Better balanced market makes Albertans more bullish on real estate

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Albertans, Ontarians, British Columbians and all Canadians, for that matter, can generally agree on one thing, a new poll suggests.

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That is, homeownership remains a good investment.

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RBC published its annual Home Ownership Poll, finding that despite the last year of challenges for real estate amid rising interest rates, most Canadians remain bullish on the asset class, though less so than last year.

“There are two things on the minds of Canadians that really came out of this poll and that is uncertainty about the near future and overall affordability of real estate,” says Nick Palucci, senior director of home equity financing at RBC.

Yet even amid these concerns, 53 per cent believe real estate remains a good investment — though down from 69 per cent last year, he adds.

One key finding from this year’s poll that may have fuelled that drop is that only 37 per cent believe conditions favour sellers. That’s compared with 71 per cent at the same time last year, he adds.

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In Alberta, however, only one in four stated the real estate market favoured sellers.

Edmonton realtor Nathan Mol with Liv Real Estate notes the difference in attitude reflects a better balance between supply and demand, at least, in Edmonton.

“Despite prices coming down in markets (like Toronto and Vancouver), inventory is still extremely tight and so buyers and sellers would feel that it’s more acutely a seller’s market there,” he says.

“But in Alberta, there are many more market segments that are balanced or moderately a seller’s market.”

Realtors Association of Edmonton data from the first three months of the year reflect this sentiment with its sales-to-new-listings ratio sitting at 51 per cent. A percentage between 40 and 60 per cent is considered a balanced market, whereas a value above 60 per cent favours sellers, and below 40 per cent favours buyers.

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The ratio in Edmonton, however, is down significantly from the start of 2022, largely before interest rates began rising, when it was 74 per cent.

It’s also considerably different from conditions before the pandemic in 2019 when the market favoured buyers with a sales-to-new-listing ratio at 37 per cent in the first three months.

More favourable conditions in Alberta are also reflected in the poll finding that only 25 per cent of respondents in the province would expect to pay less for a home this year, versus 40 per cent nationally.

Mol suggests that is because prices in Edmonton, for example, have not seen the same run-up in larger markets even though Toronto saw large price declines over the last year.

“Prices accelerated so drastically that now they are making a real adjustment whereas, in Alberta, prices didn’t run up nearly as much,” he says, adding this lends to the notion they have more room to rise.

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Edmonton market statistics from the first quarter versus the Greater Toronto Area illustrate this difference.

The average price of a home in Edmonton was about $378,000, according to RAE, down more than 10 per cent from the same period last year. But the price is up about three per cent from 2019.

By comparison, Toronto Regional Real Estate Board statistics show the GTA average price at the end of March was a little more than $1.1 million, down from nearly $1.3 million last year, a more than 15 per cent decline.

Yet it remains 40 per cent higher than the average price in 2019.

Despite more favourable market conditions here, the survey revealed that 83 per cent of Albertans versus 70 per cent nationally were worried about a recession.

Mol attributes this to Alberta’s cyclical economy and the fact that the province only emerged from a downturn at the start of the pandemic.

“Ontario and B.C. haven’t had the same ups and downs that Alberta has,” he says, noting those large markets tend to drive the national average for these surveys.