As the end of 2021 draws near, real estate experts are looking back on what was a truly remarkable year for real estate across Canada. The Edmonton housing market shifted into a seller’s market in 2021, fueled by low inventory and high demand especially for single-family homes. After such a strong year, many are wondering what is in store for the 2022 Edmonton real estate market.
We’ve previously reported that Edmonton home prices are projected to increase. Find out what other trends or factors will play a role in Edmonton’s real estate market next year.
Inter-provincial migration trend to continue
While some Edmonton homebuyers may have found the seller’s market challenging in 2021, compared to other markets in the country – notably Toronto and Vancouver – home affordability in Edmonton is still quite good. Homebuyers across Canada will be looking for more affordable cities to invest in and this will drive increased interest in the Edmonton market in 2022.
The option to work from home has provided many homebuyers much more flexibility. They are able to move across the country while continuing with their current job. The migration of people from other provinces into Alberta will continue to add demand for affordable homes. In areas where there is already low inventory, this will likely contribute to ongoing house price increases in 2022.
Interest rates remain low despite increases on the horizon
Economists are predicting that the historic trend of low mortgage rates is finally coming to an end with a shift to more normal rates starting in 2022.
In a recent article for CTV, Don Drummond, economist at Queen’s University, predicts that the Bank of Canada’s short-term interest rate will increase by about 0.75 percentage points by the end of 2022. Increases in the central bank’s interest rate will have an effect on both variable and fixed mortgage rates.
The effect of slightly higher, more normal mortgage rates is not anticipated to have a dramatic impact on the market, but may help cool red hot markets that have been plagued by bidding wars in recent years. Experts suggest that while higher mortgage rates aren’t likely to discourage homebuyers, it is a good idea to reevaluate how much you can afford and bank on rates continuing to increase over time.
Edmonton MLS inventory levels remain low
Currently, MLS listings in Edmonton show roughly 3.6 months of inventory which is more than two months below the 10-year average and down 36% against the last three years.
Low supply of homes, coupled with high demand is expected to drive home prices upwards in 2022. Estimates vary among housing market experts, but the Canada Mortgage and Housing Corporation (CMHC) is predicting an increase in home prices of about 5% in 2022. Even though Edmonton home prices are expected to increase again, the Edmonton market is still among the top three most undervalued cities in the country next to Regina and Winnipeg.
Supply chain disruptions continue to impact new housing builds
As the COVID-19 pandemic continues to dominate news around the world, there are ripple effects in the housing market as well.
Ongoing supply chain disruptions, particularly affecting lumber, are slowing down new home builds. A shortage of skilled trades workers is also contributing to construction delays. And lastly, the recent flooding in BC has exacerbated supply chain issues as many supply routes are only recently reopened. Fewer, or at least slower, new home builds are anticipated to add pressure especially in areas where there is high demand and low supply for homes.
If you are thinking about making a move next year, this Edmonton real estate market 2022 forecast gives you an idea of what to expect in the months ahead. It looks like it will be another strong year for the Edmonton market as supply continues to lag behind demand.
Have questions about buying or selling a home in Edmonton? Call or text Wally at 780.238.7384 and book a consultation today.