RE/MAX Edmonton Real Estate News

Major media outlets are reporting on the RBC Economics “Housing Trends and Affordability Report” released this past week, dissecting the information to glean what it could mean for the economic future of the Canadian real estate market. The report, proving most promising to Alberta buyers, showed a softening market in the region.

As explained by RBC, the aim of the report is to “capture the proportion of median pre-tax household income required to service the cost of a mortgage on an existing housing unit at going market prices, including principal and interest, property taxes and utilities.” Essentially it details to Canadians the state of the economy in major markets and how that stacks up against real estate trends of the same area.

Chart from RBC’s report showing nationwide affordability change over the past 30 years.

The report initially highlights declining oil and gas prices as a key influence in real estate trends, especially in regions like Alberta, where there is a strong economic reliance on those primary industries.

As stated by RBC,

We had previously reported last winter during February’s oil skid on the market’s ability to remain immune, with residential sales figures continuing to rise or at very least stabilizing. Now, nearly six months later, we are only starting to see the effect of one industry over another.

Chart contrasting nationwide affordability with provincial level rates.

The slight market decline currently underway in Alberta is creating an ideal climate for homebuyers with the Edmonton and Calgary areas “show[ing] the biggest improvement in affordability in the first quarter”.

RBC also attributes mortgage cuts, starting early in 2015, to the steadying of markets through the early stages of the oil skid, as it created affordability for buyers in the face of skyrocketing sale prices and a declining economy.

In the province, it was reported that RBC’s affordability measures fell by 1% for two-storey homes, 0.7% for bungalows and 0.6% for condominiums. It is indicated by RBC that these levels are “attractive” when compared both historically and cross provincially, and strongly suggest a stabilizing of real estate activity.

Overall, RBC is expecting that “balanced demand-supply conditions in the majority of local markets will continue to support generally modest price increases and fairly stable levels of affordability. The likelihood of small price declines in markets dependent on the oil industry suggests that home ownership costs may fall further in Alberta”.

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Edmonton’s real estate market is holding strong as it comes into fall, however a rising market also means  larger price tags on residential and commercial properties. Current and prospective homebuyers can take comfort in their investments however, as statistics are showing the Edmonton market to be one of the most affordable in Alberta.

A recent article posted by Global Edmonton targeting the competitive nature of the Calgary and Edmonton real estate markets uses sales figures to show Edmonton in a clear win situation when comparing affordable housing prices. Additionally the Calgary Herald has made mention of record high prices in the large southern Alberta city.

Residences in Edmonton are Readily Available to Home Buyers. Image Credit: Global Edmonton

Calgary has seen a 10.48 % increase since the same time last year, nearly double the national average. When comparing 11 major centres across the country, the sales figures increase was about 5.33% on average, according to the MLS Home Price Index. Additionally price growth percentage in Calgary has increased 25% over the past 3 years, while nationally that number is hovering around 12.5%.

Economist Leslie Preston (TD Bank) explains the situation down south:

“Existing home prices . . . are on track to outstrip income growth for a second straight year in 2014, which adds to concerns about an already-overpriced market. Affordability, even at low interest rates, has become an obstacle in many markets.”

Global News reports that coming in to winter the average home price in Calgary will be approximately $99,000 higher than that of Edmonton, and about $103,000 in the new year. According to Edmonton’s Chief Economist John Rose:

“When you look at housing affordability issues, Edmonton is actually – among Canada’s major metropolitan areas – one of the most affordable in terms of housing. You have to bear in mind that incomes in Edmonton are about 20 per cent above the national average.”

The affordability and availability of housing in Edmonton can account for the latest population influx in the area, and the strong economic upturn, especially in the real estate industry. Click Here to search for properties for sale in the Edmonton area.