Edmonton real estate heads into the buyer’s market

The rise in average prices is beginning to slow.

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Home resales continue to decline, according to the latest numbers, as Edmonton’s once-hot housing market no longer favors sellers as it did earlier in the year.

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“The market is becoming more of a buyer’s market than it was at the start of the year, when it was a full seller’s market,” said Paul Gravelle, president of the Realtors Association of Edmonton.

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Recent statistics from September show that 1,581 sales took place, compared to 1,876 last year, a drop of almost 16%. Activity is also down month-over-month by around 12%.

Average prices, which had previously increased slightly year-over-year, also began to lose momentum. Last month, the average home price was about $375,000 in the Greater Edmonton area, down about 0.7% year over year.

Still, average single-family home prices edged up to $463,051, up about 2% from the same month last year. Yet days on market are increasing even for the most in-demand housing segment, 44 from 38 days in September of last year.

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Local real estate agent Drew Carlson notes that the market is “definitely softening and people need to price their homes fairly competitively.”

This marks a change from the spring when sellers could price their homes higher and still see multiple offers, says real estate team realtor Drew Carlson.

“People who were hunting in the $450,000 range aren’t anymore,” he says. “They have a cap of around $380,000 so they are now looking at a duplex as opposed to a single family home.”

Higher mortgage rates are dampening demand, but they’re not the main obstacle, says Gravelle. “The problem is the stress test.”

With the Bank of Canada raising rates since March by more than 300 basis points, dramatically boosting mortgage lending, most buyers now have to qualify under the stress test at their offered rate plus two percentage points, which which is now over six percent.

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By contrast, they previously had to qualify at 5.25%, the Bank of Canada’s benchmark five-year fixed-rate mortgage, at the start of the year.

Rising borrowing costs have pushed many buyers into lower-priced segments, says Bev Hasinoff, realtor at Liv Real Estate in Edmonton.

“That’s what we see with condominiums,” she says. “With rising mortgage rates changing how much people can afford, they are looking for affordable alternatives.”

Still, Gravelle says condominium fees can be a barrier to segment growth. Even though the average price for a condo in Edmonton was around $220,000 last month, among 459 sales, prices were still down about 2% year over year, while sales were down about 1%.

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“Not only do you have to consider the cost of the mortgage, but there are condo fees that can be around $700 a month, which equates to around $100,000 of reduced borrowing,” he says. .

Still, a silver lining is that shoppers now have more choice at lower prices than at the peak of the market in the spring.

“The benefit for buyers is that sellers realize they need to become more competitive with more properties to choose from,” Hasinoff says, noting that this will inevitably mean lower listing prices.

Yet unlike other markets in Canada, Gravelle notes that the Edmonton market remains in good shape, driven by strong migration and job growth.

“We have a healthy economy with people moving here who need homes, which will help boost our market.”

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