Edmonton's falling homes supply will pose a challenge in coming months

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The current heat in Edmonton’s resale real estate market could soon prove that there is too much of a good thing as high demand will increasingly wear down supply to critical levels, says a local realtor.

“What I am seeing is we are going to go into the winter and New Year with empty cupboards,” says Tom Shearer, broker and owner of Royal LePage Noralta Real Estate.

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The recent Royal LePage Q3 2024 Home Price Update and Market Forecast notes that Edmonton’s market is likely to have one of its best years on record.

Even still, the forecast predicts the average home price will increase 6.5 per cent year over year by the end of the year to about $458,000, trailing Calgary at eight per cent to about $717,000.

As well, Edmonton will see only a slightly better percentage increase than the Greater Toronto Area with its aggregate price estimated to grow six per cent to about $1.91 million.

The GTA’s rosier estimate comes after Canada’s largest resale market experienced a price contraction for all housing types of nearly three per cent in the third quarter (July to September) compared with the spring, or second quarter.

One factor driving growth for the rest of the year are fewer borrowing challenges.

“It’s fair to say that the changes underway — falling inflation, falling mortgage rates and changes to mortgage insurance rules — will be the tides that raise all real estate markets,” says Phil Soper, president and chief executive officer of Royal LePage.

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“We’ll see a lift right across the country, but in a place where things are already comfortably growing, the impact will be less dramatic than in a place like Vancouver where the market has stalled for two and a half years.”

The report points to this having an impact in Vancouver, noting its average price could rise about three per cent to about $1.257 million by the year’s end.

Soper further adds that Alberta may cool off slightly relative to other markets because its real estate market has been so vibrant. That’s particularly so for Calgary where the supply of affordable homes is at historical lows, and inventories for higher priced homes are rising, he says. Calgary Real Estate Board statistics from mid-October show an increase in active listings of more than 13 per cent year over year while sales are down about eight per cent.

In Edmonton, September data from Realtors Association of Edmonton shows that new listings were up year over year by about seven per cent while sales grew almost 10 per cent.

Affordably priced single-family detached homes are increasingly in short supply here, too, Shearer notes.

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“In the summer, it was still a Goldilocks market where there was still selection,” he adds. “People could find a property.”

That’s changed heading into fall, which is traditionally busier than summer and winter, but less so than spring. Typically, the market will see fewer listings for the remainder of the year.

Yet demand could remain above average in the coming months, driven by lower interest rates. Another positive demand factor is coming changes to mortgage rules, including allowing 30-year amortization mortgages for first-time buyers on resale homes, and for all buyers of new homes.

That has led Shearer to recommend to realtors in his office to advise buying clients to do so sooner than later.

“If you buy a place now, you’ll be glad you did, compared with this February to April when, I believe, prices will have jumped quite a bit from where they are now,” he says.

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