Edmonton real estate sales stall, prices dip

Mortgage rules may be fuelling highest inventory in 10 years, says Royal LePage

Edmonton’s housing market inventory has reached a 10-year high, according to Royal LePage.

The real estate company’s survey of housing statistics in the city shows that overall prices decreased in the second quarter of 2018, with the aggregate home price dropping 1.4 per cent yearover-year to $377,218.

Two-storey homes reserved the most value, falling just 0.7 per cent year-over-year to $436,722, while bungalow prices went down 1.5 per cent year-over-year to $369,100. Condo prices decreased 5.3 per cent year-over-year to $223,787.

This kind of a surplus hasn’t been seen since the 2008 global financial crisis, the company said.

The overstocked market may be the result of new stress test rules for mortgages imposed by the federal government, said Royal LePage Noralta Real Estate broker and owner Tom Shearer. The rules, which came into effect at the beginning of 2018, require applicants to prove they could still afford their mortgage if interest rates were to rise.

“What happens when a major rule change comes through, which I think we’ve just gone through, is the market takes time to find its new equilibrium. Eventually that happens,” Shearer said in a telephone interview Monday.

Shearer said that while Edmonton’s current buyers’ market is a “sign of the times,” sellers shouldn’t despair.

“Sellers just have to be super competitive in pricing their homes. There’s no room for error in overpricing a home,” he said, adding that homes that sell well and do not challenge the market are getting offers. He said buyers have “high expectations” and, with the high level of inventory, they have an opportunity to shop around.

The company forecasts that by the end of the next quarter, prices will have increased by one per cent.

Across Canada, growth in housing prices slowed but continued as the Greater Toronto Area market softened, with the aggregate price of a home in Canada climbing two per cent year-over-year in the second quarter of 2018 to $613,968.

Compared to the rest of Canada, Shearer said Edmonton remains a comparatively affordable place to buy a home.

Royal LePage said its survey provides information on two-storey homes, bungalows and condominiums in 63 of Canada’s largest real estate markets. It bases the housing values used in its survey on company data, as well as data and analytics from a sister company.