Forecasts predict hot spring for real estate
A groundhog may predict an early spring, but strong activity in Edmonton's resale real estate so far this year likely foretells hot market conditions as the weather warms up.
“Spring is traditionally busier than other times of the year with more buyers and sellers,” says Melanie Boles, chair of Realtors Association of Edmonton.
A rush of sellers this spring is good news for a market facing increasingly tight supply after a busy start to 2024, which could lead to a spring market to remember, she adds.
“We've already seen significant sales increases,” she says, pointing to RAE data from February showing sales grew nearly 37 per cent from January and more than 52 per cent from February last year.
While new listings also grew last month, up nine per cent from last year, demand was significant enough to push benchmark prices higher.
The benchmark price for all housing types grew about four per cent to reach $382,200 in February year over year. Leading gains were townhomes. The housing type's benchmark price rose 10 per cent to reach $245,700.
Both benchmarks for apartment and single-family detached homes grew about five per cent to $183,700 and $441,700, respectively. The spring season runs from March to the end of June, and a recent study by Zoocasa notes that April will likely be the peak market
activity based on the previous five years.
Nationally, Zoocasa found that sales peaked in May in 2019, but 2020's high point actually occurred in July due to the pandemic.
In 2021, Canada's markets saw sales peak in March, though Edmonton's and Calgary's diverged from the norm, reaching their apex in April. For 2022 and 2023, the peak came again in April — not just for Edmonton but many cities, the study notes.
“Last year, just after April last year everything slowed down,” says Krystal Smith, real estate agent with eXp Realty in Edmonton. Rising interest rates cooled activity, she explains. The average discounted, five-year fixed rate increased after May 1 from about 4.29 per cent to reach 4.94 per cent in July.
Exactly when this current spring market will peak remains to be seen. Yet if activity holds steady from the current pace set in January and February, the entire four
month span could be notably busy, Smith notes.
“Even before spring hit, we've seen springlike activity.”
That's led to “super low” supply, particularly for lower priced homes, she adds.
“Anything between $300,000 and $500,000 is moving.”
The Edmonton resale market is entering this spring season with more new listings than last year, despite significantly higher sales, offering more choice to buyers Yet market conditions are tight. RAE statistics show the sales-tonew-listing ratio was 71 per cent in February, which indicates a seller's market. Last year, the ratio was 51 per cent, denoting balanced conditions. It's likely that last year demand for apartment-style homes added more balance between supply and demand, given the segment's was 45 per cent, and the previous two years were even lower with 2022 at 39 per cent, and 2021 at 27 per cent. In February, however, the ratio for condos apartments reached 65 per cent, favouring sellers.
The relative affordability of condominium apartments in Edmonton — still at less than $200,000 on average — is the reason for higher activity today amid still relatively high borrowing costs, Boles notes.
“The condo market is one of our busiest now, which hasn't been the case for many years.”
Boles adds strong condominium demand is likely to continue this spring along with equally strong demand for other types, given Edmonton remains accessibly priced.
“Simply put, affordability will continue to drive our market.”