April. My favourite month. Not only do I celebrate my birthday but Spring is here and the days are getting warmer and longer. We did get a couple of late snow falls in March which caused havoc on the roads for a couple days but this is common for Edmonton in March and as long you are sensible in these matters you should be fine but we are glad that is all behind us now and looking forward to a busy Spring Market.
March Sales figures are out and as you can see in the below graph, the average price for homes in Edmonton has been steadily increasing. April and May are historically the busiest times of the year for our Real Estate market with more sales and higher prices. We expect to see this continue into April as Edmonton population is increasing higher than the national average even if the number of people moving here is less than the previous year.
The biggest uncertainty facing our market (and all markets in Canada) right now is how the tariffs will play out. The stock market has already seen a huge correction but the stock market reacts much quicker as it is more volatile than Real Estate. If you wanted to buy or sell stock, it is as quick as clicking a button. Real Estate is long term and changes are more gradual because even if you want to buy a home right now it would be a couple weeks or even a month before you could move in. This time factor is part of what makes Real Estate more stable.
With the uncertainty of how the tariffs will effect the Canadian economy, some lenders are imposing tighter restrictions on getting a mortgage for workers who are in the most affected industries. Bringing the TDS (Total Debt Service) from 44% down to 42% will limit their buying power so they will have to buy less home or look to buy in more affordable areas. We are still seeing a lot of our buyer clients are moving from other provinces simply because Edmonton is so affordable compared to other major Canadian cities. We are also seeing more Millennials looking to buy a home which makes sense as they are of an age where they are looking to settle down and have the financial means to do so. The National Association of Realtors did a recent survey which shows 29% of home buyers are Millennials and only 24% of buyers are Gen X. That is just over half of all buyers so which group makes up the balance? Coming in with 42% are Baby Boomers. They make up the largest segment because they have money to buy, they are buying investment property to support their retirement, they are buying homes to help their children get into home ownership, and they are buying homes to downsize.
With the uncertainty from tariffs, expect the banks to lower interest rates further. This will be welcome relief for lots of borrowers who purchased homes with super low rates during the pandemic but 5 years later comes time for renewal. Current rates, while higher than 5 years ago, are not going to be as dramatic a jump for borrowers and therefore we don’t think there will be an excessive amount of foreclosure homes hitting the market so that should keep prices stable.
And if buying a beautiful home still seems out of reach, have you considered mortgage plus improvements? Basically this lets you buy the worst house on the best street. Sure you will have to renovate but this is why the home is more affordable and the good news is, the cost of the renovations gets added to your mortgage so you really only pay a fraction of the cost for renovations. Interested? Ask your mortgage broker for more details.
We are enjoying making content for our new youtube video channel much more than we thought. We do have someone to help produce professional looking videos but we find doing quick videos ourselves, while less professional, it is more satisfying and seems to generate more views like the video below.
This article contains the opinions of Andrew Barrett and Selena Cheung. Licensed Realtors® with RE/MAX Excellence.
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