Every day I am asked how tariffs will affect the Edmonton real estate market. I am a big news and economics nerd, so I’ve been diving daily into research on this topic! I have worked through three major market shifts in Edmonton – the US market crash in 2008, the oil price crash in 2014, and covid, and learned during each of them how to have successful sellers and buyers! While I don’t actually know what will happen, I have a few key thoughts that should help you make decisions in 2025 and beyond:
1) Housing Prices Tend to Go Up Quickly and Down Slowly (AKA Don’t Panic!) Housing tends to react slowly to bad news (and quickly to good news – something called the “ratchet effect” if you want to learn more on it). Even when condos had a 5% chance of selling – you read that right – when only 1 in 20 listed condos in Edmonton were selling, prices only dropped 3-5% per year. And in those times, I sold a LOT of condos. So IF prices drop, it is unlikely that they will happen quickly.
2) We Still Don’t Have Enough Homes In 2024, we had 18,384 new units built in Edmonton but we saw 73,000 new people move to Edmonton (1) . Unless you put 4 new people into each new home including 1-2 bedroom condos (which is unlikely!), we are still short on inventory. When prices dropped / stayed flat from 2007 to 2019 in Edmonton, that was mostly due to an oversupply of inventory. Which leads me to…
3) Prices Could Actually Increase While early predictions when the covid-19 pandemic hit were that prices would decrease, they actually climbed to record levels. Building Costs soared due to supply chain issues, there was a housing shortage, and interest rates were slashed (more on that in my next point), so prices soared. Edmonton’s homes are still some of the most affordable in the country, and it’s likely we will continue to see migration from other provinces if only for cheaper housing.
4) Interest Rates Will Likely Drop According to my favourite economist Benjamin Tal, Bad News = Good News (2), ie, bad news for economies = good news for interest rates, so the government is likely to continue dropping interest rates. As the economy becomes less stable, we’ll likely see more people put their money in bonds, and fixed rates should also drop (that is something I don’t love predicting though as it gets complicated!). Remember that while most real estate buyers are buying homes, what they’re really basing their decisions on is their payments. So lower payments = more affordability, which means prices can increase (this is part of what fuelled the super increase in prices during covid).
And finally…
5) You Have to Live Somewhere The reality is that you’re either renting, paying a landlord’s mortgage, expenses, and taxes, OR you own your own home. Edmonton’s rent has increased at one of the highest rates in the country (one bedroom rents went up 16% in 2024 alone – 3). So whatever happens to prices will happen across the board.
My final thoughts are on action that you CAN take in this environment, and these are always good things to do:
- Have back-up savings. Especially if you are in an industry where layoffs are possible, make sure you save extra money just in case.
- Take action. Money talks, so support local businesses and shop Canadian.
- Get involved. Now is the time to write letters, make phone calls, and ensure our elected officials know how much we value our country and our economy.