Apartment

Edmonton Condominium Market: Sales of New Apartments and Townhouses Slow

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New condominium and townhouse sales in Edmonton fell in the spring due to falling demand and rising interest rates.

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A recent report on the multi-family segment in the second quarter – from April to June – revealed that sales fell to 185 transactions, a drop of more than 85% compared to the same quarter the year before, when 440 sales had occurred.

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“There are a number of factors, but the rise in interest rates from March put a lot of potential buyers in wait-and-see mode,” said Cameron Slavik, market analyst at Zonda Urban, which released the report. .

Sales were even weaker than in the spring of 2020, when the overall market nearly froze due to concerns over COVID-19. This spring saw 277 new multifamily unit transactions, a market driven by rock bottom borrowing costs unlike today with interest rates more than double pandemic levels.

Another factor is the fall in stocks, to their lowest level in four years, the report reveals.

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“It’s a really unique time,” says Slavik, noting that the developers are also in “wait-and-see mode” before committing to other projects.

However, low inventories led to higher prices for new products, with wood-frame apartment prices up 20% and townhouse prices up 8% year-over-year.

The report notes that the two product types make up 80% of the new multifamily for sale market with a combined average price of around $358,000.

The price is affordable compared to other markets — and even Edmonton’s average price for a single-family home on the resale market averaged about $469,000 in August, according to data from the Realtors Association of Edmonton.

“New multifamily growth is really going to be driven by migration patterns,” says Jackson Cornelius, director of advisory services at Zonda Urban, adding that more people from out of province and overseas are coming to the city. .

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He further points to Calgary’s condo market recently recovering due to increased demand from out-of-province buyers as a potential outcome for the capital in the coming months.

Indeed, Edmonton’s new condo market had been on a similar trend through the second quarter, but rising rates dampened buyer enthusiasm, Slavik said.

“We’re still hearing anecdotally that out-of-town buyers see great value in the Edmonton market in terms of price,” he adds.
“That was more the case in the first quarter of the year, but the perception still holds as long as prices stay low relative to those higher-priced markets.”

Average resale condo prices in Toronto are close to $800,000. By comparison, the average resale price for a condominium in Edmonton in August was around $220,000, down from the same month last year when prices were around $227,000.

Still, sales were up about 5% year over year in the resale market.

Cornelius expects the new multifamily market to see more sales and more supply in the coming months. “But the current challenges are likely to carry over into next year.”

Despite falling sales, Edmonton has better economic tailwinds than it has had in several years, coupled with relative affordability.

“The conditions are in place for strong growth that should put upward pressure on sales and prices through next spring,” Cornelius said.

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