It has been several months since the coronavirus pandemic shut down the Canadian economy from coast to coast. Although the nation is in the middle of a second wave of the highly infectious respiratory illness, the country has been opening up, allowing the Great White North to initiate an economic rebound and get things back on track. All the data point to a gradual revival of the tenth-largest economy in the world.
The Canadian real estate market has been one of the drivers of the nation’s economic recovery, thanks to the hard work, diligence, and adaptation of real estate agents since the beginning of the public health crisis. Historically low interest rates have also helped to drive the strong trends in the buying and selling of properties, whether in the hottest urban centres or the prairies.
Despite having one of the most sought-after housing markets in the country, the Edmonton real estate market has been able to strike the right balance for both buyers and sellers. Below, we dive deeper into the current trends within Canada’s most affordable urban real estate market and share our projections for Alberta’s capital city as we shift into 2021.
Edmonton Is Now the Country’s Most Affordable Urban Real Estate Market!
October was another decent month for the Edmonton real estate market. According to the REALTORS® Association of Edmonton, total residential unit sales surged 26.34 per cent last month from the same time a year ago. All residential average prices advanced at an annualised rate of 7.97 per cent in October to $382,060.
Moreover, overall inventory in the Edmonton CMA tumbled 12.10 per cent from October of last year, while the number of new residential listings rose 14.75 per cent year-over-year last month.
“The Edmonton market has seen an increase in year-over-year unit sales, compared to a slight decrease in month-to-month sales,” said REALTORS® Association of Edmonton Chair Jennifer Lucas in a news release. “There have also been more sales of single-family homes, condos and duplexes compared to October of last year, while we’ve seen stable or decreasing month over month sales in all markets, which is typical for this time of year. We’re pleased to see year-over-year increases in pricing across all markets, with single family home pricing up 5.05%, duplexes up 2.34%, and condos up 1.67%.”
This comes one month after the same organisation reported that the Edmonton housing market in 2020 has been a “pleasant surprise” for buyers and sellers. The data – month-over-month and year-over-year – has been favorable to both sides of real estate transactions. This, Lucas said in an interview with the Edmonton Journal in September, has built up enough confidence where homebuyers are prepared to delve into the market.
The reason? Interest rates have never been this low. The Bank of Canada (BoC) slashed rates to 0.25 per cent earlier this year, as well as bringing the benchmark five-year mortgage rate to below five per cent. The central bank has indicated that it has no intention of tightening monetary policy, meaning that the borrowing costs in credit markets will be cheap for another couple of years.
What’s the Deal with Property Taxes?
A key advantage in the Edmonton real estate market is that the property tax hike for homeowners in 2020 was less costly than the city’s municipal counterparts. This year, property taxes rose 2.7 per cent, compared to the 13 per cent hike in neighboring urban centre, Calgary. But how long will Edmonton be able to stay so low?
Officials debated a three per cent property tax increase, choosing to tighten the public purse instead and leave it essentially flat year-over-year.
Despite many Canadian cities bleeding revenues in the COVID-19 economic climate, elected representatives will have a hard time trying to raise taxes on a vulnerable public and risk making life more expensive. Any substantial tax hikes, from property to water, could threaten the Edmonton real estate market’s revival over the next six to 12 months.
Could 2021 Be a Breakout Year for the Edmonton Housing Market?
Edmonton continues to be one of the most livable places in Canada.
Although the Edmonton economy has diversified in recent years, the city and the broader province are still reliant upon the energy sector. That said, with the rest of the country on the road to economic recovery, it is likely that Edmonton will follow suit. The city persevered through the COVID-19 turbulence, and its real estate market has handled the volatility rather well. Currently, all signs are pointing to a breakout year for the Edmonton real estate market in 2021: the central bank is keeping interest rates at historic lows, the federal government is ready to do whatever it takes to protect the housing sector, the height of the coronavirus pandemic is likely to wane in the new year, and shrinking inventories and strengthening demand are projected to prevail within this local market!