February 26, 2024

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Edmonton is shifting back to normal pace for real estate

Single-family home prices are expected to fall in 2023 from 2022's record level.

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Edmonton’s resale real estate market is returning to normalcy following the frenzied pace of record sales and prices seen in late 2021 and early 2022.

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As noted in the recent forecast by the Realtors Association of Edmonton, the market is expected to look more like pre-pandemic conditions.

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“Compared with long-term trends, the COVID years are anomalies,” RAE’s chair Melanie Boles noted in a recent statement.

Still, local realtors point out that the return to normal will be different from the market before the pandemic.

“What differentiates it from pre-pandemic times is we’re not ‘hurtin’ Albertans’ like we were back then,” says Tom Shearer, broker/owner of Royal LePage Noralta Real Estate.

Indeed, the economy is in much better shape than it was four years ago when Alberta was only in recovery from a multi-year energy industry slump.

According to a recent forecast from ATB Financial, Alberta’s gross domestic product (GDP) is expected to grow by 2.8 per cent in 2023, driven by strong migration and a relatively steady energy sector.

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“These conditions mean our market fares better than other parts of the country where there are major concerns about economic growth,” Shearer adds.

Still, RAE forecasts prices across all segments will fall, year over year, by 2023’s end with the steepest decline in single-family detached homes, also the city’s largest resale segment.

It predicts the average single-family home price will drop to $486,000 by 2023’s close from $500,480 at 2022’s close — which was a record for the Edmonton market.

Apartment condominiums are expected to see the smallest price decline — about one per cent to $195,000.

The upside to price declines is the market becomes all the more affordable with one caveat: borrowing costs will remain higher than even pre-pandemic times.

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Even in this respect, however, buyers and sellers should soon adjust to the new normal for borrowing, says realtor Rob DeJong with Schmidt Realty Group Inc. in Edmonton.

“If this is it for rate hikes, a lot of buyers’ perspectives will shift from a holding pattern to taking action.”

Buyer trends should change, too, with greater focus on semi-detached, row and condominiums in 2023, DeJong adds.

Like condominiums, semi-detached and townhomes are forecast to see price declines of 2.4 and 1.4 per cent respectively in 2023. In turn, the forecast average price of $365,000 for a semi-detached home and $254,00 for a townhome would be well within reach for first-time buyers even amid higher borrowing costs, Shearer says.

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“The entry-level marketplace will continue to see strong activity because first and foremost it’s affordable.”

The buyers likely to see the biggest adjustment are homeowners looking to move-up buy.

“They likely need to adjust expectations regarding the home they want to move up to,” DeJong says. Additionally, they need to shift expectations regarding the price they can receive for their current home, Shearer adds.

Still, Edmonton’s market should not see the price declines than larger markets, a recent report by Royal LePage predicts.

The Greater Toronto Area average price, for example, is expected to decrease the most in Canada by two per cent.
Even then, its average price will remain above $1 million.

In contrast, the report projects Edmonton’s average price could grow by one per cent, driven by strong economic conditions and low inventory.

Although RAE forecasts price declines, unlike Royal LePage, it points out Edmonton’s market will offer a greater balance between buyers and sellers, providing relative price stability and certainty.

“Because prices aren’t expected to slide much this year, at this point it doesn’t seem that advantageous for buyers to wait,” DeJong says.

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