Don’t Let Doom And Gloom Freeze Your House Search!

real estate market

Pundits, journalists, and talking heads had been beating the drum for years that Canada’s housing bubble is due to pop in Canada’s real estate market.  As a pandemic-driven jump in prices cooled off, and as the Bank of Canada raised interest rates twice(with another hike on the horizon), the long-awaited real estate market market correction has finally materialized.

This is obviously scary news for sellers, but also for buyers it’s hard to commit to jumping into the real estate market when you’re thinking prices might be 10%, 20%, 30% lower in six months…

Besides the folly of timing, the market(don’t try it!)buyers in Edmonton need to detach from a gloomy national conversation and focus on the dynamics of our local real estate market.

While you may not believe it, home prices in Edmonton are actually undervalued, and may be going up, not down, in the near future!

When someone is making the case that housing prices have a long way down to go, they can point to a measurement published by Canada’s banks that compares housing prices with the growth in interest rates and wages(adjusted for inflation). Usually, these three things(home prices, interest rates, and real wages) grow together- at roughly the same rate. Recently, however, home prices have jumped ahead! Using numbers from BMO as reported by Daniel Wong, Toronto is ahead by 41%, and its suburbs and exurbs by 71%! Big numbers like this are common across many of Canada’s real estate markets and point to a coming correction.

However, the situation is different in Alberta– home prices are actually lagging behind by 5%! Edmonton is still considered one of the three most undervalued markets in the country, next to Winnipeg and Regina. And the price of an average single-family home in the current market is still holding strong, another indicator that Edmonton’s real estate market is an exception among Canada’s real estate markets.

While the interest rate and current cost of a mortgage are giving many buyers pause, it’s important to remember your goals and avoid panicking. If you’re still in a good place to buy, Edmonton’s market does not show signs of being overvalued and this could be an excellent time to jump in as less courageous buyers stay on the sidelines. If you try to wait out the market, you could end up as one of many hungry buyers rushing back in when Edmonton bucks the trend and doesn’t crash!

Tim Grover – Edmonton Realtor

Source Material: The Bank of Canada, Edmonton Journal,  and Better Dwelling