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Average prices, which had previously been rising modestly year over year, have also started to lose momentum. Last month, the average price of a home was about $375,000 in the Greater Edmonton Area, down about 0.7 per cent year over year.
Still, single-family detached home average prices gained slightly to $463,051, up about two per cent from the same month last year. Yet days on the market are increasing even for the most in-demand housing segment, 44 versus 38 days in September last year.
This marks a change from spring when sellers could price their homes higher and still see multiple offers, says the real estate agent with Drew Carlson Real Estate Team.
“People who were hunting in the $450,000 range are now not,” he says. “They’re cap is about $380,000 and so they are now looking at a duplex opposed to a single-family home.”
The higher mortgage rates are dampening demand, but they are not the main obstacle, Gravelle says. “The problem is the stress test.”
With the Bank of Canada hiking rates since March more than 300 basis points, increasing mortgages dramatically, most buyers now have to qualify under the stress test at their offered rate plus two percentage points, which is now more than six per cent.
The rising borrowing costs have pushed many buyers into lower priced segments, says Bev Hasinoff, realtor with Liv Real Estate in Edmonton.
“That is what we are seeing with apartment condos,” she says. “With rising mortgage rates changing how much people can qualify for, they are looking at affordable alternatives.”
Still, Gravelle says condo fees can be an impediment to growth in the segment. Even though the average price of a condo apartment in Edmonton was about $220,000 last month, amid 459 sales, prices still declined year over year by about two per cent while sales were down about one per cent.
Still, a silver lining is buyers now have more choice at lower prices than at the market peak in spring.
“The advantage for buyers is that sellers realize they need to become more competitive with more properties to select from,” Hasinoff says, noting that inevitably will involve lower listing prices.
Yet unlike other markets in Canada, Gravelle notes Edmonton’s market remains in a good position buoyed by strong migration and jobs growth.
“We have a healthy economy with people moving here needing homes, which will help drive our market.”
