Looking back at 2022 we saw a great deal of inventory shortage throughout much of the market. There were multiple factors that contributed to this shortage. The most notable ones are the impacts of the pandemic on both buyer/ seller confidence as well as the supply chain shortages. These impacts also were seen on the new construction side of the industry with rising and unpredictable build costs and less building starts in 2021.
Focusing now on Edmonton’s top tier market, which includes homes valued at $800,000 or more there were a total of 591 single family homes that sold in 2022. This is a noticeable increase from 2021 (572 sales). The impacts mentioned above were also a factor within this market but may not have been as noticeable. We as an industry saw many buyers moving up in the market from traditional starter homes and family homes to larger family homes and estates. A main driver with this was of course the very attractive interest rates that allowed new owners to increase their house at a similar monthly cost to their previous home.
The question now is what is expected for the coming year? It is clear now that the days of 1.7% interest rates are behind us. With that in mind, it can be expected that some buyers that were stretching their budget may be forced out of the top tier market. This will in turn force sellers to be more competitive with their pricing and patient as the sense of urgency from buyers may be reduced. There is also the question regarding buyers outside of Edmonton. With the new legislation in place that bans foreign buyers from purchasing in Canada, it will allow more locals the opportunity to purchase homes with less competition. The Edmonton market has not experienced the influx on foreign buyers the way Toronto or Vancouver have but we did experience a large influx of buyers from those two markets moving to Alberta to seek affordability. We can expect that although there may be less competition in those markets for buyers, the higher interest rates may still force many to consider a relocation to Alberta. We will watch to see how those markets preform to further understand how Edmonton's will preform in the coming year.
Overall I expect that 2023 will be a more balanced market than that of 2022. Both Buyers and Sellers should have confidence in the market ahead as Edmontonians have been familiar with this type of market. Reasonable amounts of inventory, Buyers confidence, and hopes of a strong Alberta economy.
Should you have any questions about the specific details of your home in today's marketplace, I welcome you to contact me directly for a confidential discussion.
Wishing you all the best in the coming year!