2023 Edmonton Real Estate Market Forecast
It is that time of year when I get a lot of questions about where the Edmonton real estate market is heading. Will homes get easier to sell or harder? Will prices go up or down? What effect will interest rates have on the market in the year ahead?
Before we look ahead, let’s look back at where we have come from in 2022. Now 2022 was a roller coaster of a year for sure. It started with a bang - as early as the first week of January 2022 we knew things were different - January is traditionally a very slow month but last year it was really busy - lots of buyers and not much inventory so we saw a lot of bidding wars and rapidly increasing prices.
So why did this happen? Well, it was not much of a secret that interest rates were going to be increasing so buyers wanted to purchase before the rates went up. Buyers who might normally buy in April or May were instead buying in January and February but because not a lot of homes get listed in December to February inventory was low and it had a bit of a snowball effect in that buyers began panicking and bidding really high prices for homes.
What followed was pretty predictable - as the spring market arrived inventory increased so buyers had more options plus the well-publicized interest rate hikes started. So we had increasing supply and decreasing demand so the bidding wars slowed down and eventually pretty much ended. As the year progressed interest rates continued to go higher as predicted and consequently fewer people were buying and we began to see downward pressure on prices.
So we head into winter - a traditionally slow market was made even slower due to increasing borrowing costs and fewer and fewer buyers in the market. In fact, November's sales were down 30% over the previous November, December's was down 26% and last month, January's sales were down 32% over last January's. This can't help but have an adverse effect on prices and so by the end of December, the overall average residential selling price was down about 10% from the peak in Spring, and January's prices are down about 6% from last January.
So where do we go from here? Well, the good news is that we are about to head into the Spring market which is always the busiest time of year for home sales and so I am confident we will see an increase in buyer activity. Now when I say an increase I mean an increase from fall and winter but its not going to be like last spring - that was an anomaly and it could be a long long time before we see a market that busy again.
Does that mean prices will go up in Spring? Not necessarily. While buyer activity will increase there will be more homes coming on the market as well which means more competition for home sellers. It’s the relationship between these 2 that will determine whether or not home prices will go up or down or neither.
Will there be more buyers or more sellers? Now I don’t have a crystal ball and this is only my opinion but I would be surprised to see any significant increase in home values this spring. I don’t think they will drop significantly either though. I think we will hover somewhere between a small increase or a small decrease overall but some property types and some areas will do better than others. It appears the bulk of the interest rate hikes are behind us and fortunately our economy seems to be doing pretty well in light of those increases at least for now. If that continues I think we will get back to a more stable market without the big swings we’ve seen.
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