After finishing 2016 rather unscathed, the Edmonton region housing market will finally take a hit in the new year.
The Realtors Association of Edmonton held its annual housing forecast seminar January 4 at the Northlands Expo Centre. New chair – and owner of Realty Executives in St. Albert – James Mabey predicted a drop in both sales and prices for the Edmonton region, as inventory continues to grow and consumer confidence to dwindle.
“We are expecting things to pick up towards the middle and back half of 2017 however as consumer confidence rebounds a bit,” he said.
Last year was similar to 2015 – strong prices, high inventory and dipping sales – but consumer confidence waned due to the province’s economic situation. This left houses on the market longer and created an inventory glut, which will finally start to affect prices.
Sales of single-family homes are expected to drop by another 1.7 per cent in 2017. Prices will follow, decreasing by 2.2 per cent. Last year, 5.4 per cent fewer homes were sold year-over-year (from 10,534 to 9,961). Prices remained stable, dropping only slightly, by 0.5 per cent.
Condos dropped 14 per cent in sales last year. It is expected that sales will stabilize and increase slightly (by 0.2 per cent) in 2017. The average sale price was down in 2016 by 0.9 per cent. It is expected prices will decrease a further 3.8 per cent.
“It’s not a bleak outlook,” said Mabey. “2016, I would say was a fairly unremarkable year. It was dipping sales, lots of inventory and really steady average prices. We’ll start to see some downward pressure on those prices, but nothing drastic.”
One looming question on realtors’ minds is how the new mortgage rules set out by the federal government in October will influence the market.
The new “stress test,” which tests the ability of a buyer to repay a loan against a higher five-year rate, makes it harder for first-time buyers to get approved for a mortgage and could price many of them out of the market.
Mabey said the answer would have to wait until the spring, given that the fall season wasn’t a particularly busy season.
However, last year’s numbers may give some indication of how buyers might react.
Duplex and row houses continued to gain in popularity, with increased sales of 8.3 per cent.
“Particularly with the new mortgage stress test rules that came into effect in the fall last year, buyers, especially first time buyers, are really having to crunch the numbers and figure what they can afford to qualify under that higher rate,” said Mabey.
While homes averaged 57 days on the market, there are a few hot spots that took between two to three weeks less to sell.
Three neighbourhoods in St. Albert outperformed in terms of turnover. Homes in Grandin sold in an average of 38 days, while homes in North Ridge and Lacombe Park were on the market for 41 and 42 days respectively.
Matthew Barry, a St. Albert realtor with RE/MAX Professionals, also spoke during a panel discussion. He said despite the glut, there was a lack of well-priced, well-located inventory.
“The good properties were hard to find in the suburban areas. You couldn’t come across clean, well-maintained homes sometimes, so those would go very quickly,” he said. “Inventory was low for a lot of the price ranges, especially the $400,000s. It was tough pickings out there.”
The forecast predicts that single-family dwellings ranging from $350,000 to $450,000 will continue to be strong in 2017.
St. Albert was the most expensive place to buy a home in the Edmonton region in 2016 with an average price of $423,551.
