Edmonton, Alberta’s vibrant capital city, is making headlines again – this time as the most affordable major housing market in Canada. For context, a major market refers to cities boasting a population of over one million people. Here’s why Edmonton stands tall in the housing affordability spectrum amidst Canada’s six largest cities.

1. Market Outlook Points to Affordability:

According to the 2023 Fall Housing Market Outlook by Re/Max Canada, while cities like Vancouver, Ottawa, and Kelowna are predicted to see average price reductions, Edmonton bucks the trend. The forecast projects that despite a 10% decrease in sales year over year, Edmonton’s average house price will rise by 2%, settling at approximately $418,000. As Chris Alexander, president of Re/Max Canada notes, “The market is not going backwards by any means.”

2. The Influence of Mortgage Rates:

A major factor influencing the housing market nationwide is the increased cost of borrowing. The Bank of Canada made a swift elevation in its overnight rate from 0.25% to 5% since March of 2022. This increase, serving as a benchmark for mortgage rates, has reshaped buying intentions, especially among younger generations. A poll within the Re/Max report highlights this shift, revealing that higher borrowing costs have altered the housing plans of 55% of generation Z and 49% of millennials.

3. High Demand Vs. Low Inventory:

An analysis of the sales data illustrates that the anticipated drop in sales is primarily due to low housing inventory, even as housing demand persists. This observation aligns with the Re/Max forecast, which attributes the lag in sales across Canada to scarce supply. In Edmonton, the first seven months of the year saw an almost 17% drop in inventory compared to the same timeframe in 2022.

4. Affordability in Focus:

Given the elevated borrowing costs, potential homeowners are prioritizing affordability, thereby confining themselves to specific market price brackets.  There is not as much inventory in the price ranges and housing types that people want in Edmonton. This alone will keep prices stable as new housing stock tries to keep up with population growth

5. Migration Patterns & Their Impacts:

Alberta, known for its robust economy, has witnessed record-high migration rates, further exacerbating the supply issue. The Re/Max report also touches on Calgary’s escalating housing demand, predicting its average price to surge by 5% by the year’s end. However, Chris Alexander believes that Calgary’s growth narrative could indirectly benefit Edmonton. “As long as Calgary booms, Edmonton — as the affordable option — will see residual benefit,” he remarks.

Conclusion:

Edmonton’s real estate market narrative underscores the broader themes of housing affordability, demand, and supply that Canada grapples with. Yet, amidst all this, Edmonton emerges as a beacon of affordability in a landscape of soaring housing prices, cementing its status as the most affordable major housing market in the country. Potential buyers, especially those feeling the pinch of high borrowing costs, might find Edmonton’s market a silver lining in an otherwise challenging housing scenario.