Edmonton’s new housing market exhibits wholesome exercise in June

Breadcrumb Trail links

New construction starts are up year over year in Alberta’s capital region.

“The story across the board in most categories so far in 2022 is that demand is strong with builders responding with more development,” says Taylor Pardy, senior analyst for Edmonton at CMHC. “The story across the board in most categories so far in 2022 is that demand is strong with builders responding with more development,” says Taylor Pardy, senior analyst for Edmonton at CMHC. Photo by Ian Kucerak /Postmedia

Reviews and recommendations are unbiased and products are independently selected. Postmedia may earn an affiliate commission from purchases made through links on this page.

Article content

Higher borrowing costs have yet to make a dent in Edmonton’s new homes market with starts continuing to show strong growth.

Advertisement 2

This advertisement has not been loaded yet, but your article continues below.

Article content

The city and surrounding region saw 1,107 new starts in June, an increase of about five per cent year over year, the latest numbers from Canada Mortgage and Housing Corp. show.

“The story across the board in most categories so far in 2022 is that demand is strong with builders responding with more development,” says Taylor Pardy, senior analyst for Edmonton at CMHC.

Single-family detached homes had the most sizeable increase, percentage-wise, up 58 per cent from June 2021.

That’s the strongest growth among large Canadian metropolitan areas, whereas large centers like Toronto experienced declines year-over-year in single-family detached home starts.

“The high activity is a response to the tightness in the market for houses,” Pardy says.

Advertisement 3

This advertisement has not been loaded yet, but your article continues below.

Article content

“Inventories are low in the resale and new home markets in terms of what’s available for purchase.”

As well, the Edmonton market is seeing economic tailwinds from the rise in energy prices that drive the city’s economy and, in turn, housing demand.

“Prices are also coming off of a low point as opposed to going into a higher interest rate environment where prices had been gaining for a number of years as we’ve seen in Ontario and BC,” he adds.

Prices for new single-family detached homes in Edmonton averaged about $587,000 in June, actually down slightly from about $593,000 in May.

Prices are only up about 14 percent from early spring 2019 when new single-family homes prices were about $519,000 in Edmonton, according to CMHC data.

Advertisement 4

This advertisement has not been loaded yet, but your article continues below.

Article content

By comparison, the average price of a new single-family detached home in Toronto is up about eight per cent from 2019. Yet the average cost of a new home this past June was $1.3 million, a price tag that is much less affordable to many buyers, especially amid rising rates, than in Edmonton, Pardy adds.

New homes started in Edmonton were not up across the board, however, with apartment, row and semi-detached down 40 per cent year over year to 342 starts from 570.

“Keep in mind that month-over-month and even year-over-year changes can be fairly volatile for this segment,” Pardy says. “It’s not really something to pay too much attention to regarding overall trends.”

Year to date data is more telling, he adds, with starts for multi-family up 30 per cent from the same span last year.

Advertisement 5

This advertisement has not been loaded yet, but your article continues below.

Article content

As well, all apartment starts — 124 units — were for the rental market, he says.

June was somewhat of an anomaly for multi-family construction as a report from Zonda Urban found strong new rental development from April to the end of June in part because homebuyers faced higher borrowing costs.

“The increase in interest rates pushed a lot of people, teetering on the edge of being able to afford a home, into the rental market,” says Kendall Brown, manager of rental data for Zonda Urban.

Vacancies among all new projects fell to 7.9 from 10.7 per cent in early 2021 while rents increased to $1.81 per square foot up from S1.74 in the first quarter, the Zonda report found.

“Rents have increased for the third time since early fall,” Brown says, adding that is a result of higher demand and fewer rent reduction incentives offered by developers.

Advertisement 6

This advertisement has not been loaded yet, but your article continues below.

Article content

Even though five projects launched in the second quarter, “vacancy still fell, which tells us there is still a lot of demand,” she adds.

Rental project development is likely to pick up in the coming months. The same goes for condominium builds as older inventory is now running low, Pardy adds.

“As inventories are drawn down, I would anticipate seeing more condominium projects under development to meet that demand going forward.”

Year to date starts for apartment condominiums reflect growth with 753 units underground. That is a rise in activity from the same period last year when there were 313 starts.

Still, the year to date numbers are far below 2015 activity when the first six months of the year saw 2,607 starts.

“The market still has a ways to go to get back to peak levels,” Pardy says. “But given lower inventories, we’re likely to see monthly construction continue to pick up.”

Share this article on your social network

Advertisement 1

This advertisement has not been loaded yet, but your article continues below.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encouraging all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Comments are closed.