Edmonton real estate market predicted to slow down to pre-pandemic levels this year

Katarina Szulc
CBC Radio

Realtors Association of Edmonton chair Melanie Boles expects sales, listings, and prices to drop which she said would even out the market to 2019 and prior levels. (Sheryl Nadler/CBC)

The Realtors Association of Edmonton is predicting the market will “normalize” this year to levels not seen since before the pandemic.

Sales, listings, and prices are expected to drop across all property types, Melanie Boles, RAE chair said, which will bring them in line with 2019 levels and previous years. 

“When compared to long-term trends, 2023 will still be a strong year,” Boles said in a statement.

The association held its annual housing forecast event Wednesday, where real estate agents and prospective home buyers and sellers can grasp market predictions. 

According to the predictions for 2023, the market is expected to be balanced due to nearly equal supply and demand levels. 

The report notes an increase in demand for apartments and condos, an increase in luxury real estate, and an influx of out-of-province residents.

The forecast shows detached home prices are expected to drop 2.9 per cent year-over-year. 

Semi-detached homes are predicted to see a price drop of 2.4 per cent and for row and townhouses – a 1.4 per cent decrease is expected

The RAE is predicting a 1.1 per cent decrease in average price for apartments and condos compared to last year.

Boles said that compared to long-term trends, this year will be strong following three years of abnormal activity during the pandemic. 

As for sales, detached homes are expected to drop by 11.8 per cent, while the semi-detached category could see a 9.3 per cent decrease. But, growth is expected for apartments and condos, with a 1.3 per cent increase from 2022.

According to the association, the average price for single-family homes in Edmonton hit a record high of $510,988 in April.

Jackson Cornelius, advisory director with Zonda Urban, an organization that tracks real estate, said the average single-family home price dropped to $457,000 in December, which he believes is the floor. 

“We’ll see housing values climb back up from December lows but probably be less than the 2022 averages,” Cornelius told CBC. 

Boles said rising interest and mortgage rates played a role in reduced listings and sales, as people may have decided not to list or buy last year.

The Bank of Canada raised the interest rate seven times last year to battle inflation.

Sally Munro, a real estate agent with Century 21 Masters, said first-quarter renewals will be hard on a lot of homeowners. 

“I may not agree with the projections entirely, but there are a lot of factors that change the markets from buyer to sellers to balance and interest rates definitely have an effect on that and on the value of properties,” Munro said. 

New listings are forecasted to drop by 5.7 per cent for detached homes, with semi-detached homes falling by about 3.7 per cent and apartment/condominium listings expected to decrease by 2.6 per cent year-over-year.

“People are wondering what is the right time but every situation is personal. The right time is when you’re ready. So don’t sit back and wait for it to go up or down,” Munro advised. 

 

©2023 CBC/Radio-Canada. All rights reserved.

Posthaste: Luxury real estate enters buyer’s market as prices come back down to reality

Victoria Wells
Financial Post

Prices easing as sellers adjust to new realities of market, Sotheby’s says

Luxury real estate prices are expected to be lower in 2023. Photo by Tyler Anderson/National Post

Canada’s luxury real estate market cooled significantly last year, setting 2023 up for a buyer’s market across much of the country as prices come down.

Both buyers and sellers retreated from the luxury housing market in Toronto, Vancouver and Montreal in 2022, creating new benchmarks for prices and sales, Sotheby’s International Realty Canada said in a report out this morning. Calgary was the one outlier, buoyed by strong migration and a healthy economy.

But for the rest of Canada, high inflation, rising interest rates and fears of a recession dampened market activity as sellers held onto their properties in hope of better conditions, and buyers sat on the sidelines waiting for prices to come down.

The Greater Toronto Area’s luxury market statistics tell the tale of 2022. Last year, sales of all homes over $4 million declined 24 per cent from 2021, and sales of homes above $10 million — known as ultra-luxury properties — fell 29 per cent. Sales of residences costing $1 million or more also declined by 28 per cent.

 

That was evidence of buyers’ willingness to sit back and wait for better prices and more properties to hit the market, even as demand for homes remained strong, Sotheby’s said.

But buyers won’t be deterred for much longer. As inflation slowed at the end of the year, the appetite for homes became harder to ignore — just in time for the market to shift in favour of buyers. That means prices will ease because sellers have adjusted to the new realities of the market, Sotheby’s said.

“By the end of the year, luxury housing segments in several major metropolitan areas were on the brink of buyers’ market conditions, while others had clearly shifted into this territory,” Don Kottick, chief executive of Sotheby’s said in a news release. “The market is now on the verge of another important adjustment, this time in terms of pricing.”

