I attended the Edmonton regional housing forecast yesterday, and most of the concern surrounding the market was the falling price of oil, while this a concern all the presenters agreed that the Edmonton market will remain stable, however the rate of growth will slow. Todd Hirsch, ATB chief economist speculated that oil will rebound in 2015 to between $75 - $80 a barrel, as $50 and $109 oil are both unsustainable.
We also tend to forget that our economy is not totally dependant on oil, with reamining 3 of the top 4 sectors (agriculture, forestry and tourism) expected to grow faster as a result of lower fuel costs.
Development in the downtown core, not only with the arena but multiple other projects will also provide a boost to our economy, Todd Hirsch reiterated that Edmonton's downtown is one of the fastest growing in North America.
What is important is to remember is that real estate is regional and a lot of what we hear in the media is driven by the Vancouver and Toronto markets, which are significantly different from ours. With Average home price in Vancouver at $801,450 and Toronto $577,963, both cities have a lower average family income, therefore making housing costs much higher. The average home in Canada sits at $413,639 making the Edmonton region still very affordable.
The article below gives a summary and is taken from the Edmonton journal dated January 7 2015. Click here to be taken the article on the Edmonton Journals website.
The Edmonton-region housing market will slow down but still hold steady in 2015 despite an ongoing collapse in oil prices, says the Realtors Association of Edmonton.
The group, which represents 3,200 real estate brokers and associates, issued its annual housing forecast Wednesday which predicted stability in the face of economic uncertainty with oil prices falling below $50 per barrel.
Sales of single-family homes will remain flat at the same level as 2014’s 11,500 transactions, the forecast said.
Condo, duplex and row house sales will increase by a modest 2.5 per cent throughout the region.
Prices will fluctuate through the year, but the 12-month average for a single-family detached home is anticipated to increase about 3.5 per cent, up from the 2014 average price of $432,713.
Condo average prices are forecast to increase by 2.5 per cent over the year from the 2014 12-month average price of $252,175. The group attributes the lower growth rate of condo average prices to an influx of new units hitting the market.
New association president Geneva Tetreault said the forecast took the troubled energy sector into account, but the regional economy remains relatively strong.
“We’ve had a phenomenal year in 2014 and there are still a lot of other great things that affect our economy,” Tetreault said.
“We just expect things to level or maintain where they are. Interest rates are still low and there’s a lot of great things going on in the city as well as in the province.
“It’s wrong for us to look at our industry as everything being based on one thing.”
Canada Mortgage and Housing senior market analyst for Edmonton Christina Butchart said the federal agency’s own numbers generally concur with the Realtors’ forecast.
“CMHC is pretty much in line with a lot of their forecasts,” Butchart said.
“For prices, we’re expecting a little slower growth in 2015 and 2016 than we saw in 2014. For sales, we agree that we’re not going to see that faster pace of sales that we saw in 2014.”
ATB Financial chief economist Todd Hirsch said the turndown in the energy sector was not showing immediate effects on the housing market.
“Builders are still reporting generally good, steady demand for new homes, although there is an increasing sense of caution in the industry as in-migration from other provinces is set to slow in 2015,” Hirsch wrote in the financial institution’s economic outlook released Wednesday.
“Mortgage lending rates have continued to support new purchases. With very little concern about the prospect of interest rates rising within the next six months, there should be little worry about higher rates destroying demand any time in the immediate future.”
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