Just after the October 25, 2024 Rate Announcement by the Bank of Canada, Josh Tagg with Mortgages for Less and Jay Lewis with ReMax Excellence in Edmonton got together to discuss this announcement, and what is going on in the Real Estate Market in Edmonton.

Full Transcript:

Jay Lewis: Hey everybody, it’s Jay. I’m here with my good friend, Josh. Hey everybody, good to see y’all again. So Josh, today was the rate announcement. And since you’re from Mortgages for Less and an amazing mortgage broker, I thought I’d call and just have a conversation about what they said and what the impact is for us.

Josh Tagg: Perfect. So today, of course, the Bank of Canada did make their announcement this morning. It happens eight times a year. So it was as expected, they made it. And recently, the expectation of whether the bank would increase versus not shifted to no increase, and that’s exactly what happened today. Some economic data for gross domestic product or GDP as well as inflation has been coming in and it’s painting a weaker picture than we’ve seen kind of over the last two years. So with that backdrop, the bank decided to keep things on pause as far as interest rates are concerned. And some of the economists for the major banks have spoken up recently and said that they really do think that the bank is done or very close to done with their interest rate increases to the point where we can actually likely expect their next movement to be down. Probably not till summer or fall of next year, but downward is likely the next direction from the Bank of Canada.

Jay Lewis: So we’ll probably expect a couple more sort of announcements just like we’ve seen today, where just no change for the next couple of times just to see what happens?

Josh Tagg: Yeah, basically what they’re saying is the impact of previous rate increases is having a dragging effect on the economy and that’s by design. It kind of sucks that they have to do that because a slow economy hurts all of us. I think a lot of us know that the economy is slowing down. We’re already feeling it, but it’s now starting to be evident in the economic data that comes out on a bit of a delay. The impacts of interest rate increases has a delay. And now they’re starting to see that. And so probably they’ll keep rates about the same. It’s possible we may still see another quarter-percent increase, but there’s a pretty good likelihood of it only going down from here.

Jay Lewis: Got you. Yeah, I mean, it certainly had an effect. I was looking at some house prices earlier. And so if we go back, you know, to the beginning of 2022, seems like we kind of peaked around here in Edmonton anyway around that $412,000 total residential sale price. And then we’ve come down to the, I think it was $350,000 somewhere in January, February. And then now we’re back up to $376,000. It seems to be stabilized and holding strong. So I guess it’s done what it was supposed to do.

Josh Tagg: It seems to and Edmonton’s been pretty steady in that same general price range for the last couple of years. Whereas the swings have been much bigger in the big markets like Toronto or Vancouver and really even Calgary being more affordable than those big markets, it’s been increasing lately. So Edmonton is remaining that bastion of affordability, I guess you could call it, as far as the cities with over a million people across Canada is concerned.

Jay Lewis: Absolutely, yeah. And we are seeing that a lot of the questions we’re getting is, you know, Calgary, Edmonton, where should I go? I imagine you’re hearing the same.

Josh Tagg: I hear it all the time, yeah. But one thing that I would like to point out is, as you and I have looked over the data, we’re seeing that, yes, things slowed down as far as the number of people purchasing since the Bank of Canada started raising rates a year and a half ago. But now we’re seeing, as the fall begins here in 2023, we’re seeing more sales each month since July than we saw in both 2022 and even 2021. And remember 2021 was like that biggest sales year ever. So what does it feel like on the ground as you’re speaking with buyers and negotiating with sellers? How does it feel?

Jay Lewis: Yeah, I think that’s exactly what we’re seeing. You know, there hasn’t been a, you know, as we already spoken to, there hasn’t been a huge difference in price now from year over year, but there’s certainly been more activity. We’re, I’m guessing it’s around the 20, 25% increase in sales, the number of sales, not the price though. So we’re definitely seeing some volume increase as well this fall.

Josh Tagg: For sure. Most definitely. So I imagine that sort of impacts the ability to maybe negotiate prices a little bit lower and store. We’re seeing the price is higher than they were and whatnot. So, you know, as, uh, as we see the people are thinking of moving to Alberta and making a decision between the two major cities, when people call you, what is it that you say about why Edmonton should be a serious contender for their decision?

