Noori Gill looks out over the neighbourhood where they was renovicted in Edmonton, on Jan. 17. Gill is struggling to get into the housing market and some of the realities of being a renter.Amber Bracken/The Globe and Mail
In Alberta, a province where protections for tenants are scarce, home ownership is widely seen as essential to secure long-term stability. But finding a starter home is a growing challenge for Edmonton renters, as demand outstrips supply in Alberta’s capital city.
“Over the last three years developers have shifted gears away from producing for-sale housing and moved toward the rental market,” said David Dale-Johnson, an executive professor and Stan Melton Chair in real estate at the University of Alberta’s School of Business. “A lot of the potential buyers have done the same thing simply because, at 5 or 6 per cent mortgage rates, people can’t qualify for a mortgage.”
As a result, despite record population growth, starts in the for-sale market increased by 30 per cent in 2024, whereas the number of purpose-built rentals started nearly doubled relative to the year prior, reaching a record 6,307 units in December.
This situation is impacting Edmonton tenants such as Noori Gill, whose chances to become a homeowner are being eroded by an influx of out-of-province buyers seeking to move up and get more bang for their buck.
Last year, Mx. Gill passed on the opportunity to purchase the two-bedroom condo they currently rent in Parkdale, an older neighbourhood in central Edmonton, because the 900-square-foot apartment doesn’t meet the massage therapist’s long-term needs – a decision they might come to regret as their lease comes due in June.
“I was renting a house for about 10 years, but after my roommate and I were renovicted in 2023, we moved into this condo,” Mx. Gill explains, adding that if they were to deplete their savings to buy a place, it should have enough space to accommodate for a roommate, and to run a home-based business to support their income.
“I was running a massage therapy business in the old house, so I was hoping I could start that up again.”
Choice, however, is becoming less available for aspiring first-time buyers like Mx. Gill.
“I’m sure I qualify for a mortgage on something that needs a lot of work,” Mx. Gill said. “But I’m not a handy person, so I’m looking for a house that comes ready-made, and those are more expensive.”
Since 2023, the median resale price of a detached dwelling in central Edmonton, the most affordable part of the city, has risen by 18 per cent, reaching $312,000 in December.
While this amount is within Mx. Gill’s budget, landing a detached home built in the past 25 years listed for less than $325,000 is no easy feat.
“Most first-time buyers are being approved for that $300,000 price range,” said Tom Shearer, a real estate broker in Edmonton. “Because there’s a lot of people in that same category, you’re going to have to search in an area that’s maybe less desirable in terms of quality or location.”
Outside central Edmonton, only in a handful of satellite communities – including Stony Plain, Morinville and Devon – do median resale prices for single-family homes remain in the $300,000s, as demand in the region continues to outstrip supply.
“We don’t have as much inventory starting the year as we’ve had in previous year,” Mr. Shearer said. “So there will be a bit more desperation in trying to find and purchase a home, and that’ll put pressure on pricing.”
Royal LePage forecasts the median resale price in Edmonton’s detached segment could rise by 12 per cent in 2025, and inch close to $500,000.
Relative to the exorbitant prices that have become the norm in the Vancouver and Toronto markets, a $500,000 home might seem like a bargain. But for renter households, or potential first-time buyers, this price point is largely out of reach.
According to the National Bank of Canada’s latest housing affordability report, the annual income required to qualify for an Edmonton property in the high $400,000s is $111,445. However, because the median income of renter households in the Vancouver, Toronto and Edmonton metropolitan areas sits between $60,600 and $65,500, the options first-time buyers can afford are limited – even in Edmonton.
“First-time buyers are having to be incredibly organized, and work harder,” Mr. Shearer said. “They’re having to have a down payment of $20,000 to $40,000 just to get started.”
For prices to stay within reach for first-time buyers, new supply across segments is essential,” said Kalen Anderson, CEO of BILD Edmonton Metro. But continued demand for rentals is making this market a more attractive proposition for Edmonton builders, she said.
“Newcomers typically don’t go straight into purchasing a home as soon as they arrive,” she said. “There will usually be this kind of shock absorber of the rental market.”
As a result, the lion’s share of new development is focused on meeting demand in the rental market, supported by programs such as CMHC’s MLI Select, a mortgage loan insurance product for multifamily rentals. Currently, there are 11,071 dwellings under construction in Edmonton, and more than 5,063 units are purpose-built rentals in the apartment segment.
“For the last few years, the CMHC has offered favourable lending rates related to [rental] construction, which has made a lot of projects that wouldn’t otherwise be feasible,” she said, pointing at the tension between rising construction costs in the multi-family segment and Edmonton’s stable rental rates, as well as the difficulty to finance for-sale condos in a high-interest-rate environment.
“All of these factors come together and create the perfect mix of conditions whereby rental is the market’s preferred product,” Anderson said. “It’s not that builders and developers have an ideological preference either way; they have to get the projects financed by third-party institutions like banks, and so the banks have a say in how this is going, they want to make sure that their money will make the return needed.”
Despite changes to immigration levels, a recent survey conducted by Altus Group shows that seven out of ten participants – which include investors, developers and lenders – expect a strong performance from commercial multifamily properties over the next 12 months across Canada, while only a third are betting on single-family residential.