This morning, the REALTORS® Association of Edmonton hosted its Annual Housing Forecast, and I'm excited to bring you these insights. Specifically, we'll be diving into the presentation by Shaun Cathcart, Director & Senior Economist, Housing Data and Market Analysis at the Canadian Real Estate Association (CREA).
Long story short, Mr. Cathcart predicts a booming real estate market for Edmonton in 2024. He started his presentation by discussing interest rates, sharing that many economists anticipate the Bank of Canada will begin lowering interest rates in the latter half of this year. While only 1 or 2 rate cuts for this year were predicted as recently as November, the current expectation now stands at 4-6 rate cuts by year-end, which would make a significant impact. However, he did caution that if the housing market becomes too heated in the spring, rate cuts could be postponed. The long-term outlook remains positive, with rates returning to a normal level (2-3%) by 2026 or 2027.
(Note: all the charts in this blog post are from Mr. Cathcart's presentation).
Next, he turned to national population growth, which has hit a new record of 1.25 million new Canadians in the most recent quarterly report. This is a substantial increase compared to the typical 400,000-600,000 new Canadians in a given year. With this influx of people, the demand for housing remains high and is projected to continue. With more people comes more demand for housing, and the inventory of available homes is still relatively low compared to the long-term trend despite being slightly above the record low seen in 2021.
The national homeownership rate has been on the decline since 2011, and Mr. Cathcart attributes this to new home construction not keeping up with the growing population. The only type of housing that has seen an increase is apartments, primarily purpose-built rental apartments. This has made detached homes unattainable in many parts of the country, highlighting the need to build more homes that people want and can afford. In contrast to Canada, other parts of the world have row housing and townhouses as the norm for families - Mr. Cathcart (as well as fellow presenters Kim Petrin - City of Edmonton Deputy Manager, and Tim Uppal - Deputy Leader of the Federal Conservative Party) stressed that we need increased construction in this category.
CREA is predicting a 7% increase in home sales and a 2.3% increase in prices on a national level. Mr. Cathcart warns that these forecasts could be on the low side, mostly because of what's happening in Alberta, where CREA forecasts near-record sales in 2024, with an 11% increase over 2023, and a 6.3% rise in prices. CREA even expects record-setting sales in 2025 in Alberta.
Lastly, Mr. Cathcart predicts that what we've seen in other parts of the country over the past few years - high demand leading to skyrocketing prices - will soon happen in Edmonton. This trend occurred in markets like Vancouver and Toronto, and when those cities became unaffordable, neighbouring areas were affected. Calgary experienced a surge in demand last year, and Mr. Cathcart predicts that Edmonton is next on the list. However, he cautioned that the "relative affordability advantage" could quickly disappear if we fail to add more inventory to our market.
In conclusion, the real estate market outlook for 2024 in the Edmonton area predicts near-record sales and rising prices. Still, we must remain diligent in providing more affordable housing options and ensuring that our inventory meets demand levels adequately. As always, we will keep you updated as new developments and forecasts continue to emerge.
Posted by Liv Real Estate on
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