Edmonton Real Estate Market Update - June 2022
It has been an interesting real estate market this year, and if you have been watching the headlines, it's probably been one of the more confusing times in real estate with so many different opinions... "interest rates are down"... "now up"... "it's a great time to buy"... "now it's not"... "its a great time to sell"... "now it's not"... "the market is up"... "now it's down"... If you're watching this and thinking "what the heck is going on", you are not alone. In this blog, I'm not only hoping to bring you up to speed on what has transpired this year, but give you some direction as to what we can expect moving forward.
So, what has been going on in the Edmonton real estate market?
It has been a while since my last market update, and this is in part because of how busy the year started for Edmonton's housing market. 2022 started with a bang and continued to pick up momentum through February, and March. Home buyers had to compete against multiple bidders due to high buyer activity, low inventory, and out-of-province buyers to add to the fun. Sellers needed to try and navigate multiple offers, in some cases upwards of 10-20 offers on a single home! It was insane, and to say It was challenging for people on both sides of the transaction would be somewhat of an understatement. In this blog, I'd like to go over the first half of 2022's real estate market, share with you the current state of the housing market, and discuss where I see things going in the coming months.
But first, a word of caution... 
Before I can get into the Edmonton housing market, I'd like to touch on a lot of recent headlines in the news and online lately. Not to discredit any of them, but it is important to know that when the headlines read "Canadian housing market" or "Canadian real estate market", these stats from the Canadian real estate association can be heavily skewed by two major Canadian housing markets, Vancouver and Toronto. These markets have a massive effect on Canadian real estate statistics, and just because something is happening there, it does not mean Edmonton is in the same situation. Many different factors differentiate Edmonton from the Vancouver and Toronto markets, such as affordability, available inventory, foreign buyers, and many other factors that just don't apply to us here in Edmonton. So be careful about what you are reading, and be sure to identify real estate professionals in your local area for information that is relevant to you.
Now, for the Edmonton housing market update!
The First Half of 2022 For The Edmonton Housing Market
2021 had been an active year in the Edmonton housing market, and this activity carried over from 2021 and picked up steam early in 2022 due to a few factors:
Interest Rates - Rates were very low, and increases were expected. A buyer who locked in while they were lower was trying to find a home before they increased.
Low Inventory - Normally, in the Edmonton real estate market, we don't start seeing inventory improve and homes start coming onto the market until well into February heading into March for the start of the spring housing market. With buyers starting earlier than usual to take advantage of lower interest rates, there was much more competition for the limited available inventory. This caused multiple buyers to compete for the same home with multiple offers on many, if not most homes on the market.
Out of Province Buyers - We saw an influx in buyers from Ontario and British Columbia either selling and moving to Alberta or purchasing real estate as an investment due to unaffordability in their markets and higher cost of living. With rising prices in Vancouver and Toronto (and surrounding areas), along with the cost of living issues, Alberta, and specifically Edmonton, were much more viable options due to the fact we are still the most affordable major Canadian city in Canada, and the cost of living here is much lower than their provinces.
So as a result, our market became highly competitive with many homes selling well above their listed price.
The Edmonton housing market is almost predictable in a sense. On a normal year, coming out of the Holiday season into January, the Edmonton market is slower. Inventory and sales are lower. Buyer activity is dismal. And things don't start picking up again until into February when we start seeing a gradual increase in sales activity, and new listing inventory heading into our spring market. The Edmonton Sales cycle for most years creates an almost perfect arch, with the peak of the arch in June most years like clockwork. See the sales graph below courtesy of our marketing director at Liv Real Estate. As you will notice, our market peaked much earlier this year in March, and we started seeing a slight decline in activity in April. Still up year over year, but we had peaked for the year non the less. Can you guess what happened right around this time that caused a spike this early in our market, then the swift decline? If you guessed interest rates increased, you would be right!
This graph from the Liv Real Estate® blog shows MLS® sales this year compared to previous years
Interest Rates, Inflation, And What It Means For The Edmonton Housing Market 
There is no doubt that by now you have heard about Canada's current inflation problem, and the Bank of Canada's response to the inflation by increasing their overnight rate. First in April to 0.50% (from 0.25% where it was since March 27, 2020), then in April to 0.75%, and most recently on June 1st to where it currently sits at 1.50%. How much higher they intend to raise the overnight rate varies depending on who you talk to, or what you read, but where they agree, is that they aren't done yet, and we can expect another increase as soon as July and possibly a couple more times before 2022 is done.
