EDMONTON, CANADA’S ‘MOST AFFORDABLE’ BIG CITY
My wife grew up in Toronto, and much of her family still resides there. Whenever we visit the east, there are always two main topics of discussion: #1 the dreadful traffic on the 406, and #2 the exorbitant real estate prices in their market. Rising real estate prices have been at the forefront of many discussions lately, and with Toronto/Vancouver dominating the conversation, I believe it’s important to highlight the benefits of the Edmonton real estate market.
To start off, let’s examine some numbers in the Edmonton market. Based on WOWA’s Edmonton housing report, the average selling price for a home in February was approximately $407,500, marking a slight over 10% yearly increase. Breaking this down by specific “types” of homes: detached homes have an average selling price of just under $510,000 (again, over a 10% year-over-year increase), semi-detached homes have an average selling price of $385,000 (around an 8% increase year-over-year), and townhome sales have seen a 9.7% increase year-over-year, with a current average selling price of $275,735. Really, the only housing type to see an average price decrease over the last 12 months was apartment-style units, with a decrease of 3% and an average selling price just north of $181,000.
In addition to home sales, it’s important to consider the current state of the rental market in Edmonton. With an influx of net migration, inventory is undoubtedly tightening up, and rental rates have increased over the last 12 months. According to the National Rent Rankings (March 2024), the year-over-year (Y/Y) rental increase for 1 bedroom came in at over 13%. Edmonton was significantly higher, with a Y/Y rental increase for 1 bedroom at just over 19%. The national Y/Y rental increase for 2 bedrooms was approximately 12%, with the Edmonton market seeing a significantly higher uptick, coming in at 15.7% growth, Y/Y. By any metric, rents are going up, and real estate, across most sectors, is experiencing considerable growth.
This article is titled “EDMONTON, CANADA’S MOST AFFORDABLE BIG CITY” for a reason. Up until now, we have discussed increasing home prices, rental surges, and shrinking inventory. I know some may argue, “Isn’t this the opposite of being affordable?” Granted, there is a type of sticker shock when you see the numbers, but I can argue convincingly that Edmonton has historically been, and continues to be, undervalued compared to many other large cities in Canada. I firmly believe there is a stark difference between price and value. Compared to many Canadian markets, Edmonton has, and will continue to, provide great value. Digging a bit deeper, here is what we find.
In that same rental report that shows Edmonton outpacing the rest of Canada for Y/Y rental growth, it’s important to note that Edmonton still ranks 32nd in rental rates in Canada. Edmonton is the 5th largest city in the country yet boasts the 32nd highest rental rates as of March 2024. A 1 bedroom in Edmonton, on average, rents for $1,312/month, and a 2-bedroom for $1,639/month. For comparison, Vancouver and Toronto showcase rental rates for 1-bedrooms at $2,653 and $2,495, respectively. For two bedrooms, the going rental rate is $3,541 and $3,287, respectively. Removing Canada’s two largest cities from the equation, when comparing Edmonton to Waterloo, ON (Canada’s 47th largest city), the Edmonton rental market showcases considerable value. Rental rates in Waterloo for 1 & 2 bedrooms are $2,027 and $2,449, respectively, significantly higher than rental rates in Edmonton.
On the home sale front, the average Canadian home price at the start of the year was $659,395. The average home price in the GTA as of March 2024 is $1,093,900 ($1.44M for Detached Homes). The greater Vancouver area came in even higher at $1,276,515 as an average home price (Detached Homes averaging $2.16M). Edmonton, with an average home price of $407,500, came in significantly more affordable than our friends to the south. For the same period, the average home price in Calgary was $585,000, with detached homes averaging $770,000. Edmonton even came in more affordable than parts of Atlantic Canada, with Nova Scotia boasting an average home price of just under $430,000.
I don’t think you can look at “affordability” without considering income in a particular region. If things cost a lot more, but your income is outpacing that cost, then you are still ahead. Unfortunately, that is not “EDMONTON, CANADA’S MOST AFFORDABLE BIG CITY”
My wife grew up in Toronto, and much of her family still resides there. Whenever we visit the east, there are always two main topics of discussion: #1 the dreadful traffic on the 406, and #2 the exorbitant real estate prices in their market. Rising real estate prices have been at the forefront of many discussions lately, and with Toronto/Vancouver dominating the conversation, I believe it’s important to highlight the benefits of the Edmonton real estate market.
