Despite recording a 43 per cent sales increase in the second quarter of 2019, the Edmonton multi-family home market experienced a 20 per cent drop in total sales in the third quarter of the year, says a new report by real estate research firm Urban Analytics.
“While Edmonton’s new multi-family home market was able to leverage the momentum gained from the then recent change in provincial leadership in the second quarter of 2019, it appears this positive change in consumer sentiment has been curbed as prospective buyers shift(ed) their attention to the outcome of the federal election, which is poised to dictate both private domestic and international investment and the direction of consumer sentiment,” said the report.
“Developers and sales representatives across all sub-markets reported a noticeable decrease in sales centre traffic and have equated this to the uncertainty regarding the results of the federal election. Despite the slower traffic levels, there was no increase in the number or value of incentives offered to prospective buyers, or little indication of any significant incentive offerings. The ‘wait-and-see’ approach by both developers and purchasers have impacted total sales across all product types and sub-markets.”
In the third quarter, there were 352 sales compared to 439 in the second quarter. In the third quarter of 2018, there were 356 sales.
The report said sales of new multi-family homes in Edmonton would require price reductions or price-reducing incentives to generate some excitement and differentiation in the more competitive sub-markets such as the southwest and northwest.
“While year-over year quarterly sales declined by just one per cent in quarter three of 2019, it continued a pattern of inconsistency in sales velocity from quarter to quarter,” said Urban Analytics, adding that since the implementation of the mortgage stress test the market has struggled to establish a steady pace of buyer demand and sales.
“The Alberta economy has faced a variety of economic headwinds in recent years from the sharp decline in oil price to the introduction of the B20 mortgage stress test, which effectively reduced consumer purchasing power by approximately 18 per cent. Although entry level home buyers have been most impacted by these factors, they’re affecting nearly all buyer groups to some extent. Many would-be home buyers remain on the sidelines, as evidenced by these third quarter sales statistics. As consumers await any new policies by the recently re-elected federal government designed to facilitate a home purchase, developers must continue to incentivize existing inventory in order to attract buyers to their projects.”
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