Often referred to as Canada’s Festival City, Edmonton is celebrated for its vibrant arts and culture scene, incredible choice of neighbourhoods and excellent infrastructure. It’s also rated one of the top cities in Canada for employment rates, affordable housing and overall positive quality of life.
What can we expect from Edmonton’s thriving real estate market in 2023?
Here’s what you need to know.
Climbing Interest Rates Expected to Stabilize
When it comes to mortgage interest rates for 2023, economists are on the fence.Though the Bank of Canada (BOC) increased its rate seven times last year (including an entire percentage point in July), some experts are hopeful current rates are here to stay. Other economists predict a continuing rise in rates until inflation cools, with the current prime lending rate at 6.45% (key interest rate of 4.25%) as of December 2022.
For now, the BoC has held its benchmark rate, which may lead to a slight decline in fixed mortgage rates over the next 12 months. In addition, the country’s mortgage stress test has peaked at 5.25% (or contract rate +2%), and, as rates stay the same, so will the stress test.
Short-term fixed rates (one, two and three years) are also anticipated to become more popular in 2023.
Experts recommend getting pre-approved for a mortgage loan at least four months before making a new home purchase. A pre-approval will protect you from potential rate increases during your home search.
Home Prices Expected to Rise
As per RE/MAX’s 2023 Canadian Housing Market Outlook, Alberta home prices are expected to rise in 2023, particularly in major markets such as Calgary and Edmonton. Edmonton is anticipated to see average prices increase by 3%, spurred by move-up and move-over buyers searching for single-family homes. Condo prices, on the other hand, may drop as much as 1.5% from $210,300 to $198,000.
Current factors influencing average home prices in Edmonton include rising interest rates, migration from other provinces, an increasing demand for luxury real estate and balanced market conditions (see below).
Despite the impending rise, Edmonton homes are still considered relatively affordable compared to Calgary and other major markets. For example, the average 2022 residential sale price in Calgary was $658,277 vs. $401,025 in Edmonton. Greater Vancouver and Greater Toronto sale prices were listed at a whopping $1,267,131 and $1,203,916, respectively.
Other Regional Sales Trends:
- Despite rising interest rates over the last 12 months, most Albertan home buyers have not capped their mortgage capacity.
- The demand for downtown Edmonton condos is expected to continue in 2023 (see: The Benefits of Choosing a Downtown Edmonton Condo)
- Average sales are expected to decline by 2% in 2023
- New construction developments are still facing supply chain issues and inflationary cost challenges. A shortage of skilled labour also poses a problem for many Edmonton home builders.
A Balanced Market
Unlike a seller’s market where home inventory is limited (compared to the number of buyers), or a buyer’s market where there is an oversupply of homes, a balanced market sees a leveling out of supply and demand. Since 2022, Edmonton has shifted from a seller’s market to a balanced market. As a result, both buyers and sellers can look forward to reasonable sale prices and offers, reasonable closing times and less tension during negotiations. Other characteristics of a balanced market include:
Stable Property Prices – Property prices stabilize because inventory and buyer demand are equal. As a result, there is less volatility regarding property surges and fewer chances for multiple bid situations.
Interest Rates – Stable interest rates also contribute to a balanced market. When interest rates are both affordable and predictable, buyers are less inclined to rush as a means of protecting themselves from rising rates.
Favourable Market Conditions – Home buying and selling transactions are generally smooth and timely – with fewer negotiations and contingencies between buyer and seller.
Even Competition – As properties are purchased, more properties will make their way onto the market. As there is no under or oversupply, buyers feel less inclined to compete for available listings.
Days on Market –As long as properties are priced correctly the first time, they will be sold within a reasonable timeframe. Days on market are within the average date range.
Find out how much your Edmonton home is worth today with the help of our Free Market Evaluation.
Summing it All Up:
- Experts predict BoC interest rates will stabilize for 2023, with a current key interest rate of 4.25%. The mortgage stress test is also expected to stay the same (5.25%). Economists are also anticipating an increase in short-term, fixed-rate loans.
- Edmonton home prices are expected to increase by 3% in 2023, spurred by move-up and move-over buyers searching for single-family homes. Condo prices are anticipated to drop as much as 1.5%, though experts predict an increase in demand for downtown Edmonton condos.
- Edmonton has transitioned from a seller’s market to a balanced market. With supply and demand now on an even keel, buyers and sellers can expect reasonable sale prices and offers, streamlined closing times and a smooth negotiation process.
Are you thinking about buying or selling a home in the Edmonton area? Get started with our fully comprehensive buyers’ and sellers’ resources, including:
- Home Buyer’s Guide – Step by step, we’ll walk you through the home buying process from start to finish.
- Six Essential Tips That Make Home Buying More Affordable - Learn how to make buying a home in Edmonton more affordable with these simple, easy-to-follow tips!
- Seller’s Guide – From pricing your home correctly to attracting the right buyers at the right time, our detailed seller’s guide will set you on the right path for a successful home sale.
- 12 Common Mistakes to Avoid When Selling a Home – Even the most seasoned Edmonton home sellers can make mistakes. Save money, time and stress by avoiding these all-too-common home-selling pitfalls.
- The Best Places to Live in Edmonton
- #7 Essential Tips for Selling Your Home Fast and For Top Dollar
- 5 Easy Ways to Pay A Mortgage Off Quicker
Photo credits: shutterstock.comPosted by Terry Paranych on