The New Age of Renters

The residential real estate market in Edmonton is low, and it isn't showing signs of recovery.

Why?

Price is not a barrier to entry in Edmonton, with high incomes when compared to the rest of the country, and lower home prices. Then why are home prices down? Demographics in Edmonton are also very favorable when it comes to home-ownership. Believe it or not, baby boomers play less of a part driving down home prices than they do in other Canadian markets.

Baby boomers are the first significant factor. As baby boomers retire, they tend to sell their homes to pull equity out of their houses to finance their retirement. When people sell under these circumstances, they will try to maximize the sale price of their property, regardless of market values.

Millennials don't see value in ownership. In other markets, this is ostensibly due to high home prices making ownership impossible for young people (think Vancouver or Toronto). However, in Edmonton, price is not a problem. There's a growing sentiment among millennials that ownership is unnecessary, cumbersome, and it traps you in one location. Homes are increasingly seen as a liability rather than an asset, and the mobility afforded by renting is more appealing to millennials than homeownership.

Of course, new builds and the flight to quality drive lower prices in older assets. New homes in the market built at costs close to those of used homes have been driving down the value of old product around the city.

That said, there will always be a market for high-end custom homes, but all other categories of single-family dwellings will suffer because of this trend. As this goes on, we are likely to see an increase in infill developments around the city and redevelopment of older neighborhoods into high-density neighborhoods with multifamily buildings.

https://www.edmonton.ca/business_economy/economic_data/economic-outlook.aspx

https://edmontonjournal.com/business/real-estate/looking-ahead-to-edmontons-housing-market-in-2019