not, will always gravitate and pay a premium for a clean, well-maintained property. If possible, investing a little extra on deferred maintenance items before listing your home will go a long way. Taking care of rotting shingles, or dated flooring and fixtures, will positively impact the number of people looking at your home and how much they are willing to pay. 

Why Do Apartment Style Condo Values Continue to Fall?

We continue to build them. The market has more units than buyers need. We continue to build more and this drives prices down. Another factor is aging buildings. We have a significant number of old buildings in disrepair. Condo boards keep condo fees artificially low instead of building a reserve fund, and then when capital projects come up (roof, building envelope, boiler system, plumbing, balconies) there is no money to pay for these maintenance issues. Cash calls become mandatory and property value decreases.

The rising cost of insurance causes condo fees to increase. Aging buildings do not help either, the more neglected the building maintenance is, the more insurance claims there are, the higher the condo fee, and the subsequent lower property values.

Lastly, lack of legislation and enforcement. When dealing with condo boards, property managers, and city officials, it feels like the Wild West. City officials encourage office building conversions and reduce red tape to build more units. Office conversions have a horrible track record of being flipped by the lowest bidder, leaving owners upside down and drowning in special assessments for repairs within a few short years. More units in our market make for lower property values. The province does try to encourage property managers and boards to run their buildings on budget with guidelines and legislation, but there is little to no enforcement. Corners are often cut, and property values suffer.

On a Personal Note

I landed a platinum sales award this year from Royal Lepage. It means I sold 25ish homes worth X number of dollars, and places me within the top 10% of realtors nationally, giving me access to a larger performing referral network.  Our family is grateful. Thank you for your trust.

We have become a bit of a hockey family. When I’m not on the ice with our oldest son, I’m taking coaching and discover hockey classes or playing. I think I was on the ice 10 times last week. This was an intimidating venture; I hadn’t been in hockey equipment in 30 years. With a little extra push from my partner to find the courage to try, our family has discovered a fun and inclusive community in which I spend most of my free time. For anyone looking to lace them up for the first time, or the first time in a long time, I would suggest taking a look at the Discover Hockey Program in Collaboration with the City of Edmonton.

Thank you for taking the time to get this far, if you or someone you know is buying or selling this year, please, don’t be a stranger.