How much home can you buy for $500,000?

Article content

What does $500,000 get you today in Edmonton’s new home market?

That’s what Postmedia set out to discover. Further, if you’re wondering why we’re talking about $500,000 for a new-built home in this city, which has been described as one of Canada’s more affordable housing markets, that appears to be the new benchmark for those interested in an entry-level home — not a condo — in today’s local marketplace.

That $500,000 figure was chosen as the benchmark as rising costs have made it increasingly difficult for homebuyers to acquire a new single-detached house at $400,000, which was previously the benchmark, according to BILD Edmonton Metro, the voice of greater Edmonton’s real-estate development industry.

In addition, Postmedia also spoke with two Edmonton-area builders, Akash Homes and the Rohit Group of Companies, as well as CBRE Edmonton, a commercial real estate services firm, to get a more complete picture.

Article content

Toggle full screen modePrevious Gallery Image

1. 

2. 

Next Gallery ImageToggle gallery captions

All 2 Photos for Gallery

Function Not Available

Full Screen is not supported on this browser version.

You may use a different browser or device to view this in full screen.

OK

Today’s Market

So what does $500,000 get you?

According to both Akash and Rohit, that new home buyer is looking at either a front-attached duplex at about 1,500 square feet or a laned, single-family home, also at about 1,500 sq. ft.

“That’s risen very quickly,” said Dhruv Gupta, president, Akash Homes. “Eighteen to 24 months ago it was $400,000.”

Increases in the costs of land, labour and materials is driving up prices, Gupta said, noting builders work these increases into their ongoing pricing.

But as housing costs continue to rise, builders are looking at ways to keep the costs down, said Adil Kodian, executive vice-president at Rohit Group of Companies.

“In the last couple of years, we’ve been tweaking the (size of) the lot as much as we can,” said Kodian. “Now the size of the homes are getting smaller and that’s because of the level of innovation.”

That innovation, said Kodian, is about being able to create a denser single-family home that fits into a smaller, narrow pocket.

And the builders understand that no one wants a home-building version of shrinkflation, the phenomenon prevalent in the grocery sector where food packages shrink but the prices goes up.

Article content

Article content

“I want to live in a smaller house — no one has ever said that,” said Kodian.

Akash’s Gupta, meanwhile, emphasized that even though they may build a smaller home, they don’t down spec — that is, the features or specs the home are not cut back.

But the fact is that today’s $500,000 single-family home product is smaller than what buyers might have been used to, added CBRE’s Cody Nelson, vice-president, capital markets.

“(That) $500,000 used to get you a front-attached, double car garage (home), the quintessential North American home,” said Nelson. “That no longer exists. You’re now getting a landed home with a single garage.”

That quintessential home would now cost at least $575,000 to $600,000 in Edmonton proper, said Gupta.

Choice Narrows

As for what the Edmonton market looks like for new home buyers, Nelson noted that the southwest is the most expensive part of the city.

Akash’s Gupta, meanwhile, which has expanded into neighbouring Edmonton communities like Fort Saskatchewan, Morinville and Sherwood Park, said that while historically buyers could look to those areas for bigger lot sizes and, in turn, bigger homes, that is not so much the case these days.

Article content

“Houses are the same smaller size,” said Gupta. “We’re building the exact same product there (as in Edmonton).”

What’s Next

The outlook for reasonably priced housing in Edmonton is that you can likely expect prices to rise.

So far, Edmonton’s market has been fairly balanced and pretty normal. But Rohit’s Kodian said he expects lot prices will increase by five to eight per cent in the next 12 to 18 months.

This is in part, said Nelson, due to land not coming onto the market, pointing to city of Edmonton plans to prioritize building up existing areas as opposed to adding new suburban communities.

“The reason we have the affordability we have is because the city has allowed the suburbs to grow,” said Nelson.

Some of that land Nelson is referring to is in the southwest.

Further, the city of Edmonton, from BILD Edmonton Metro’s perspective, is not helping. BILD Edmonton said the city is restricting development and preventing the market to meet the demands of people who want to find housing in Edmonton by making land south of 41st Avenue S.W. unavailable for new neighbourhoods.

Article content

Initial planning to service those lands is being contemplated but with such rapid growth as Edmonton is experiencing, land supply will become an issue, added BILD Edmonton.

“By dragging its heels on the lengthy planning process to open up lands annexed in 2019, Edmonton is limiting supply in the fastest-growing area of the city, driving up prices for Edmontonians considering homeownership,” said Lindsey Butterfield, BILD Edmonton Metro’s vice-president, government relations and policy. “To support housing growth and demand, we need to ensure that strategic and uninterrupted growth is enabled in all areas of the city, and undue delays to bringing on more supply are avoided by moving forward rapidly with proactive and thoughtful planning.”

The city, meanwhile, has said it wants to restrict urban sprawl and is looking to substantial completion, where areas now being developed should be prioritized before bringing on even newer subdivisions.

How Edmonton Currently Compares

So if $500,000 gets you a new laned home or duplex in Edmonton, how does that compare to other cities? Favourably, according to Akash and Rohit.

Article content

In Vancouver, or more properly on the city’s outskirts, that $500,000 might get you a studio apartment-style condo, said Kodian.

In Ottawa, which Kodian called a close comparison, with it being similar in terms of population and it also being a government city, he said that money would likely get you an apartment-style condo.

In Calgary, where Akash builds, too, Gupta said a buyer would barely get a townhouse. In Winnipeg, Gupta said that while prices are similar it would be a very small single-family home.

“We’re the only city of over a million (people) where you can do this,” said Gupta, referring to buying a new build of reasonable size for $500,000.

Article content