Jay Lewis: Well, you know what, we moved here from Calgary, you know, many moons ago, right? Just before his marriage, didn’t have any kids. And so there was three things that we sort of looked at when we were deciding if we want to come here, you know, and it was weather, you know, is the weather better or worse, you know, what’s the culture like compared to Calgary? And then even what does it cost? Like, you know, is it going to be way more expensive or way less money, right? And so those are the three things that we always talk about for sure. Okay, so tell me, what’s the weather difference? The weather is pretty much the same. So six months of the year, Calgary is warmer than Edmonton. And that’s of course in the winter time, you know, Calgary’s famous Chinooks. The summertime, it’s drier and hotter here in Edmonton. So, you know, it’s pretty much a draw as far as the weather’s concerned, for sure.

Josh Tagg: Okay, I know there’s always been some rivalry between those from Calgary and those from Edmonton. And a lot of that I think traces back to decades ago when Edmonton had a better hockey team. I’m not sure if Calgary has ever had an amazing hockey team. Hopefully, nobody from Calgary is listening to this, but there’s been that rivalry between the two cities. And so, Calgarians, I grew up in Calgary, and I learned all sorts of horrible things I could say about Edmonton. But, you know, as I’ve gotten to know Edmonton more and more over the years, I don’t think most of those are true. You know, culturally, what would you say the difference is between the cities?

Jay Lewis: So Calgary’s got the Stampede, which is amazing. It’s an amazing event, and you know, it’s a massive party that’s on the world stage, and that’s what a lot of people think about. But what people don’t understand is Edmonton has over, I think it’s 50 or 50 plus festivals a year here. So there’s always some pretty awesome and exciting things going on, an awesome festival here. You know, we’ve got the service festival where it focuses in on all of these different countries and the people have moved here. And so the communities put on a party here, we can try their food out and see their culture. So there is tons and tons and tons of stuff to do in Edmonton as far as culturally is concerned. I would say there’s more events here for sure. We are known as Canada’s festival city. So there’s a reason for that. So there’s more festivals and more events here for sure.

Josh Tagg: And we know that if somebody is working in a similar type of work, whether you’re a massage therapist, an elevator mechanic, an engineer, whatever, the jobs pay more or less the same in Edmonton as they do in Calgary, as they do in Toronto or Vancouver. But there’s obviously the difference in the cost of housing. Single-family homes in Edmonton can still be had for, what is it, just under $500,000?

Jay Lewis: On average, yeah. On average.

Josh Tagg: So I guess that means there’s several under that and there’s several above that, right? For sure. I guess looking at the numbers here on the screen, if we have average sale price in September for homes in Edmonton, it’s like $499. And at the same time, it’s $730 or $729 in Calgary. So I did some math, assuming you put a 10% down payment at those two different prices, it’s like $1,300 a month difference in the mortgage payment. And having a mortgage that’s $200,000 higher, of course, requires significantly more income to qualify for that, you know, in the ballpark of $40,000 to $50,000 a year extra income for the household. So the ability to purchase a single-family home is obviously greater in Edmonton, whereas in Calgary, for the same thing, you’re probably looking at a townhouse. And likewise, I guess it cascades to other property types. So how do those conversations work in your world?

Jay Lewis: So that’s exactly it. We have clients that come and visit us after being in Calgary and they’re shocked for the difference of what they get with the money they have. And that’s exactly what we’re seeing. They’re looking at sometimes an end unit, they’re happy with an end unit townhouse in Calgary. They come up here to Edmonton and they’re like, wow, I’m in a front attached garage home. So yeah, that’s exactly that. They’re spending less money to live in a better product. And I think they earn the same amount of money, so they have more disposable income. You know, they can go skiing, they can go on a holiday. That’s big money if, you know, what, $14,000 a year less that you’d be paying here, you can go on some pretty sweet holidays for that.

Josh Tagg: Okay, fantastic. Well, it looks like we’ve covered a lot of the differences and why we’re seeing the sales volume picking up in Edmonton, and why when people are coming in from out of province, why Edmonton is definitely worth considering, and maybe is the better choice for many people.

Jay Lewis: Yeah, totally agree. And you know what, we’re happy to show anybody who’s interested around. And there’s, you know, some sort of different areas and Edmonton is really misunderstood. So it is exciting to show people, you know, our river valley, we’ve got some amazing parks. There’s so much to talk about. And we look forward to showing you guys around for sure.

Josh Tagg: Well, Jay, it’s always fun when we get, we chat. Thanks for, for making this happen today. And thanks to everybody for watching. We look forward to chatting with any of you about the mortgages on my side, or if you’re looking for real estate questions or understanding where in Edmonton you might want to consider owning or the surrounding area, of course. Reach out, the numbers are at the bottom of the video here. Thank you.