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Edmonton’s resale real estate market is experiencing a different kind of recovery after a short-lived dip in activity over the last several months resulting from rising interest rates.
Statistics for May from Realtors of Association of Edmonton reflect the surge in demand for apartment and townhomes.
It’s an indication demand remains strong, says Melanie Boles, RAE chair and local realtor.
“We still have the buyers, but buying power is down,” she says. “But overall, the market is really just now catching up to our predictions from the start of the year.”
Boles is referencing RAE’s forecast for 2023 that predicted buyers would gravitate to less pricey housing types from the traditionally popular single-family detached home segment.
In May, this trend finally appeared to be occurring as sales fell year over year for single-family detached homes while increasing for townhomes and apartment condominiums.
That said, single-family homes continue to make up the bulk of activity in Edmonton’s market, weighing on sales overall, which fell nearly seven per cent in the Greater Edmonton Area last month, year over year, with 2,719 transactions.
Single-family homes led the decline with sales dropping nearly 10 per cent.
In contrast, both townhome/row and apartment sales grew by about four per cent. The rise in activity aside, prices still fell in these segments. Townhomes’ benchmark price decreased about seven per cent to $233,300. The benchmark for apartments dropped more than four per cent to $177,200.
Overall, the composite benchmark for the city fell more than eight per cent to $378,800.
One reason for the lack of price traction has been rising supply with inventory up about six per cent year over year in May.
Altogether, conditions overall make Edmonton one of Canada’s most attractive resale markets, says Phil Soper, chief executive of Royal LePage.
“If you go back to the end of last year when we released our 2023 outlook, there were only two major cities in the nation that we expected positive price gains on a year-over-year basis.”
Those were Edmonton and Calgary. Calgary has already seen strong price growth, achieving benchmark price all-time records first in April and then in May.
“It’s become pretty obvious there was still a lot of demand out there that hadn’t been satisfied,” Soper says.
Yet buyers are more price conscious due to higher borrowing costs, he adds.
Townhomes and apartments are increasingly on the radar of first-time buyers, whose purchasing power is reduced due to higher interest rates, Boles says. “But their first choice is townhomes because they get a bit more space,” she notes, adding the segment also generally has lower condominium fees than apartment options.
Given the rise in demand, the townhome segment now strongly favours sellers with a sales-to-new-listing ratio of 80 per cent — the highest among all segments, according to RAE data. (A ratio exceeding 60 per cent is considered to favour sellers.)
Yet demand momentum is building across the market, including single-family homes. RAE statistics for May reflect this with month-over-month sales for the segment up about 39 per cent.
For Boles, the jump in activity from April is likely the result of more move-up buyers selling their townhomes and apartments and are now able to purchase single-family homes.
“Those sellers have to go somewhere,” she adds. “As the market settles into this new normal, these buyers will likely drive the market into the summer.”