In part 4 of our series on the RAE Housing Forecast Seminar 2021, we drill down on the purpose of the seminar: forecasting the year ahead. A bold thing to do in light of the uncertainty we all faced last year, and the aftershocks that a global pandemic has the potential to send into 2021.
“As you can imagine, putting a forecast together for 2021 has had unique challenges,” said Realtors Association of Edmonton Chair Tom Shearer. “We have witnessed varying degrees of confidence for what 2021 has in store, and economic perspectives on what may happen next vary considerably.”
Last year many economists were forecasting a drop in year-over-year and unit sales, volumes, and prices of homes. But, Shearer says, in the majority of major markets, including ours, we saw the exact opposite happening.
“We experienced significant momentum in the last half of 2020,” said Shearer, “with many real estate professionals reporting the busiest September to December in years.”
Despite so many unknown factors playing a part in all of this, Alberta’s tendency to be resilient in the face of hardships and economic downswing could fuel recovery.
“The Edmonton region is still a desirable place to live, work, and raise a family,” Shearer said. It is a trend he expects will carry into 2021 and beyond.
PROJECTIONS FOR 2021
“Overall, we are predicting modest reduction in sales,” Shearer explained
SINGLE FAMILY DETACHED HOMES
- Average sale price is being projected to decrease by 0.8% from $429,433 to $426,000, which would not be a very significant change. 
- The number of units sold may come down a bit from 10,804 to 10,300. A possible 4.7% drop.
- Number of units listed might come down by around 0.5%
DUPLEXES
- Average sale price might have a similar decrease at 0.8% from $332,625 down to $330,000. 
- This style of home might see less of a decrease in unit sales from 2,049 to 2,000, making it a tiny 2.4% drop if accurate.
- Number of listings could decrease by 2.0%
CONDO
- The average sale price might experience a very small decrease of 1.2% potentially bringing it down from $222,573 to $220,000.
- Number of units sold in Edmonton might drop by approximately 4.6% taking it from 3,814 to 3,640.
- Available listings might come down by 2.2%
“The high degree of uncertainty has impacted our projections for 2021,” Shearer said. “lasting effects of Covid-19 pandemic will be felt across many industries, including real estate. Therefore, these numbers represent a conservative approach to the coming year.”
LOTS OF REASON TO BE OPTIMISTIC
Shearer says to keep a few things in mind to maintain that sense of reasonable optimism:
- Canada is still one of the most desirable countries in the world to move to. 
- Overall, Edmonton is one of the most affordable places in Canada to live, work, and play.
- Edmontonians earn higher-than-average incomes.
- These factors have the potential to attract both new employers and investors to the Edmonton region.
- Interest rates are at historic lows, which, according to many economists and samples from the Bank of Canada, is likely to remain in and through 2021.
“Clearly, low interest rates have been a market driver for 2020,” said Shearer. “This has increased the buying power for many consumers.”
Alberta’s energy sector has also been experiencing a bit of a transformation since the break in oil prices earlier this decade, Shearer explains, with many companies poised for a rebound.
“It is reasonable to be optimistic that as the vaccine rolls out through the year, and the restrictions are eased, economic activity will increase, impacting the energy industry positively.”
INCREASED LABOUR NEEDS = INCREASED HOUSING NEEDS
If many of the economists are right about the future of Alberta, the possibility of an increase in potential jobs and investors into our province and city would undoubtedly result in an increased demand for places to live.
“Alberta and Edmonton have great demographics,” he said. “Alberta has one of the youngest populations in Canada, and, as Lynette pointed out [in Part 3 of our series], along with being highly educated, the Edmonton region is the second youngest in Canada.”
Edmonton has the people needed to drive economic growth, which also results in a greater number of people who are in the home-buying market, he explains. Younger people are likely to transition from renting into home-ownership by purchasing a condo, but, as you slide up the age on that demographic scale, they are also likely to upgrade into single family homes from the condo market when their income increases with time, or when/if they decide to have a family. All of this creates a housing market with steady activity.
As young and older alike moved farther away from the greater Edmonton area into surrounding areas this year, those areas saw significant increases:
- Single family unit sales went up almost 10% in Sherwood park and Spruce Grove. 
- Beaumont saw a 15% increase.
- Fort Saskatchewan saw an increase by over 20%,
These increases in surrounding areas all took place while high-rise unit sales in Edmonton dropped by 24% and experienced a price drop of 6.4%.
Shearer feels this trend could signal opportunity.
“Value-conscious consumers or investors may come back to the condo market as the impacts of Covid-19 recede.”
THE ROAD AHEAD
Reflecting on the beginning of the pandemic, Shearer recalls how economists feared that people would turn their backs on the housing market, and how surprised everyone was when the housing market became the driver of economic recovery. 
Last year was a year of professional excellence for realtors in Edmonton, who stepped up to fulfill their duties to their clients in the midst of a global pandemic, and demonstrated their commitment to Edmonton’s economy and housing market by completely overhauling much of the way they did business in order to keep their clients, and themselves, safe. From embracing changing technology, to shifting into more virtual experiences by holding showings, open houses, and tours to online, Edmonton Realtors rose to the challenge.
Moving forward with that same spirit of resilience and adaptability will ensure that whatever 2021 brings, the housing market in Edmonton can endure.
“As professionals, we do well when we come together and collaborate to better serve our communities, our clients, and it all starts [with] how we show up.”
WHAT DO I THINK WE CAN EXPECT FROM THE 2021 REAL ESTATE MARKET?
So far in 2021, we have already seen a higher level of activity than what was originally forecasted. I think the Real Estate Association of Edmonton intentionally forecasted cautiously, and we can all appreciate why. There are many different factors, and no guarantees.
January was up over 36%, and February sales were up 51% compared to the same months in 2020. I think we can expect to see this level of activity continue for at least the first half of the year, while remaining steady for the remainder of 2021 as restrictions lift and the economy continues to pick up.
With much of Alberta’s population expected to be vaccinated by September, the economy should be a lot closer to returning to some level of normality in the later part of the year. While I agree with what Mr. Tal had to say in part 2 of our series about the possibility that people may divert their attention away from the buying or selling of a home, onto things like vacations and entertainment due to the pent-up demand from having to social-distance as well as most of the service industry being shut down, I can’t help but think that this shift in consumer spending could create an opportunity for those working in the service industry to finally get a chance to take advantage of those interest rates before they go back up.
I think that the Edmonton Real Estate Associations forecast was a little light on their predictions regarding single-family homes, as I believe, based on the January we’ve already had, we should expect to continue to see good activity as the weather warms.
Where I agree with their forecast, is in the condominium market. With high levels of inventory, and lower buyer demand, I think we could expect to continue to see lower than usual activity for condo sales. It will be more important than ever to price aggressively, and make sure you show well to prospective buyers.
I hope you have found the information in our series helpful, and it has brought some clarity to your understanding of what’s going on out there, as well as where we are heading over the coming months. If you have any questions, please don’t hesitate to reach out. I’m just a quick call away, and always happy to help you with your real estate needs.
Happy home buying and selling in 2021!
Posted by Corey Sylvester on
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