So why are we talking about the Bank of Canada's overnight rate, and what does it have to do with mortgage rates?
Well, the reason we have been able to take advantage of historically low-interest rates in 2020, 2021, and the first couple of months of 2022, was because the Bank of Canada reduced the overnight rate to 0.25% to help combat the struggling economy due to frequent industry closures, and shut-downs to help slow the spread of COVID. So, the government reduced the rate to combat a sluggish economy. In doing so, it made borrowing cheap, especially for a mortgage where at one point you were barely paying over 1% interest on your mortgage over 5 years. Lenders use the overnight rate as a kind of barometer for how they borrow amongst themselves. When it becomes more expensive for the lenders, they pass that extra cost down to the people borrowing for let's say a mortgage for example. Now that the economy has come roaring back, and industries have opened up, complemented by supply issues caused by current overseas events and conflicts, we now face an inflation problem here in Canada, and now the overnight rate will be increased again to try and slow inflation.
This chart from moneysense.ca shows historical interest rate trends from 1980 until today.
So what does this mean for the Edmonton housing market?
Edmonton Real Estate Market for the month of May 2022
Today, in the Edmonton real estate market, sales remain active. As previously mentioned above, sales have dropped slightly since we peaked back in March. However, they are still up year over year. See the image below provided by the Realtors® Association of Edmonton for sales stats for the City of Edmonton from May 2022.
Image from the Realtors® Association of Edmonton
Average Price
- The average sold price for single-family homes was down by 2.1% compared to a month earlier, however, it was up 4.8% year over year.
- For condos, the average price saw modest price growth of 0.6% month over month and 1.4% year over year.
- Duplex/row housing saw an average sold price drop of 2.8% month over month, with a 12.3% year over year increase.
New Listings On the Market
- 3, 585 new listings which was an increase of 41.% month over month
- 14,000 new listings Year to date, which was an increase of 15.6% compared to the same time last year.
Home Sales
- There were 1,979 sales in May. This is a decrease in home sales of 6% compared to the previous month.
- Year over Year, however, we saw an increase of 4.1% with year-to-date sales reaching 9,122.
Average Days on Market
- The average number of days on market for single-family homes was down from 27 the year before, to 23 in May this year.
- Condo days on market also came down from 49 in 2021, to 45 in May this year
- Duplex/row housing also saw a decrease from 32 DOM, to 24 this year.
- Overall, all residential days on market say a decrease from 34 DOM, to 30 in May.
Buyers have found some reprieve from the over-active market of just a couple of short months ago with some much-needed inventory. New listings that show well, and have been priced correctly are still selling quickly and in many cases in multiple offers, however, it is not nearly as aggressive as it was previously.
Sellers thinking about getting on the market now, need to be careful about overpricing their home based on sales a couple of months ago and should be a bit more conservative due to the higher level of new listings entering the market now. It is as important as ever to make sure your home is market-ready, staged well, and marketed properly.
What Edmonton Home Buyers Can Expect In the Coming Months
- For the months ahead in 2022, I expect we see once again more transition. Over the last 24 months we have had the wind at our backs and easy sailing with historically low rates driving the market, however now the government of Canada is implementing some changes that will cause a shift into a bit of a headwind.
- For Edmonton, I can see us shifting from what has predominantly been a seller's market recently, into more of a balanced market heading into our summer and fall markets with Edmonton housing prices balancing out, and even retracting a bit from where we are today. This is only normal considering interest rates will be rising. Beyond that, it depends on what happens with interest rates and how much higher the feds decide to take them.
I will of course be watching intently and will update again as information becomes available. For now, the market remains strong, and Edmonton is a highly desirable real estate market. local, as well as out-of-province buyers are still active, and our spring market is in full swing. Although interest rates have increased in recent months, they are still quite reasonable when looking at what they have been pre-pandemic. So if you are in the market for a new home, or plan to sell, now is still an excellent time to do so.
I hope you have found this information helpful. If you have any questions, or would like to discuss the Edmonton market, or you're selling, or buying plans, please always feel free to reach out.
Posted by Corey Sylvester on
Leave A Comment