Edmonton Housing Market Update | December 2022

[@jasonknoblauch1665]

Single family homes are still way to over valued.

[@erickrodriguez1950]

First time watching, amazing. Thanks so much!

[@TheJJDaily]

Thanks Trevor! Good luck out there.

[@raffaellawilson9650]

Thanks Trevor! Is Inglewood a good neighborhood?

[@akashdeepsingh9333]

Great knowledge

[@stevearden4903]

I like turtles

[@sulaymankamara797]

Thank you for the update

[@deeejayeee]

No matter how bad things get there will always be buyers and sellers...just fewer

[@ajd7772]

Thanks Trevor. Appreciate it. The market has definitely shifted downwards. December seems super slow. That being said, condos (especially lower priced ones) seem to be outperforming the rest of the market. Not a surprise considering that as rates go up, people will probably look for lower prices. Here's one other hypothesis I have: As interest rates go up, high condo fees become less relevant. For instance, take a $400,000 condo that has $800 condo fees. When interest rates were 1.5%, the mortgage on this condo would have been $1600 a month, so condo fees would have been 50% of the mortgage payment. But with mortgage rates at 5%, payments would be around $2400 a month, so $800 in condo fees would only be 1/3 of the mortgage payment amount. It makes it easier to stomach for people. Just one thought. I also think detached is struggling because WFH is slowly dying and people are returning to the DT core. Renting has been very hot lately because people want to be in DT, but don't seem to want to commit to buying (yet). Interestingly this has resulted in many condo projects choosing to become rental buildings instead. Once those condos become rental buildings there's no going back. If in the future a lot of renters of condos decide they want to buy, there could actually be a shortage of condos in Edmonton especially in the downtown area especially with all the immigration. We're a ways away from that though. Next few years will be a bit rough. Excited to see what Spring brings, good or bad.........

[@ajd7772]

@@TrevorTardif Hi Trevor. You make some good points, but of course you would agree that there is a point when condos become undervalued. When is that point? I can show you a direct comparable (same unit in building) that sold for $500 per sqft in 2014, and sold for $250 per sqft in 2022. Great building, newer, nothing wrong, just condo fees that are $0.70 per square foot. If condos approach $200 a square foot in downtown edmonton (you could never build for that) they become very attractive long term. Detached has been "king" for a long time but markets are cyclical. That being said there is a long ways to go, the downtown core is devastated right now and if we go into a recession we will see a ton of businesses shut down. It could take 5 or 10 years before we see Edmonton's downtown really take off but it will happen. I liken buying a condo in downtown edmonton right now to buying one in Vancouver in the early 90's.

[@ajd7772]

@@TrevorTardif You're definitely not alone in your opinion. For lack of a better way of putting it, I've found realtors (especially Edmonton ones) hate condos and do everything they can do push potential buyers to homes. I've seen it myself. I came to the conclusion this is for two main reasons: 1) Buyers can qualify for more money when buying a house (because condo fees count towards a mortgage) which means more commission for the realtor........ 2) Condos are much more messy to buy. Condo docs complicate things and can often be a reason for a deal falling apart...... so condos are looked at very negatively in Edmonton and it has caused the market to come crashing down. So as I said in my first post, because condos are so low now, new developers are converting pre-sale condos into rentals and this is going to lead (down the road) to a shortage of condos downtown. Think about it... right now things are so bad, the economy is bad, rates are high, construction costs high AND downtown is dead because of WFH. Warren Buffet said "buy when others are fearful" and there's no place more fearful than condos. But I understand why some people would be hesitant. Good talk :)