David Dale-Johnson says Edmonton's distinctive real estate market will keep house prices in the city propped up despite Alberta's economic downturn.
Who could blame Edmontonians for wanting to poke holes in the housing bubbles of our richer cousins in Vancouver and Toronto, especially after more than a year of slow sales and mildly dipping prices on the home front?
Thinking about buying or selling?
Don’t wait for an increase in house prices anytime in 2017. “If you’re in sell mode, you have to be very patient if you’re seeking a higher price—otherwise bite the bullet,” said Dale-Johnson. And new home buyers who qualify for mortgages should be patient, and look at a 2017 purchase as a medium- to long-term investment rather than with a flip mentality.
But there are good reasons to suggest prices for our abodes will be steady as the province rides out a rocky economy through the rest of the year, according to University of Alberta real estate expert David Dale-Johnson.
“Edmonton has a number of characteristics going for it that make us much more resilient to downturns,” said Dale-Johnson, the Stan Melton Executive Professor in Real Estate at the Alberta School of Business.
They are (in no particular order):
A diverse labour force
People need work in order to spend on homes. Fortunately, a large proportion of our employers are in health care, government and higher education, all areas that are outside the vortex of the energy sector, explained Dale-Johnson. Furthermore, administrative and executive oil and gas employees tend to bear the brunt of a downturn (as witnessed in Calgary with its high office vacancy rates and ensuing decline in residential real estate values), whereas people working in the trades—many of whom reside in Edmonton—are still required for operations, he added.
“The ice district and revitalization of Edmonton’s downtown is a good thing for the city in terms of appeal, and nearby homeowners will benefit from it for a long time.” Another positive fact: we’ve built more than 1.8 million sq. ft. of office space in Edmonton recently—the most that has been built in Edmonton at one time—and our biggest buildings are currently well occupied.
“It comes with a price in that we now have high vacancies in older, sometimes outdated buildings. The good news is that it will force owners to reposition or repurpose the older office stock—that will take time but will ultimately be good for the city,” Dale-Johnson noted.
Edmonton is dubbed "The Gateway to the North" for good reason: it serves as home base for many people working up north and in outlier towns. It also services those in nearby regions, which is a boon for commercial real estate. To wit: Simons (La Maison Simons) opened its first Western Canadian location in Edmonton, and Southgate Centre has the fifth highest sales per square foot of any mall in Canada.
Dale-Johnson added that footloose firms from Vancouver and Toronto will look at Edmonton and Calgary as great alternatives where their employees can enjoy lower housing costs, a friendly and inviting community, great culture and good infrastructure.
In the long term, Alberta needs another source of growth besides oil, and Dale-Johnson believes immigration could be one solution. “Both Edmonton and Calgary are attractive places to live. They have culture and good infrastructure, and are affordable, relatively speaking.”