January 22, 2020

Edmonton Market Analysis Q4 2019 – A Year in Review

2019 was a year of change and uncertainty for Albertans. With our primary industry of oil and gas still under attack, our real estate market continued to see downward pressure. Though we saw 9% less inventory coming to market than the year prior, with almost identical sales numbers, the average sale price reported for all residential products in Edmonton and surrounding areas declined by 3.1% -($360,262 compared to $371,748 at the end of 2018).  Over the full course of the year, Single Family Detached products sold for 2.2% less than the year prior (Average of $425,068), Condos saw a 4.6% decline (Average $227,429) and Duplex/Rowhousing declined by 2.7% (Average of $333,476)-this despite being the only category whose sale numbers increased from the year prior (up by 5.2%).

It’s important to note that Average sale prices simply reflect what people are spending, not the true value of a home. The sentiment for sellers was that it was more competitive and in most categories, the bargain on homes was more significant than the statistics above would suggest.

Insights by category:

Central area homes such as Glenora, Bonnie Doon and Strathcona generally aren’t as volatile as newer areas like Windermere or McConachie, where new construction is still present. However in 2019, the market conditions affected all areas equally.

Luxury home prices felt the largest impact. While sales in this category were down from 2018, the number of home sales $1M+ did not fall too far behind the 5yr average.  (139 sales compared to 5 year average of 151). Sellers had to make their properties interesting enough to luxury home buyers to forego simply building their own dream home, by pricing their properties significantly below replacement value.

For Condominiums, the level of supply and demand improved significantly over the course of the year. With developers slowing condo builds by shifting their focus to rental apartments, we’re coming back to a better balanced market and I expect prices to stabilize. Nearly 15% less new inventory than the year prior with sales almost on par.

As mentioned above, a significant amount of apartment buildings hit the market. In perfect timing, the increase of in-migration absorbed the inventory well, keeping vacancies down and rental prices up.

Interesting Trends

Consistently the most popular price range is $350,000-$400,000- this is where we saw the largest decline in sales y/y.

The largest gain in sales are properties priced $50,000-$150,000-an increase of 29.2%. Yes, there are properties in this price range. Most are condos converted from apartment buildings who have continued to see declines since 2007. Investors are starting to capitalize on properties that seem to have reached the bottom with some units dropping by over 50% in value since their original sale. These units are starting to look like appealing investments with low risk and generous returns on rentals. First time investors with smaller downpayments are able to get into the rental game much sooner.

Surprisingly, the most consistent price range y/y was $800,000-$1,000,000. 2019 sales were on par with the 5 year average (180 sales compared to the 5 year average of 183)

What should we expect for 2020? Economists predict almost no changes in sales or prices. That may reflect in the statistics, however we’re seeing a slightly higher optimism and though sale numbers may not reflect it, I suspect this is the year where we tip the scales back to a more robust market. We’ll likely skip along the bottom, with more balanced negotiations, finishing the year with increased confidence and setting up for a 2021 recovery. Several factors still need to swing in Alberta’s favor for this to come to fruition, however the momentum appears to be swinging back in our direction. Investors and home buyers are starting to recognize this and capitalizing on opportunities that soon won’t be as easy to find…