Sotheby’s expects prices to be lower than the heady days of 2021 this year, even as listings grow. That dynamic will likely draw more buyers back into the market, eager to snap up properties at valuations they’ve long been waiting for.

“Prices will shift to meet current realities,” Kottick said. “This will start to unlock long-awaited opportunities for buyers and upsizers to purchase homes that meet their lifestyle needs as they acclimatize to the market.”

Activity in Vancouver’s luxury real estate market is expected to bounce back as a result, Sotheby’s said. As interest rates pushed mortgage rates higher last year, Vancouver’s buying frenzy cooled, and the region experienced major declines in sales. Homes priced above $4 million and $10 million languished on the market as buyers pulled back, and sales volumes were 30 per cent and 46 per cent lower, respectively, than they were in 2021. Sales of homes above $1 million fell 29 per cent. Prices also eased, and are expected to continue to moderate in the coming months.

In Montreal, conditions were more balanced last year. Bidding wars, which were the norm in 2021, became less common and homes took longer to sell. Sales of residences priced above $1 million declined 18 per cent, but houses above $4 million eked out a two per cent gain in sales. Sotheby’s expects prices to cool some more in 2023, but not so much that the market tips in favour of buyers. Sellers will also benefit from a balanced market, the report said.

Meanwhile, Calgary’s market showed continued signs of strength as people flocked to Alberta from other parts of the country. Sales of homes priced higher than $1 million rose by 16 per cent compared to 2021, and sales of homes above $4 million grew by 50 per cent. That put the region in sellers’ market territory, and Sotheby’s expects the market to keep gaining strength in the first part of this year. But in good news for buyers, conditions should become more balanced as new listings come online.

Still, inventory will remain a problem in some big cities, including Vancouver and Toronto, as demand outstrips supply, Kottick said. And as more immigrants flow into the country, demand will only increase. That means prices aren’t likely to get as low as some buyers may have hoped.

“Although housing prices are expected to adjust downward to realistic market norms in several major metropolitan areas, pent-up demand for housing mobility as well as anticipated population gains from immigration will continue to support housing values in the long term,” the report said.

 

 

Canada’s main measure of inflation dropped to its slowest rate in almost a year, a positive change, but one that will complicate the Bank of Canada’s decision on what to do with interest rates, writes the Financial Post’s Kevin Carmichael.

The consumer price index increased 6.3 per cent from December 2021, down from 6.8 per cent the previous month and the smallest year-over-year increase since the index rose 5.7 per cent in February 2022, Statistics Canada reported on Jan. 17. The drop in the headline number was mostly the result of lower gas prices. Excluding food and energy, inflation rose 5.3 per cent from December 2021, down only marginally from 5.4 per cent in November.

What does that mean for interest rates? Read the full story to find out more.

 

 

• NDP Leader Jagmeet Singh will deliver a keynote address to his caucus during their three-day retreat in Ottawa
• The standing committee on government operations and estimates meets to discuss a request to undertake a study of contracts awarded to McKinsey & Company
• Adam van Koeverden, parliamentary secretary to the minister of health and to the minister of sport, on behalf of Francois-Philippe Champagne, minister of innovation, science and industry, will be announcing the recipients of support from INOVAIT’s Focus Fund
• The Economic Club of Canada hosts an event called “Challenges and Opportunities Facing the Future of Canada’s Natural Resources”
• Francis Drouin, parliamentary secretary to federal Agriculture Minister Marie-Claude Bibeau, tours the Toronto laboratory of Genecis Bioindustries. The company, one of six finalists in the Novel Technologies Stream for the Food Waste Reduction Challenge, is converting food waste into compostable and biodegradable plastics
• Melanie Joly, Minister of Foreign Affairs, and James Cleverly, Secretary of State for Foreign, Commonwealth and Development Affairs of the United Kingdom will hold a press conference during his visit to Canada
• Dan Vandal, Minister for PrairiesCan, will outline federal support to ensure the continued growth and competitiveness of technology and technology-enabled Calgary businesses as they expand and create new jobs for Albertans
• Agriculture Minister Marie-Claude Bibeau travels to the United Kingdom to meet counterparts and deliver remarks at the International Grains Council Grains Forum and then to Germany to attend the Berlin Agriculture Ministers’ Conference 2023
• Today’s data: Canadian industrial product and raw materials price indices; U.S. retail sales, producer price index, industrial production and capacity utilization, NAHB housing index, business inventories
• Earnings: Kinder Morgan Inc., Charles Schwab, Alcoa Corp.

