Edmonton’s Current Condo Supply Offers New Opportunities

The consensus among realtors is that Edmonton’s condominium market is still flat. The

REALTORS® Association of Edmonton Report on the Greater Edmonton Area reveals that new

Edmonton real estate listings and inventory jumped up in May − the highest levels seen in 10

years. For the first time this year, May finished with more listings than last May did. The first

four months of 2017 showed lower supply and higher demand than last year, but the latest

market statistics now indicate an opposite trend.

 

For James Mabey, REALTORS® Association of Edmonton Chair, optimism reigns: “We are in

the middle of our busiest season for real estate. More sellers are entering the market and are

motivated to move their properties before the summer months, which provides the best selection

of properties for buyers who are actively looking and taking advantage of the increased number

of listings typical for this time of year.”

 

The report calculated that the average condo sale price is $250,818 in May, down from $258,494

or a decrease of 2.69 per cent, compared to April 2017. Out of 1,277 condo listings in May 2017,

only 449 were sold. Average prices for duplexes and row houses decreased to $344,406, a 3.75

per cent decline from April 2017, and a 1.52 per cent dip from May 2016.

 

Inventory continued to increase for May 2017 and is up 10.16 per cent over April 2017, and

increased 4.33 per cent relative to May 2016. New listings increased 16.21 per cent relative to

April 2017, and increased 15.09 per cent, compared to May 2016.

 

The report notes that average days on the market remained stable, decreasing slightly for most

categories in May. Condominiums increased to 62 days on the market from 60 days in April

2017 and May 2016.

 

Potential opportunities for students:

One source notes that liberals are anxious to move money faster to deal with Edmonton’s critical

social/affordable housing backlog, but the decreased condo sales and more options to buy might

also garner real estate opportunities for students attending the city’s universities and community

colleges.

 

Some industry agents agree that condos are a hard sell, because of the public’s perception of

condo and strata fee escalations, but these scenarios belong to condos that are not well-

maintained and do not apply to the majority of condos for sale.

 

Nevertheless, condo sales have been flat now for three years. With lower prices and more

selection, sources believe that the market will bounce back soon. It may, in fact, be an opportune

time for parents or developers to think in terms of accommodating students’ housing needs.

 

Parents might consider a condo purchase for their student-children:

Many parents who want to see their children attend higher education are also burdened by their

children’s housing expenses. Some parents might follow what others have done: provide the

down payment on a condo and have their children rent from them. The advantage is that parents

help their children get into the real estate market and establish credit, while securing an

investment or retirement property for themselves. The decision many parents face is who to put

on the title and how to finance the property, so, consulting with an accountant, lawyer or realtor

prior to any final decisions is paramount.

 

During the consultation, keep in mind that if the condo is in the parent’s name as a secondary

residence, they might end up paying more than they bargained for in capital gains tax that kicks

in at resale time, assuming the condo increases in value.

 

In addition, if the child is making rental payments, ensure they can actually afford to do so, and

don’t forget to factor in property taxes, condo fees and utilities.

 

As part of real estate best practices, consider the condo purchase as a long-term investment and

don’t expect to make a profit after a year or two. While the child is attending university or

college, definitely hold onto the property for the length of time they are in school.

 

One expert notes that buying the condo as rental property has the advantage that the interest on

the mortgage is fully tax deductible, including the interest on a borrowed down payment, and

condo owners are able to deduct 100 per cent of interest costs against income. The downside: the

treatment of the capital gains tax could impact the advantages. Professional realty help and

answers prior to your decision to buy is again emphasized.

 

Should a parent go the condo-as- rental-property route, the children could be given permission to

sublet during the summer months, especially for those where Edmonton is not their principal

home city, or they need to move out of the area temporarily for work. In this scenario, subletting

over the summer serves as a practical way to keep rent revenue flowing without interruption until

the child returns to college or university. The summer months prove a popular time for students

to sublet to other responsible students.

 

Student as principal buyer:

Another option cited is for the parent to arrange to have the child on the title as the principal

buyer and the parent(s) as co-signor. The property is, then, considered a principal residence and

not a revenue property, which means that the interest is not deductible, but neither will parent(s)

need to deal with any capital gains tax.

 

The future of unique, affordable mini-condos:

Edmonton may well lead in unique and affordable condo concepts, such as The University of

Alberta’s 230-square- foot condo that was built as a model inside its industrial design studio.

In March 2017, the University of Alberta asked for feedback from the public about how such

spaces could fit into the lives of Albertans. The tiny condo was designed and installed by

associate professor and tiny-home builder Tim Antoniuk in the University’s Micro Habitation

Lab.

 

The grand opening was held for developers, policymakers, and students wanting to live in the

city’s core, and their thoughts were solicited about the tiny design, featuring a folding bed, a

moveable bathroom wall to create more living space, and tables that could be extended or tucked

away.

 

A tiny inner-city condo, inspired by Antoniuk’s design, could cost as little as $150,000.

While the tiny-house movement has its foundation in the United States, the actuality of smaller,

often more environmentally friendly homes has recently become more popular with Edmonton

property owners, such as the planned community in Big Valley, population 350 − albeit 220

kilometres south of Edmonton. The neighbourhood intends to build a subdivision containing 22

undersized lots, measuring 30 by 80 feet − considerably smaller than conventional lot sizes in the

village, measuring approximately 50 by 120 feet.

 

With a tiny home costing considerably less than conventional houses, a build of this type just

might catch on as an alternative to red-hot markets, especially for downsizers, students and new

wage-earning millennials.

 

Zoocasa is a real estate brokerage based in Toronto.

 

Sheila O’Hearn is a freelance and creative writer, and has worn many hats throughout her career, from general staff reporter to magazine editor. She has a keen interest in business entrepreneurship and currently writes for several outlets. Visit her at LinkedIn for more info.