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Edmonton area offers both buyers' and sellers' markets

Edmonton and area can be described as either a buyers' market or a sellers' market, depending on where you live and what type of home is for sale. POSTMEDIA FILE PHOTO
Edmonton and area can be described as either a buyers' market or a sellers' market, depending on where you live and what type of home is for sale. POSTMEDIA FILE PHOTO

With record home sales across the country in the past three months, let’s get a snapshot of Edmonton and the surrounding communities to see how we are doing and where we might be going.

As of this writing, the Edmonton region has almost caught up to last year’s number of sales. We currently are only three per cent below the number of sales compared to last year. The three per cent drop is almost all due to slower condo sales year over year, as the number of single-family home sales are almost exactly the same as last year.

Many housing markets across Canada and the United States experienced a sellers’ market this summer and fall. Toronto saw value increases as much as $100,000 this year in single-family homes. Toronto is simultaneously experiencing an exodus from condos due to the recent changes restricting short-term rentals within the city.

There have been many projections about where real estate values will go, and so far, most have been wrong. Few, if any, projected the sellers’ market we’ve seen with shortages of homes in municipalities across the nation and multiple offers driving up prices.

Many of the economists who made more dire projections early on have changed them to be more favourable.

When looking at where prices are headed, it can be useful to look at the ratio of buyers and sellers engaged in the market.  This is what really matters. What I mean by that is it really doesn’t matter what is going on in the economy with interest rates or with employment — at least in the short term. What really matters is whether we are in a buyers’ market or a sellers’ market.

We calculate this by dividing the number of active listings by the number of sales in the last month. If there are 1,000 homes for sale and 200 sell in the last month, we could say we have a balanced market of five months supply.

We might say that four to six months supply of homes is a balanced market. Less than four months supply would be a sellers’ market with upward pressure on prices and more than six months supply a buyers’ market with downward pressure on prices.

For the scope of this article, let’s look at single-family home sales in our region. I’ve separated the sales into two groups, one under $400,000 and one over $500,000.

And there are outliers in the group. Both Sherwood Park and St. Albert are in significant sellers’ markets for homes under $400,000. They have 1.9 and 1.6 respective months supply. Both communities are also in the best shape of the region when looking at homes over $500,000 with 3.4 and 3.6 months of supply. These are the only communities I assessed with a sellers’ market in the higher price range.

Spruce Grove and Edmonton would be next at 2.23 and 2.6 respective months supply of single-family homes under $400,000. This is still a sellers’ market.

But here is where things shift to a buyers’ market. The over $500,000 homes in Spruce Grove and Edmonton have 7.2 and 8 months of supply, putting this category into a buyers’ market with some downward pressure on prices.

Leduc currently has 3.6 months supply of homes under $400,000 and 12.3 months supply of homes over $500,000 (Leduc’s average months of supply will vary more month to month as it is a smaller community.)

Some economists are projecting softening of homes prices in Toronto, Vancouver and the Prairies.

With lower interest rates, a lower stress test qualifying rate, and a seemingly greater reliance on our homes, we may see only a slight correction in values in our region. Keep in mind we have been losing value over the past five years while much of the rest of Canada has seen significant growth in home values.

There is a bigger discrepancy in our prices with other regions than perhaps at any other time. This discrepancy could help to limit price drops and make our rebound more dramatic.

Some of our condos are priced at what you might expect to pay for an underground parking spot in some cities — how low can they go? And just to be honest, this isn’t the first time I’ve said that.

Personally, I’m optimistic about Alberta. We must realize that Alberta is much more than oil. In fact, we have a lot to offer.

We are a large province with significant resource wealth beyond oil. We stand to benefit as the world looks for inputs and resources in the changing auto industry. Lithium demand will increase and we have reserves of lithium that could support a new industry along with manufacturing jobs.

Our reserves of natural gas could be used to produce hydrogen fuel cells. We have a strong forestry, mining, manufacturing, agriculture and tourism industry, where innovation could create new products, exports and more jobs.

We have state-of-the-art institutions, good infrastructure and a highly skilled workforce. We have some of the most affordable housing and affordable living costs in the nation.

I believe that the future will strongly favour the bold. Investors or home buyers who make their purchases while prices in Alberta are low will stand to gain significantly. Personally, I’ll be watching the market and will look at picking up an investment property over the next year or two.

We have seen little to no gains in property values in Alberta over the last 13 years. To me, that spells opportunity.

Feel free to contact me or your local realtor for information about our condo market or more detailed information on what’s happening to values in your neighbourhood.

Dennis Faulkner is a realtor with Re/Max Select. He can be contacted with all your real estate questions at

Copyright Postmedia Network Inc., 2020

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