 

 

 

 

• Canadian pension funds inconsistent on climate policy, watchdog group says
• ‘Pro-competitive’ divestiture of Freedom should be enough for Competition Commissioner, Rogers argues in court filing
• 4 ways the wealthy can make a dent in a large tax bill
• A mental health crisis in Canada is fuelling billions in losses for employers
• What you need to know about the state of the Rogers-Shaw merger
• Jobs market is ‘wild card’ in Canadian economy
• Lightspeed reneges on boast to keep hiring, cuts 300 workers
• Barrick misses 2022 gold target despite 13% jump in Q4 output

 

 

 

The stock market has been rocky, but that doesn’t mean you should stop investing — you might just want to branch out. This is where alternative investments come in. Alternative investments — assets other than stocks — can help hedge against inflation, protect your wealth from downside risk and potentially enhance portfolio returns. Thanks to one disruptive startup, an alternative investment has finally been made accessible to everyday investors — fine art. Our content partner MoneyWise explains how to invest in art.

 

© 2023 Financial Post

Vancouver city block sold for $100 million in medical deal

Western Investor Staff
Western Investor

The Vancouver General Hospital (VGH) and the University of B.C Hospital Foundation closed on this full city block property across from VGH in March 2022.

Courtesy: Colliers, for Western Investor (top land deals of 2022)

 

Property type: Land assembly (Windermere Lodge)

Location: 900-990 West 12th Avenue, Vancouver

Potential: Long-term plan for redevelopment

Land size: 1.5 acres

Price: $100 million

Date of sale: March 2022

Seller: Private investor

Buyer: Vancouver General Hospital (VGH) and the University of B.C Hospital Foundation.

 

© 2023 Western Investor

Average rent increased by 10.9% in 2022, report shows

Shantae Campbell
Financial Post

Condo buildings in Liberty Village neighbourhood in Toronto. Photo by Carlos Osorio/Reuters files

Canadians faced an average annual rent increase of 10.9 per cent in 2022, with another five per cent increase forecast for  2023, according to year end data from Urbanation and Rentals.ca.

Average monthly rent for December was up 12.2 per cent at $2,005 on a year-over-year basis, according to the groups’ monthly rental report. That marked a slight decline from November.

Out of the 35 cities surveyed, Vancouver had the highest monthly rent for December, with a year-over-year increase of 16.8 per cent for one-bedroom units and 17.9 per cent for two bedrooms, with average rents of $2,596 a month and $3,562 a month, respectively.

Toronto claimed second place as the most expensive monthly rent with a year-over-year increase of 21.3 per cent ($2,457) for a one-bedroom unit and 18.1 per cent ($3,215) for a two-bedroom unit.

Calgary finished third with an average year-over-year increase of 22.6 per cent to $1,816 per month for purpose-built and condominium apartments.

 

As for apartment and condo rentals in December, Ottawa and Edmonton ranked fourth and fifth, with annual increases of 14.5 per cent and 11.7 per cent, respectively, while Montreal’s average rent increased by only 6.6 per cent.

Higher borrowing costs have kept rental demand strong in the face of falling supply, Shaun Hildebrand, president of Urbanation said in the report.

“The Canadian rental market had one of its strongest years ever in 2022, more than reversing any weakness experienced during the pandemic,” Hildebrand said. “Rental demand is primarily being driven by a quickly growing population that is finding it increasingly more difficult to afford homeownership or find suitable rental housing. Looking ahead for 2023, rents are expected to continue rising, but less heated growth can be expected as the economy slows and new rental supply rises to multi-decade highs.”

According to the report, It is expected that rents will increase at a more moderate five per cent in 2023, as economic and employment conditions begin to soften after the rapid rise in interest rates and record breaking rents.

The annual rent increase figure of 10.9 per cent was determined by taking the weighted average for rents across all 12 months of 2022 and dividing over the weighted average rents across all 12 months of 2021,

Rentals.ca said.

 

© 2023 Financial Post

Average rent increased by 10.9% in 2022, report shows

Shantae Campbell
Financial Post

Canada’s inflation rate slows in December

Fergal McAlinden
CMP

Annual price growth cooled in the final month of 2022

The annual rate of inflation in Canada fell to 6.3% in December, according to the national statistics agency, with gas prices posting a notable monthly decline.

Statistics Canada said in its latest consumer price index that Canadians paid 13.1% less for their gas last month compared to November, a trend that it attributed to lower crude oil prices across the world.

