Real estate poised to pick up in 2020, report suggests

Edmonton’s real estate market is bottoming out and should rebound over the next 20 months, a new report predicts.

Altus Group released its 2019/2020 forecast this month revealing the city’s struggling housing market should benefit from growing migration that will elevate demand for housing and boost starts.

“Alberta has been in a rut since things slowed down a lot starting in the second half of 2014,” says Peter Norman, vice-president and chief economist of research, valuation and advisory at Altus Group.

“We will probably see more of the same for housing from last year into this year initially.”

But he adds conditions should slowly improve into 2020, backed in part by migration, if it continues to grow like it did in the last few months of 2018. During the span from September to December, the province’s population increased by more than 32,000, up from a 19,000 increase in the same period in 2017 (no city-specific data were available).

While both major markets in the province will continue to face challenges, chief among them lacklustre oil prices, their forecasts for both single-family and multi-family homes are mirror opposites.

“Calgary has had a softer go of it in terms of employment growth,” he says. “It’s a bit of the opposite conditions we see in Edmonton.”

The capital city’s labour market has fared better during the downturn in oil prices that set in at the end of 2014 and has largely hung over the province’s economy until now. It saw roughly 19,200 jobs created in 2018, well above its long-term average of 13,900.

That is one reason its single-family market has experienced higher demand than in Calgary, leading to more starts than its southern neighbour in 2018.

All told about 8,000 new single-family homes were built last year in Edmonton. But starts are expected to remain level this year and next as the industry slows construction to sop up inventories, he adds. By comparison, Calgary saw about 6,000 new starts last year with similar numbers expected this year. By 2020, starts are expected to rise to more than 8,000.

Overall Edmonton’s single-family starts are still about five to 10 per cent lower than the long-term average, Norman adds.

For the multi-family segment, market conditions are a little tighter in Edmonton than they are in Calgary.

“Where we will see a little bit of a pickup is on the apartment side with rental and condo because it’s a kind of product that really addresses affordability issues,” Norman says.

By comparison in Calgary, the apartment sector may see reduced activity going forward.

More activity in the multi-family market in Edmonton to meet higher demand should keep prices from rising significantly through to the end of 2020, the reports notes.

Overall, Norman suggests while the Edmonton market is still struggling, prices have not turned sharply negative. But they have not been rising quickly either and are not expected to rise all that much in the next year and a half.

Still, Norman adds the forecast does appear to suggest it’s likely a good time to be in the market for a home in Edmonton.

“If you’re a potential buyer right now, we’re possibly seeing the market firm up and finding its feet again into the next couple of years so it’s probably not a bad time to buy.”