Restrained growth seen for Edmonton housing in 2013

January 9, 2013 Edmonton Journal, Bill Mah

 

Despite leading the country in employment, a steady stream of migrants and still-enviable economic growth, the Realtors Association of Edmonton forecasts “restrained” growth in the local resale housing market for 2013.

The prices of single-family MLS homes in the Edmonton region will increase on average by two per cent to $390,020 from $382,373, according to the group’s annual forecast released Wednesday at a seminar.

With sales moderated by a growing supply, condominiums will increase by one per cent to an average selling price of $237,829 from $235,474.

The number of homes sold in 2013 is expected to inch upward by three per cent, according to the forecast.

“The real estate market in Edmonton and area will remain stable and show steady but restrained growth in prices and sales numbers,” said Darrell Cook, new president of the Realtors’ group.
“Unless there are unforeseen external influences, there is very little possibility of any cliffs, bounces or bubbles.”

The forecasted increases would represent a slower pace of growth than the market saw last year, when the average residential price jumped 5.4 per cent year over year.

Single-family homes ended 2012, up 6.8 per cent over last year, but condo prices ended last year down by less than one per cent.

A forecast released earlier in the week by Royal LePage was even more conservative, predicting Edmonton homes would sell an average of only 0.6 per cent higher in 2013 than 2012 while sales will fall 3.4 per cent year over year.

Cook and others who spoke at the real estate seminar said newcomers to the region are a major influence on the housing market.

Edmonton’s annual population growth has averaged 12,000 since the last municipal census in 2009, according to the City of Edmonton.

“We’re seeing a lot of in-migration but a lot of these people are coming into town and they’re renting for the first year. Who knows what will happen for 2014 when they do start to buy,” Cook said.
John Rose, chief economist for the City of Edmonton, said a tight labour market will put Edmonton on pace for slower economic growth of about four per cent, compared to about 4.5 per cent in 2012.

The same skills shortage is attracting migrants and keeping wages high, he said.

A growing population and high average incomes are good news for the housing market, but Rose agreed with Cook that the rental sector is the first to benefit.

“The rental vacancy rate is down below two per cent and we’re going to see that spill over into the housing market in terms of both resales and new housing,” Rose said.

Economic uncertainty in other parts of the world and Canada may also be restraining homebuyers, Rose said.

“The other key factor is I think people are looking around at what’s happening in Vancouver, Toronto and Montreal, so there’s a little bit of hesitancy on the part of consumers to go out there and buy like there’s no tomorrow.”

While newcomers to Edmonton haven’t yet left their mark on home sales, their impact is being felt on the rental market.

Rents are forecast to rise in 2013 to an average $1,100 a month from $1,070 a month last year, said David Lan, senior market analyst for Canada Mortgage and Housing Corp.

Rental housing starts are expected to more than double in 2013 to more than 1,800 units.