Edmonton real estate surge expected to hold with rate cuts

“I don’t see it as being a significant momentum changer for our market. We’re already moving along at a very nice pace,” said Tom Shearer, broker and owner of NorAlta Real Estat

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Experts don’t expect Edmonton’s real estate market to change much with the Bank of Canada’s decision to lower its target overnight rate to 4.75 per cent.

“I don’t see it as being a significant momentum changer for our market. We’re already moving along at a very nice pace,” said Tom Shearer, broker and owner of NorAlta Real Estate.

On Tuesday, the Bank of Canada announced that it would be lowering its overnight rate in a long-awaited decision. Since last July, the rate had been set at five per cent, which made interest rates, including mortgage rates, higher. As the rate comes down slightly, mortgage and real estate experts don’t expect that it will change Edmonton’s market much — for a good reason.

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While Canadians will be happy the rate came down, it doesn’t mean that the bank will return to the low rates of years past.

“According to our TD economics team, we expect the Bank of Canada to follow a gradual path for rate cuts,” said Gary Aulakh, associate vice-president of real estate secure lending with TD.

“We will continue to see gradual rate cuts that will take place over the remainder of this year and next year, but that we should not be expecting rates to be at the historic rates that they were.”

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The main effect that the rate change will have is some more affordability.

“It’ll make everything in the market a little bit more affordable for people who are out there shopping for a home,” Shearer said.

But with the rate changing just 0.25 per cent, the cut won’t equate to massive savings for prospective homeowners.

“While the rate cut — 25 basis points — isn’t going to make a significant difference from a dollar perspective, it is still money back in the pocket of a consumer and most importantly, it may give a signal for folks that were waiting on the sidelines to make that investment,” Aulakh said.

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The rate change will likely have a pronounced effect in more rate-dependent markets like British Columbia and Ontario, where the cost of housing has already risen so high that any decrease makes a more noticeable difference. While the rates have been high, those markets saw a contraction in activity as people looking for a home waited for the rates to come back down.

Alberta and Edmonton, by contrast, have bucked the national real estate trends with strong sales buoyed by more affordable starting price points.

The Edmonton area saw more than 3,200 home sales in May, which was up more than three per cent from April and nearly 19 per cent from May 2023, according to a recent report from the Realtors Association of Edmonton.

With strong activity in the market despite the higher rate, prospective homeowners in Edmonton seem to have been less concerned with the rates than buyers in other markets, but increasing prices could slow its roll.

housing graphic shows jump in edmonton real estate
Edmonton’s benchmark price for a home surged since January, and rate cuts could prolong the increasing prices. Supplied/Realtors Association of Edmonton Photo by Supplied /Realtors Association of Edmonton

Edmonton’s home price index was up just one per cent from April, but more than six per cent compared to last year.

For Edmontonians, Shearer suggested the rate change and the increase in prices could make for slower easing of the real estate market as it heads into the slower summer months, making for a “more prolonged activity period compared to previous years.”

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