CITY CENTRE STILL CHEAP
Edmonton faces a shortage of homes in lower prices bands

Joel Schlesinger, for the Edmonton Journal - Friday

A recent report finding Canada’s real estate market faces persistent supply issues that could lead to a housing crisis hits close to home even though Edmonton was not among cities surveyed, a local realtor says.


Edmonton's supply of homes remains in a better position than many other Canadian cities.© Provided by Edmonton Journal

Real estate agent Nathan Mol with Liv Real Estate says Edmonton’s market is largely seeing a balance between demand and supply after several months of the market favouring sellers.

Still, supply remains in short supply where it often matters most.

“The challenge is inventory in the more affordable price bands (for single-family homes) is down significantly,” he adds.

The recent Re/Max Canada 2022 Housing Inventory Report reveals a similar trend in other cities.

Tracking active listings in Calgary, Greater Vancouver, Ottawa, Winnipeg and Greater Toronto, among others, the study found levels in July were below the 10-year average in seven of eight major centres examined.

In Calgary, the July market featured 7,069 active listings, about 26 per cent below average, the study found.

“Listings have fallen considerably there,” says Elton Ash, executive vice-president of Re/Max Canada.

Meanwhile, the population over the past 15 years has grown by 37 per cent, he says, further noting similar trends are at play in Edmonton.

Mol says the local market is short on supply for affordably priced, single-family detached homes — which are most in demand — compared with the pre-pandemic market.

In September 2019, for example, 1,390 single-family detached homes were for sale, which had at least three bedrooms and two bathrooms, and were priced under $400,000. For homes priced between $400,000 and $500,000, 1,200 homes were for sale.

This September, supply among single-family homes under $400,000 is 50 per cent lower than 2019 levels and 30 per cent lower for homes in the $400,000 to $500,000-range, Mol notes.

Despite rising borrowing costs, Edmonton and other major markets have not seen expected increases in inventory compared with similar periods in the past, Ash notes.

“If we look at the market cycles over the last 40-plus years, whenever we’ve seen higher rates, buyer demand dropped off dramatically while inventory increased,” he says.

“This time around, we’re still seeing low inventory even as buyer demand drops.”

The scenario is unlikely to turn around without faster new development, Ash says. In fact, he suggests Canada faces a looming housing crisis, given more than 1.3 million newcomers are expected to arrive by the end of 2023.

In Edmonton, however, the supply pinch is likely to be not as acute as other cities, Mol says.

Supply in the most in-demand segment, affordably priced single-family homes, is likely to remain low with millennials — the largest cohort of buyers — seeking to purchase in this segment for growing families, Mol says.

“The good news is that starts so far this year are up 12 per cent over last year for single-family detached homes … whereas many other cities are seeing a sharp drop-off,” he says, referring to Canada Mortgage and Housing Corp. data.

Mol points to Ottawa, a similar sized city, where single-family starts are down year over year, and about 40 per cent of Edmonton’s activity.

“Luckily for us, even though affordable housing supply is still a challenge, we are in a much better situation than most other cities.”