Edmonton real estate: Post-boom, a reasonable resurgenceClick here to view map »
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Ned Stanojevic knows how to gut a house. So when Edmonton’s housing market heated up, he started flipping homes.
“At that time it just made sense,” he says. The 43-year-old father of two figures he flipped six homes between 2005 and 2009. At the height of his city’s boom, he had three at once. “That was my tolerance level.”
Edmonton’s real estate market in those days was not for the faint of heart.
“The market place was very aggressive,” he said. “That’s the way it was back then. If you thought you’d have the weekend [to decide], it’d be gone.”
When the market started to chill in late 2007, Stanojevic still had two properties on his hands. Renovating was “the only thing that kept us in the game,” he said.
“A lot of people bought property and didn’t do anything to it because it appreciated so quickly. I always renovated a property regardless. … That’s what saved our bacon.”
In depth: Paying for Canada’s housing boom
That was then. Nowadays, there are few places less fitting than Edmonton to deliver a housing market warning: It’s considered one of Canada’s most reasonably priced major cities.
So it was a bit odd when Finance Minister Jim Flaherty told to reporters earlier this month he has a “sharp eye” on pockets of the country’s housing market for signs of buyers overextending themselves.
Flaherty vowed “to intervene again if I have to make sure we don’t create a housing bubble.”
Edmonton, however, isn’t considered in danger of a correction.
While affordability’s increasingly scarce elsewhere in Western Canada, Edmonton, where the average home price is $337,599 ($397,613 for a single-detached dwelling), is looking even-keeled by comparison.
WATCH: Is Edmonton really the most affordable major city in Canada?
A deal, relatively speaking
A home in Edmonton costs roughly 3.7 times the median income of a working-age family. In Vancouver, by contrast, that ratio’s closer to nine. That makes the city the most affordable major market in Canada – and what optimists hope other cities look like soon.
The city’s boom was timed with the heady rush of investment into Alberta’s oil patch in the middle of the last decade.
By 2005, oil had ignited a fire under Edmonton’s housing sector, says Royal LePage realtor Jason Thomas.
Families and workers from Ontario, Atlantic Canada and other areas of the country flooded Edmonton – often as an anchor for spouses working a five-hour drive away in Fort McMurray.Click here to view data »
Boom, bust, recovery
By 2007, home prices in this city – which in a good year rise 5.0 per cent annually – were appreciating that amount every month, Thomas said.
What followed is predictable: “Speculation [and] overbuilding, especially on single family homes. People were putting down deposits on four or five homes that would take a year to build and then flipping them once they were completed.”
The local property bonanza was cut short in 2008 as the world descended into recession and oil prices tanked.
Demand for the new housing stock in Edmonton’s expanding suburbs flat-lined, Thomas says, and prices cratered. “That’s really what caused our market to bust – too much inventory in the suburbs,” he said.
Edmonton housing prices have steadily risen since, reclaiming the gains made during the city’s boom – and now look poised to surpass them.
The bursting of Edmonton’s bubble between 2007 and 2009 “appeared to erase the significant overvaluation that had been built up,” TD economists said in an Oct. 18 regional report. TD predicts prices will appreciate by between three and four per cent through next year.
“It was unsustainable, of course,” Thomas said of Edmonton’s housing bubble. “It’s taken us a few years to get back.”
READ MORE: Why this Calgarian has no plans to buy
Stanojevic sometimes looks at today’s market and daydreams about flipping houses again.
“There’s a side of me that looks at properties and says, ‘I’d like to get my hands on that,'” he said. “But I’ve got a younger family” – his sons are 4 and 2 – “this business, so my time constraints are a bit of an issue.
“I still believe good areas and good real estate always sell.”
Where are Edmonton home prices growing fastest?
1. Laurier Heights:
- 98% growth since 2005; average 2012 sale price: $678,000
2. Grandview Heights:
- 89% growth since 2005; average 2012 sale price: $891,000
- 80% growth since 2005; average 2012 sale price: $364,000
- 79% growth since 2005; average 2012 sale price: $309,000
- 78% growth since 2005; average 2012 sale price $392,000
The experts at the Canada Mortgage and Housing Corporation expect the City of Edmonton will have shovels in the ground for nearly 8,000 condo, townhouse and other multi family units by the end of the year – that’s the highest number of starts since 1978.