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!

Edmonton housing market to remain balanced in 2021, prices to increase 2%

Edmonton real estate is likely to continue as a balanced market in 2021, with demand being segmented. Buyers are looking for single-family homes and yards, which includes duplex and row-style townhomes. The average sales price in Edmonton increased by 1% to $364,820 in 2020 (Jan. 1 – Oct. 31), compared to $361,152 in 2019 (Jan. 1 – Dec. 31). The RE/MAX Outlook for Edmonton real estate in 2021 is an increase of 2% in average price to approximately $372,116.40.

Who’s Driving Demand for Edmonton Real Estate?

Move-up buyers are currently driving demand in the Edmonton real estate market, which is expected to continue into 2021. The most popular property type among move-up buyers in Edmonton are single-detached homes and townhouses.

First-time homebuyers in Edmonton are typically single homebuyers. These buyers are not looking at one property type specifically and are buying across all property types. The average price spent on a property by a first-time homebuyer is approximately $300,000.It is expected to be more difficult to enter the market as a first-time homebuyer in 2021, as there is expected to be less inventory, making it tough for buyers to find the right property.

Move-up buyers in the Edmonton housing market are typically young couples. There has been very little hesitation in move-up buyers when it comes to entering the market, as many are trying to take advantage of the low interest rates and low property values. Move-up buyers in Edmonton have changed the criteria on what they look for in a home due to COVID-19. Many move-up buyers are looking for yards, more space, separate offices and finished basements.

The condominium market in Edmonton is most popular with single homebuyers and young couples. The average price for a condo in Edmonton is $222,181. Apartment-style condos are currently in oversupply, which means prices are likely to drop. Currently in Edmonton, many examples of large assessments have been seen, mostly due to insurance costs escalating dramatically for condo corporations, which has resulted in higher condo-fees.

Edmonton’s luxury market is currently driven by move-up buyers with the average starting price for a luxury home in Edmonton being $1,000,000. At this price point, many buyers are getting great value, with the majority of the homes being newer infill or older beautifully renovated homes with large yards in mature areas, or huge lots, often with ravine or private nature backing, in new development areas.

Edmonton’s Hottest Neighbourhoods

Edmonton’s top-selling neighbourhoods in 2020 were Anthony Henday Zone (West), North Central Zone and Southwest Zone. These neighbourhoods are expected to continue as the most popular neighbourhoods moving into 2021.

Edmonton New-Home Construction

Edmonton’s new-home construction sales are strong for single-family in both the suburbs and infill. Apartment condos are in oversupply. Most buyers are looking for a new or “like new” home across all price ranges. Based on the current demand, single-family, duplex/rowhouse and townhomes with yards are a little undersupplied. One new-home construction trend that has emerged throughout 2020 has been the need for home office space options, which is directly related to COVID-19.

Canadian Housing Market in 2021

Canadians are on the move. RE/MAX isn’t calling this an “exodus,” but the re-location trend across the Canadian housing market is real, and it’s just one focus of the RE/MAX 2021 Housing Market Outlook Report. RE/MAX Canada anticipates healthy housing price growth at the national level, with move-up and move-over buyers continuing to drive activity in many regions across the Canadian housing market. An ongoing and widespread housing supply shortage is likely to continue, presenting challenges for homebuyers and putting upward pressure on prices.

Due to these factors, the 2021 RE/MAX 2021 outlook for average residential prices is an estimate of +4% to +6% nation-wide. Here’s the regional break-down:

Additional report findings include:

• 35% of RE/MAX brokers indicate that “move-over” buyers from other cities and provinces will continue to spark market activity in 2021
• 45% of RE/MAX brokers indicate that move-up buyers will likely be a primary driver of the housing market demand in 2021
• Half of Canadians (53%) are confident that Canada’s housing markets will remain steady in 2021
• 52% of Canadians believe real estate will remain one of the best investment options in 2021

“Despite the tragic impacts of the pandemic, our optimism in the strength of Canada’s housing market has always remained,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “While we’ve seen a significant shift in buyer preferences this year, we believe factors such as the supply issue, pent-up demand and historically lower interest rates will continue to fuel activity in 2021.”