To start off, let’s examine some numbers in the Edmonton market. Based on WOWA’s Edmonton housing report, the average selling price for a home in February was approximately $407,500, marking a slight over 10% yearly increase. Breaking this down by specific “types” of homes: detached homes have an average selling price of just under $510,000 (again, over a 10% year-over-year increase), semi-detached homes have an average selling price of $385,000 (around an 8% increase year-over-year), and townhome sales have seen a 9.7% increase year-over-year, with a current average selling price of $275,735. Really, the only housing type to see an average price decrease over the last 12 months was apartment-style units, with a decrease of 3% and an average selling price just north of $181,000.
In addition to home sales, it’s important to consider the current state of the rental market in Edmonton. With an influx of net migration, inventory is undoubtedly tightening up, and rental rates have increased over the last 12 months. According to the National Rent Rankings (March 2024), the year-over-year (Y/Y) rental increase for 1 bedroom came in at over 13%. Edmonton was significantly higher, with a Y/Y rental increase for 1 bedroom at just over 19%. The national Y/Y rental increase for 2 bedrooms was approximately 12%, with the Edmonton market seeing a significantly higher uptick, coming in at 15.7% growth, Y/Y. By any metric, rents are going up, and real estate, across most sectors, is experiencing considerable growth.
This article is titled “EDMONTON, CANADA’S MOST AFFORDABLE BIG CITY” for a reason. Up until now, we have discussed increasing home prices, rental surges, and shrinking inventory. I know some may argue, “Isn’t this the opposite of being affordable?” Granted, there is a type of sticker shock when you see the numbers, but I can argue convincingly that Edmonton has historically been, and continues to be, undervalued compared to many other large cities in Canada. I firmly believe there is a stark difference between price and value. Compared to many Canadian markets, Edmonton has, and will continue to, provide great value. Digging a bit deeper, here is what we find.
In that same rental report that shows Edmonton outpacing the rest of Canada for Y/Y rental growth, it’s important to note that Edmonton still ranks 32nd in rental rates in Canada. Edmonton is the 5th largest city in the country yet boasts the 32nd highest rental rates as of March 2024. A 1 bedroom in Edmonton, on average, rents for $1,312/month, and a 2-bedroom for $1,639/month. For comparison, Vancouver and Toronto showcase rental rates for 1-bedrooms at $2,653 and $2,495, respectively. For two bedrooms, the going rental rate is $3,541 and $3,287, respectively. Removing Canada’s two largest cities from the equation, when comparing Edmonton to Waterloo, ON (Canada’s 47th largest city), the Edmonton rental market showcases considerable value. Rental rates in Waterloo for 1 & 2 bedrooms are $2,027 and $2,449, respectively, significantly higher than rental rates in Edmonton.
On the home sale front, the average Canadian home price at the start of the year was $659,395. The average home price in the GTA as of March 2024 is $1,093,900 ($1.44M for Detached Homes). The greater Vancouver area came in even higher at $1,276,515 as an average home price (Detached Homes averaging $2.16M). Edmonton, with an average home price of $407,500, came in significantly more affordable than our friends to the south. For the same period, the average home price in Calgary was $585,000, with detached homes averaging $770,000. Edmonton even came in more affordable than parts of Atlantic Canada, with Nova Scotia boasting an average home price of just under $430,000.
I don’t think you can look at “affordability” without considering income in a particular region. If things cost a lot more, but your income is outpacing that cost, then you are still ahead. Unfortunately, that is not the case in most places. Costs continue to rise, but income is not keeping up with that demand. Although it was difficult to find exact, up-to-date figures, according to the Fraser Institute’s 2023 reporting, based on cities with a population of more than 100,000 people, when comparing median employment income, Edmonton is the second highest in the nation, behind Ottawa-Gatineau (notably, Calgary finished with the 3rd highest income).
In a nutshell, compared to the rest of the country, Edmonton boasts some of the highest income and most affordable housing options. Although we still have some work to do, all things being equal, I believe you will be hard-pressed to find a more affordable big city than our very own City of Champs.
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Robin.
