2020 was certainly a wild ride, in both the real estate industry and beyond. Now we’ve got our eyes on what’s in store for us during 2021.
Of course, it’s impossible to perfectly predict what could happen, but we can always look for trends to give us an idea of the possibilities.
The good news is Edmonton’s real estate market has been booming despite the pandemic, and there are many reasons to think it will continue that same path.
Low Interest Rates
To encourage spending, the Canadian government has set the prime mortgage interest rates incredibly low. Considering the way the economy has been hit by the COVID-19 pandemic, we think it’s pretty safe to assume that this trend of low rates is going to continue throughout 2021.
Low-interest rates means two things: it could be easier to qualify for a mortgage as an investor and lower monthly mortgage payments. Lower payments also means you’ll be able to earn higher cash flow from your income properties. The low rates also make it easier to add to your real estate portfolio during this time.
Demand for Single Family Homes
To stop the spread of illness, people this year were asked to self-quarantine. For at least a portion of the past year, kids have been learning remotely and adults have been working from home.
With the understanding that the pandemic is not yet over and there’s no telling when something similar could happen again, there’s been an increase in demand for single-family homes. As a real estate investor, it’s a good time to start thinking about acquiring single-family homes into your investment portfolio.
There is a growing trend of people leaving the crowded environments of multi-family buildings where people share an entrance, elevator, hallways, and many other common areas. They are moving to quieter residential neighbourhoods and the private spaces offered in single-family homes. Many of these folks still don’t need more than the 1-bedroom suite they had in the multi-family building, and as a result, secondary suites in residential neighbourhoods are a very popular option.
It’s a good time to invest in single-family homes, townhomes, or duplexes, especially those that offer the option of including an income suite in the basement or over the garage for multiple streams of income. These styles are more likely to resonate with tenants these days.
Potential for Immigrant Influx
In general, Edmonton tends to attract a slightly higher-than-average number of new Canadians. When these newcomers arrive in Canada, they need a place to live, and most start by renting.
Throughout the pandemic, immigration has been put on hold. As a vaccine gets us closer to returning to normal, we can expect the government to start processing the backlog of people waiting to move to Canada. This could lead to an influx of new immigrants into the country, and since Edmonton is more affordable than the bigger cities like Toronto or Vancouver, there’s a good chance that Edmonton will see its own influx of newcomers.
This makes it a good time to buy investment properties, especially new-construction properties. You can have brand-new units ready for the influx. When people enter the country, the demand for rental units will go up.
Current studies are somewhat conflicted about what we’re going to see with home prices in 2021. Some reports are guessing that there will be an increase in prices while others are saying that there may be a price decrease.
It isn’t likely we will see a massive jump in house prices in either direction in 2021, however it does appear that Edmonton is well poised for continued market growth over the next few years. We also know that compared to the national average, Edmonton homes prices are very affordable and in a very favourable market cycle position for real estate investors. If you have access to the down payment and are considering your options, it’s worth a look into the Edmonton market.
Possible Rental Market Outlook
The one major negative effect we might see in 2021 relates to tenants. Everyone has been affected by COVID-19 in some way, but many people have seen a loss in income due to the pandemic.
A lot of people have struggled to pay their bills, were drowning in consumer debt, and left with the hard choice to sell their homes. By selling their homes they could access the equity they had in their home, pay off consumer debt and perhaps even bank a few dollars. Even though the pressure is off, they are not eager to jump back into home ownership and many are opting for the convenient option of renting a home.
With recent mortgage rule changes and home prices on the rise, we believe that renting a home will continue to be a growing trend for several years to come.
Overall, things look really positive in the Edmonton real estate market for 2021. We believe that the Edmonton real estate market is primed for some movement. Contact us to learn more about how you can get started in the new year.