Winter Solstice has just finished and we are having the coldest day of the year. Minus 36 when my hubby got up and take another 10 degrees off for the wind chill. Me? I stay in bed and hibernate. This blast of cold air is effecting all Canada but when Fionna heard Vancouver (airport) shut down from the cold at minus 12, she just laughed. It is amazing what you can get used to. So capping off what has been a busy year for Real Estate here in Edmonton, we wish you happy Holidays and a prosperous 2023.
While it is cold and snowy, it is the perfect time to get out and enjoy displays of Christmas lights. The University of Alberta have their popular Luminaire display at the Devon Botanical Gardens and it is extremely lovely walking around admiring it all, provided the wind doesn’t pick up. Make sure to dress warm regardless. As well as the light display, you can book an igloo and enjoy a three course fondue feast.
It is no surprise the Canadian housing market is correcting under intense downward pressure from higher interest rates but the Prairies, in particular Calgary and Edmonton, continue to operate at pre-pandemic levels despite the corrections that have taken place to date. Strong Provincial economy and rising in-migration are obviously helping but I think a lot has to with our prices are affordable, even at the peak. We certainly have one of the more mild market corrections of major Canadian cities.
While the December sales figures are not out yet, we do know that for the month of December, the number of sales have slowed down to pre-pandemic levels. To put that into context, prior to 2020, Edmonton would see roughly 17,000 sales per year and our market has been like that ever since I got my Realtor license. So knowing that, I am feeling positive for our market heading into 2023 despite headlines of recession and doom.
Headlines thrive off bad news so you will hear stories like the market is down 30% or more. Ask yourself, which market, and what are they comparing. I mentioned before pre 2020 we did on average 17,000 sales each year but 2021 was over 24,000 sales. Wow, 40%. What a jump. But what has been happening in 2022 with the slow down from all those interest rate increases? Good question. So despite numerous headlines of market crashes and the December figures are not out yet, it looks like we will do 24,000 sales in 2022. Rather phenomenal don’t you think. And if predictions are correct then that 30% correction brings us back to pre-pandemic levels of 17,000 which Edmonton has seen almost every year I have had my Realtor license.
Wrapping up the year there was a news article for stock investing that mentioned Real Estate as one of the best investments in these current times. It may seem counter-intuitive and why would someone giving stock advise tell you to buy Real Estate. They were suggesting to add one of the numerous REIT’s to your portfolio because historically given similar market conditions and interest rates, Real Estate has outperformed the bond and equities market several times over. I did hear average rent in Edmonton has increased by 9%. That is not as much as other cities, but our Real Estate prices are more stable too.
Each time the Bank of Canada increase interest rates (yes they did it again by half percent) it erodes a buyers purchasing power as they have to qualify for a higher amount. One thing we have noticed here in Edmonton is that as interest goes up and prices come down, buyers are still able to buy the same home. Normally you would expect this translating to smaller square footage or going from detached home to an attached home, but as I have said before, Edmonton is very affordable.
But High interest rates have their benefits. (its not really that high, in fact it is no higher than it was back in 2008 and we all got through that without deliberating on it.) One benefit of these higher mortgage rates is higher interest for savings accounts. We are finding more condominiums with healthy reserve funds are putting part of their reserves into high interest GIC’s for 1 year fixed and 1 year redeemable which given the circumstances, makes a lot of sense. When you buy a condo you should always review the condo docs and make sure you are happy how the board are managing the complex.
This article contains the opinions of Andrew Barrett and Selena Cheung. Licensed Realtors® with COLDWELL BANKER Venture Realty.
The trademarks REALTOR®, REALTORS®, MLS®, Multiple Listing Service®, and the associated logos are controlled by
The Canadian Real Estate Association (CREA) and identify real estate professionals
who are members of CREA or identify the quality of
services provided by Real Estate professionals who are members of CREA
Copyright © 2022 Wealthyhome. All rights reserved.