What the crystal ball says for Edmonton housing

Canada's real estate and housing authority predicts that oil's fall from grace will negatively impact the housing market in Edmonton.

Canada Mortgage and Housing (CMHC) recently issued its 2016 forecast at an Edmonton conference. It doesn't take a genie in a bottle to see that new homes, the resale segment and even the rental housing sector are going to be slow in the coming year.

Using 2014 as a benchmark, CMHC Edmonton market analyst Christina Butchart says that slumping oil prices and the resulting Alberta economic slowdown is having an impact on housing in Edmonton, and affecting each market segment in a different way.

Resale Homes

With fewer jobs available and some jobs disappearing, fewer folks are coming to Alberta and moving to Edmonton. That's affected MLS sales this year and next year won't be an improvement.

CMHC PREDICTIONS

• MLS sales in 2015: 17,500
• MLS Sales in 2016: 17,800 (Small increase in the third and fourth quarters of the year)
• MLS Sales in 2017: 18,300
• Average Resale Price for 2015: $363,000
• Average Resale Price for 2016: $366,000
• Average Resale Price for 2017: $374,000

Experts believe that with the current buyer's market, homes will take longer to sell and prices will soften.

Rental Market

The CHMC predicts that the vacancy rate will rise over the next three years due to decrease in demand. Here is its very conservative prediction:

• Rate for 2015: 3.0%
• Rate for 2016: 3.5%
• Rate for 2017: 3.7%

The biggest increase they predict will be in the availability of apartments for rent. CMHC says there are 2,500 to 3,000 rentals currently in mid-build in the city. With higher vacancy rates should come a decrease in monthly rates; however a prediction for the opposite has been published:

• Average rent for 2-bedroom apartment 2015: $1,265.00
• Average rent for 2-bedroom apartment 2016: $1,295.00
• Average rent for 2-bedroom apartment 2017: $1,320.00

CMHC bases this prediction on that the fact that the new units scheduled to be completed and entering the market place are new and will be commanding a higher-than average monthly rent.

New Construction

This is historically Edmonton's strongest market segment, and so far this year has outpaced Calgary in terms of sales. However, that is predicted to change in a dramatic way. In terms of new multi-family home starts, here are CHMC's predictions:

• Multi-family 2015: 10,500 units
• Multi-family 2016: 5,500 units
• Multi-family 2017: 5,000 units
• Single-family 2015: 5,900
• Single-family 2016: 5,600
• Single-family 2017: 5,800

What's happened this year?

When compared with Calgary, Edmonton has sold fewer single-family homes but has won the war in terms of new construction.

From January 1 to October 31 this year, Edmonton had 3,497 new home starts which is 1,518 more than Calgary. Both cities have fallen short of 2014 numbers, but Edmonton fell short by 11% compared to Calgary's 36% dip over the previous year.

CMHC says that while both cities are affected by the current economic conditions, Calgary has endured more layoffs and job losses than Edmonton, therefore affecting the housing market.

The most sales are happening in new homes under $450,000. Consumer confidence in Edmonton seems to be strongest in the affordable housing segment.