DESPITE THE CHALLENGES, AREA REAL ESTATE VALUES HAVE HELD UP EXTRAORDINARILY WELL
I have to say the Edmonton area real estate market has surprised me.
When you consider the onslaught we have had in the past five years — oil price crash, more than 100,000 job losses, fires, floods, domestic and international trade disputes and then COVID -19, I would say the Edmonton and area real estate values have held up extraordinarily well.
Since 2014, we’ve only seen modest declines in prices, with single-family homes declining the least. Edmonton remains Canada’s most affordable major city with one of the highest average incomes.
Other Canadian cities have seen significant price gains in the same time period, creating a bigger difference in real estate values between regions.
We have had clients who can work anywhere and chose Edmonton as they can afford much nicer living quarters here for the same money.
Given the lower prices and interest rates combined with rising rental demand, it is easier for investors to get positive cash flows. We are seeing investors looking at condos for their positive cash flow.
This fact will help to support our real estate values.
In April, we saw about 45 per cent of last year’s sales volume, with May being about 58 per cent of last year’s sales volume. And in the last week or two, activity seems to keep ramping up where we are seeing multiple offers on properties throughout the city.
Personally, I was a little surprised to see that we were at almost half of normal sales levels in April with most of us staying at home isolating.
Prices have held up very well. Sellers are not giving their homes away because of a virus.
The qualifying rate for the stress test dropped twice this year and is now at 4.94 per cent. This means more of us can afford to buy a suitable property.
Interest rates have just recently dropped again, which reduces your mortgage payment (if you have a variable rate). This provides more incentive for renters to consider home ownership as it may be cheaper than renting. Both of these factors increase the incentive for home ownership and will increase demand for housing.
In the last two weeks it feels that activity has continued to ramp up. We will see exactly how much in a week or two as the sold numbers are released. I suspect that we are experiencing some pent up demand from buyers who held off in March, April and early May.
We may see further increases in activity in June if more restrictions are relaxed. Based on this and the recent uptick in activity, now might be a good time to list your home if you’re planning on listing this year.
That is provided you are not vulnerable to the virus, as listing would put you at increased risk.
I am more encouraged about our market than I was a month ago. Back then I feared a second wave and a second shut down. I was quite concerned what a second shut down would do to our economy and home values. It looks now that our leaders may take a different approach should we get a second wave and perhaps isolate the vulnerable instead of doing the same level of shut downs.
Oil also seems to be making a rebound, which is obviously significant to our local economy. With this news and the fact that business failure may be kept to a minimum, we may see only a small correction in our housing market.
The lower interest rates and stress-test qualifying rate will help to protect home values.
In terms of how real estate is being done now, it’s the same as in April. We have lists of questions related to travel, symptoms and contact history with symptomatic persons.
The questions are for both buyers and sellers.
We are still asking our sellers to leave lights on and doors open to reduce touch points. Sellers who are vulnerable may also ask buyers to wear masks, booties and use hand sanitizer prior to entering.
Sellers want more imaging and video so buyers can research their homes more thoroughly to rule out unnecessary showings. Some sellers encourage buyers to do a “drive-by” first to ensure their property is a good fit. Each situation can be unique and can require a slightly different approach.
We are still social distancing and using digital signing software to reduce in-person contact. Some are even doing virtual open houses.
Feel free to contact me if you have any questions about the market or how we are doing real estate as restrictions are lifting. Stay safe.