Still, grocery costs remained high, coming in 11% higher than the same month in 2021, and increases in mortgage interest costs, personal care supplies and clothing offset the slowdown in annual price growth.

The overall inflation rate came in slightly lower than many observers had anticipated, with a Bloomberg survey prior to the announcement indicating expectations among economists of a 6.4% gain in the consumer price index.

Discounting food and energy inflation, December saw year-over-year prices increase by 5.3%, StatCan said.

While inflation is still significantly higher than the Bank of Canada’s 2% target, December’s reading marks another month of slowing price growth after the inflation rate spiked to 8.1% in August last year.

The central bank is due to make its first decision on its benchmark interest rate on January 25, with a further quarter-point hike expected to be announced.

 

Copyright © 1996-2023 KM Business Information Canada Ltd.

Annual pace of housing starts slows in December

Fergal McAlinden
CMP

The trend was driven by a decline in urban starts

The annual pace of housing starts in December fell by 5% compared with the previous month, according to Canada’s national housing agency.

Canada Mortgage and Housing Corporation (CMHC) said on Tuesday that last month saw a seasonally adjusted annual rate of 248,625 units, a decline from November’s 263,022 that was driven by a lower pace of urban starts.

That measure slipped by 5% to 227,708, according to CMHC, with the rate of single-detached urban starts down 11% (to 44,858) and the pace of multi-unit urban starts dropping by 4% (to 182,850).

 

Toronto led the way in overall housing starts in December, with 71,510 units, compared with 38,058 in Vancouver and 12,905 in Calgary. That amounted to a December increase of 72% in total SAAR starts for Canada’s most populous city.

Montreal saw 12,052 new housing starts while Edmonton posted 9,582, Winnipeg had 4,478 starts, Quebec came in with 4,462, and Victoria saw 3,295.

Overall rural starts, meanwhile, posted a seasonally adjusted annual rate of 20,917 units last month.

 

Copyright © 1996-2023 KM Business Information Canada Ltd.

Surrey 14-acre industrial site sells for $75 million

Western Investor Staff
Western Investor

Once the site of a newspaper printing plant, the site was sold for land value and eventual development

Re/Max Little Oak Realty, Surrey, B.C., for Western Investor

 

Property type: Industrial land

Location: 12091 88th Avenue, Surrey, B.C.

Land size: 14 acres

Zoning: Light industrial

Date of sale: May, 2022 ( closed)

Sale price: $75 million

Buyer – Northwest Development Ltd., Burnaby, B.C.

Brokerage: Re/Max Little Oak Realty, Surrey, B.C.

Broker: Daisy Chohan

 

© 2023 Western Investor

Home prices fall a record 12 per cent in 2022 as homeowners grapple with rising rates

Fares Alghoul
other

The Canadian Real Estate Association expects a further 5.9 per cent decline this year, with a rebound in 2024.

The Canadian Real Estate Association said average house prices in Canada dropped a record 12 per cent in 2022, while sales fell more than 39 per cent from December 2021.

The average national home price in December was $626,318, down from over $816,000 when the market peaked in early 2022, said CREA in a new report.

The once high-flying Canadian real estate market has been hit hard by a series of interest rate hikes over the past year, and many observes expect more trouble ahead as homeowners grapple with mortgages rates over 6 per cent.

But despite ongoing economic worries, national home sales have remained almost stable since the summer, “suggesting the downward adjustment to sales activity from rising interest rates and high uncertainty may be in the rear-view mirror,” CREA said in the report.

“The adjustment to higher rates is not fully over, but one major sign is that sales haven’t really fallen any more since last summer. The market also tightened up in December,” Shaun Cathcart, senior economist at CREA, told the Star.

However, the 12 per cent drop was still an “all-time record,” ahead of similar collapses in the 1980s and 2008.

The national average price is heavily influenced by sales in Canada’s two most active and expensive housing markets, said CREA: Greater Vancouver and the Greater Toronto Area. Excluding those two markets cuts about $118,000 from the average national price.

CREA’s benchmark Home Price Index was $730,600 in December, down 1.6 per cent from the previous month. That represents a 13.2 per cent decrease since February, according to the industry group, when prices reached their peak before the Bank of Canada started hiking interest rates to curb inflation.

A slight rise of 1.3 per cent in Canadian home sales was reported in December from November, while the number of newly listed properties dropped 6.4 per cent month-over-month.

CREA expects average home prices to decline a further 5.9 per cent in 2023. But prices will rebound 3.5 per cent in 2024, it said. Home sales are forecasted to rise by 10.2 per cent in 2024 as markets continue to return to normal.

