Edmonton's condos called a top investment opportunity

The average price for a condominium in Alberta’s capital is attractive, especially for out-of-province investors.

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Edmonton has for months been among the most affordable major cities in Canada, but a new report suggests it may also be a top investment opportunity for condominiums.

Produced by Zoocasa, a national realty firm, the report examined three metrics from this past August, ranking major markets by average monthly rents, condominium prices and monthly mortgage payments (based on the average condominium price).

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Indeed, local realtors are not surprised by the numbers regarding Edmonton’s market, given the segment has been mired in a slump for more than a decade, offering value for investor dollars.

Yet as an investment, a condominium purchase in the city is anything but a sure bet, says realtor Drew Carlson with Carlson Real Estate Group with Exp Realty.

“The condo market in Edmonton has been a straight line across” for pricing over the last decade.

What’s more, the city has large supply of purpose-built rentals, says realtor Nathan Mol with Liv Real Estate in Edmonton. While condominiums have struggled over the last decade, “at the same time, more rental stock came onto the market,” he says.

Still, the city’s vacancy is likely tighter than the four per cent rate Canada Mortgage and House Corp. published this year based on data from last fall, he adds.

As well, the entry-point, or average price, for a condominium is attractive, especially for out-of-province investors, both realtors admit.

Indeed, the report reflects this with Edmonton ranking among the most affordable markets for investors seeking to purchase a condo and rent it with an average price of about $193,000. That’s the third lowest average price among the 21 municipalities analysed, trailing only Lethbridge (about $182,000) and Grande Prairie (about $154,000).

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Additionally, the city has the second lowest monthly mortgage payment of $918. The only cities with smaller payments were Lethbridge at $800 and Grande Prairie at $674 a month.

What makes Edmonton particularly notable is its average rent of about $1,360 a month. That’s the highest among cities with the lowest average prices and mortgage payments, which suggests the market is among the most potentially profitable from a rent cash flow perspective for investors.

That said, Calgary also fared well in the report as an investment market. Calgary’s average monthly rent was $1,920, while the average price of condominium was $309,100. At the same time, the average monthly mortgage payment was $1,355.

While the average price is significantly higher than Edmonton, Calgary is one of the few large cities where rent is actually higher than the average mortgage payment.

That may partly explain why Calgary has attracted droves of investors from Ontario and elsewhere, driving sales for resale and new condominiums, Mol says.

He adds that trend could likely spill over to Edmonton, too, given the capital city generally lags Calgary regarding housing trends.

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Still, he notes the segment remains a challenge in Edmonton where demand for single-family detached homes reigns with an average price of less than $500,000.

By comparison, the benchmark price for a detached home in Canada in August was more than $825,000.

“In Edmonton, it’s just so much easier for people to say condos are a bad investment until evidence has proved that otherwise,” Mol says, noting condo fees are often a deterrent.

Yet out-of-town investors are likely to see opportunity in Edmonton’s condo market, Carlson says.

He further notes it’s possible for a professional couple to move from Toronto to Edmonton, buy an affordable home to live in and then purchase condominium as an investment.

“One hundred per cent they could do that,” he adds. “They can get a lot for their homes there, and afford much more here.”

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