Edmonton Builders Anticipate Continued Housing Surge This Fall

Edmonton is experiencing a significant surge in housing demand, positioning itself as one of Canada’s hottest markets for new construction. As of July 31, 2023, the city has recorded 13,059 housing starts, marking an increase of nearly 30 percent compared to last year, according to data from the Canada Mortgage and Housing Corporation (CMHC). This upward trend suggests that Edmonton is on track to surpass its previous record of 18,384 starts set in 2024, as stated by Michael Mak, senior housing market analyst at CMHC.

The current housing boom is particularly notable in the rental multi-family market, which has accounted for over 40 percent of this year’s housing starts. This shift reflects ongoing price pressures in both the resale and new home markets. Since 2022, rising mortgage borrowing costs have compelled many first-time buyers to extend their savings period for down payments, even in a market like Edmonton, which is often highlighted for its affordability.

Mak emphasizes that many individuals are relocating to Edmonton in search of both affordability and space, contributing to the city’s continued interprovincial migration. While housing prices in Edmonton have risen, the city still maintains a competitive edge compared to other major cities. The average price of a newly constructed single-family detached home in Edmonton reached $649,243 in July, reflecting a two percent increase year-on-year. In contrast, the average price in nearby Calgary exceeded $911,000 during the same period.

Market Trends and Builders’ Adjustments

The consistent demand for rental properties has not overshadowed the aspiration of many residents to achieve homeownership in Edmonton. Builders are responding to market conditions by adjusting their offerings to promote affordability. Collin Campbell, president of Mattamy Homes’ Alberta division, notes that the demand for townhomes remains robust, particularly as these homes do not carry the condominium fees that complicate mortgage qualifications for first-time buyers.

Statistics from July reveal that townhome starts increased by approximately 20 percent compared to the same month last year, with year-to-date figures showing a rise of about 22 percent. Meanwhile, single-family detached home starts decreased by nearly seven percent year-on-year, although they still reflect a 12 percent increase over the year.

The market for semi-detached homes is also thriving, with starts rising over 66 percent in July compared to the previous year and around 25 percent year to date. Campbell highlights that developments on the outskirts of the city are particularly appealing to buyers seeking the characteristics of single-family homes at more affordable price points. One notable project in Sherwood Park features townhomes priced in the $400,000 range, offering three bedrooms and two baths within nearly 1,400 square feet.

Additionally, all homes in Alberta from Mattamy include solar panels as part of the purchase price, aiming to reduce monthly energy costs for homeowners.

Future Projections and Buyer Activity

Although the rental sector has seen the most vigorous construction activity, the absorption rates for ownership properties in the Edmonton region reached a four-month high in July, according to CMHC data. Campbell interprets this metric, along with the increasing engagement on Mattamy’s website, as indicators of heightened buyer activity anticipated for the fall.

“We’re already noticing savvy buyers positioning themselves ahead of potential future pricing pressures,” Campbell states, underscoring the proactive nature of the market as it continues to evolve. As Edmonton’s housing landscape remains dynamic, both builders and buyers are navigating the challenges and opportunities presented by the current economic conditions.