The “decline has already happened over the course in 2022; however, the record-setting start to that year will be reflected as a decline this year as prices are not expected to be anywhere near those record levels in 2023,” CREA said.

Still, rate hikes could spoil hopes of a turnaround. Higher rates make it hard for first time buyers to qualify for a mortgage and enter the market, “and if the Bank of Canada raises interest rates further and we have a recession, then I would not be surprised if house prices fell more,” said Jim Davies, a professor emeritus at the Department of Economics, University of Waterloo.

In the Greater Toronto Area, the average home price in December was $1,106,000 — a 1.1 per cent decline from November and 8.9 per cent from the previous year.

In the GTA, “we don’t have enough product in the market” as new listings are still down, and that justifies why the Toronto market is still expensive, said Desmond Brown, a Toronto real estate agent.

While some prefer to sit and wait, “there are still a lot of people who have to buy and sell for legitimate reason,” he added. “The provincial government and city of Toronto are doing their best to try to bring in supply, but that supply is not coming soon enough.”

 

With the drop in sales, a positive outcome for new buyers is their ability to negotiate. “Now, properties are sitting longer in the market, and they are able to negotiate a price that ends up in most cases under the asking price,” Brown added.

 

© Copyright Toronto Star Newspapers Ltd. 1996 – 2023

Canada Home Prices See Record Drop as High Rates Hit Buyers

Ari Altstedter
Financial Post

Canadian home prices fell by the most on record in 2022, as rapidly rising interest rates forced a market adjustment that may have further to go.

A “Sold” sign in front of a home in the York neighborhood of Toronto, Ontario, Canada, on Thursday, March 11, 2021. The buying, selling and building of homes in Canada takes up a larger share of the economy than it does in any other developed country in the world, according to the Bank of International Settlements, and also soaks up a larger share of investment capital than in any of Canada’s peers. Photo by Cole Burston /Bloomberg

(Bloomberg) — Canadian home prices fell by the most on record in 2022, as rapidly rising interest rates forced a market adjustment that may have further to go. 

The country’s benchmark home price fell 1.6% in December to C$730,600, bringing the total decrease since February’s peak to 13.2%, the Canadian Real Estate Association said Monday. 

The decline was the biggest peak-to-trough falloff since the group started compiling the data in 2005. Last year also saw the biggest price decline for a calendar year since records began, with a 7.5% drop overall.

With the economy in danger of entering a recession, and the Bank of Canada warning of more rate hikes to counter persistent inflation, the housing market may face continued pressure in the coming months. 

A record number of buyers used floating-rate debt for purchases during Canada’s pandemic-era real estate boom, and those borrowers may come under increasing strain if mortgage costs remain high. Job losses from an economic slowdown also would make it harder for people to keep up with loan payments and stay in their homes.  

Economists surveyed by Bloomberg predict Canada will enter a recession in the first part of this year. 

“As we look ahead to the crucial spring selling season, the all-important question is who will emerge from hibernation in greater force — buyers or sellers?” Douglas Porter, chief economist at the Bank of Montreal, said in a note to clients commenting on the new sales data. “We suspect that the market will still be digesting the rapid run-up in interest rates, and that buyers will be more reluctant to re-emerge, keeping prices under pressure for some time yet.”

Pulling Back

The housing slump so far has largely been driven by a pullback among buyers who’ve been priced out due to higher interest rates. The number of transactions in December was down 39% on a non-seasonally adjusted basis from last year, when the market was approaching its peak and before interest rates started rising. 

Read more: Global Central Banks Aren’t Declaring Victory Over Inflation Yet

Compared with November, the number of sales in December rose 1.3%, while new listings fell 6.4% as more prospective sellers opted to try and wait out the market weakness.

Part of that may be seasonal: Listings tend to slow during Canada’s winter months, then pick up again when the weather warms in the spring, traditionally the busiest time to sell.

So far, the decline in prices doesn’t seem to be enough to lure back many buyers because it’s been so outpaced by the rise in borrowing costs. From a record low 0.25% last March the Bank of Canada has raised its benchmark rate to 4.25% today, meaning prospective buyers looking for a 5-year mortgage now often face rates of about 6.5%. 

Despite the past year’s decline, prices rose so fast during the pandemic buying frenzy that the national benchmark in December remained 33% higher than it was three years earlier. A report last month by Royal Bank of Canada showed that for the typical buyer dependent on a mortgage, housing affordability deteriorated to its worst level ever as mortgage rates rose with prices still elevated.

 

© 2023 Financial Post