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Edmonton Real Estate Market
- Thread starter Daveography
- Start date
thommyjo
Senior Member
Correct. But if we need rents to be closer to $3500/month for a 2bdrm for “construction to work” numbers wise…. That’s a lot still.
Average household income in Edmonton after taxes is $84,000/year. Or 7k/month.
So 3500 for rent is 50% of the average take home each month. Not including utilities, parking etc. and that’d be for a 2bdrm.
I’m just saying, that can’t be the solution either. Real estate is such an inefficient form of wealth building. We need to increase productivity and entrepreneurship in this country and stop being so entrenched in real estate speculation. It’s hurting us deeply.
kcantor
Senior Member
Most academic studies including this one from the U of A show immigration has a nominal effect on housing prices:
View of The Effects of Immigration on the Housing Market: Canada
journals.library.ualberta.ca
While the impacts of immigration on rents are anecdotally greater, the industry itself is quite efficient and particularly responsible to supply and demand. Interestingly enough, jurisdictions that meddle in that - ie rent controls - often experience reductions in supply and higher rents over the long term.
IanO
Superstar
Except that's for new builds and top end of the market, not average rents around town.
thommyjo
Senior Member
Still a 50-60% increase across the board needed for those to happen. Average rent being 2500-2700 is still deeply problematic based on current wages.
kcantor
Senior Member
Edmonton still enjoys one of the highest median incomes in the country and the lowest rental cost in the country for major cities. I’m not sure how you see that as deeply problematic.
Platinum107
Senior Member
I've personally never found the argument "Hey, at least here it isn't as bad as other places!" very compelling. The cost of renting or owning a decent place to live is awful no matter where you go, it's just more or less awful depending on where it is. Edmonton needs to avoid even becoming like Calgary, much less Vancouver or Toronto, and that involves creating policies which allow diverse and dense housing forms across the entire city (which we have taken the first steps towards).
erudyk_29
Active Member
^ Agreed, just because we have it better than other places, does not mean it's good.
I'm very glad that Edmonton has relatively high incomes and relatively low rent costs, but relatively low is not necessarily low.
Edit: Just to add on, I don't think "better than Toronto/Vancouver" should be a badge of honor for how affordable Edmonton is. Even being better than Calgary is not that impressive at this point.
I'm very glad that Edmonton has relatively high incomes and relatively low rent costs, but relatively low is not necessarily low.
Edit: Just to add on, I don't think "better than Toronto/Vancouver" should be a badge of honor for how affordable Edmonton is. Even being better than Calgary is not that impressive at this point.
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David A
Senior Member
It is all a rather academic argument here. People are moving here from these other less affordable places and that increases demand and rents here. Unless you put up barriers and checkpoints, you can't stop that.
Yes, building new rentals helps, but if the cost of doing that is higher than current rents then it that will not keep them at current levels either. It may suck, but it is reality.
Yes, building new rentals helps, but if the cost of doing that is higher than current rents then it that will not keep them at current levels either. It may suck, but it is reality.
kcantor
Senior Member
Noting that things are actually pretty good here is far from saying at least here it isn't as bad as other places.
As far as policies which allow diverse and dense housing forms across the entire city, the first steps we have taken are baby steps indeed. Whether you compare what we're doing with one of the most regulated markets in the world (Singapore) or one of the least regulated markets in the world (Kuala Lumpur), the kinds of densities that are possible in Edmonton pale in comparison.
If having it better than just about any other place in the world doesn't mean it's good, how exactly would you define and measure good?
erudyk_29
Active Member
Being able to afford a modest living on a minimum wage, full time job.
Assuming a typical 8 hours a day, 40 hours per week.
An Albertan making minimum wage makes 600$ a week, ~2400 per month. Taxes for this person would be about 24.15%. Leaving them with 1820.4 per month after tax.
Someone paying the average 1330$ a month rent for a 1 bdrm apartment is left with 490.4 $ to pay for everything else.
In Edmonton, you're going to need a car in 95% of cases, so that's going to eat up a substantial chunk of what's left. Subtract food (which is getting more and more expensive) and this person is barely breaking even, if they even are.
Admittedly, this is not most people. Most people can afford to live in Edmonton, which is not the case for a lot of cities worldwide. However, we can still do much better, and if you happen to be stuck in a position where you're making minimum wage, you're barely getting by.
I'm lucky enough to be in a position where I can live with at home with my parents, but with university, I could physically not work enough hours to afford to live in Edmonton making 22$ an hour at my part time job. Without significantly sacrificing my studies.
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Platinum107
Senior Member
Exactly as @erudyk_29 said, a person should be able to work a full-time minimum wage job and have 30% or less of their income go towards rent of a 1 bedroom apartment. That's what I would define as "good" or "fine".
I know this is a broader societal conversation, but the fact that housing has become a money printing machine for the top 0.1% and mega corporations is horrendous and provides an endless amount of existential dread as a young person. Nobody here said this, but I've heard the "just pull yourself up by the bootstraps and make money, then you can buy a house" argument from so many people in different generations and, frankly, t's enraging because average incomes have become so absolutely detached from housing prices that the market isn't even comparable to decades long past.
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edm13
New Member
Just a quick note, 24% is likely the marginal tax rate for a minimum wage earner. I’d guess the average tax rate for them is somewhere between 10-15%. Then you also qualify for pretty well every benefit out there (gst cheques, child tax benefits, etc). Someone in this position, should be able to live decently with a room mate in a 2 bedroom apartment
Stevey_G
Active Member
Interesting read thanks for the share. That 2-way fixed model they built is....interesting. Being 10 years removed from 300 level econ courses I'm not sure I properly understand wtf they're doing lol. But it got published and uses great sources, so I'll trust it.Most academic studies including this one from the U of A show immigration has a nominal effect on housing prices:
View of The Effects of Immigration on the Housing Market: Canada
While the impacts of immigration on rents are anecdotally greater, the industry itself is quite efficient and particularly responsible to supply and demand. Interestingly enough, jurisdictions that meddle in that - ie rent controls - often experience reductions in supply and higher rents over the long term.
The issue of high housing costs is a bit more complicated than just one factor I will give you that; but immigration and migrating Canadians do play a role in it and I would be much more interested in a paper that looked at more regional phenomena than trying to eye the issue Nationally from a macro lens.
Every city faces different issues, but ultimately every city faces a mixture of the following factors: inelastic supply-side issues, population growth, foreign investment/laundering, speculative investing, shifts in perceptions of homes as an investment rather than a home, easy financing, NIMBYS, zoning restrictions, materials/labour costs, a lack of government home building programs, broader inflationary pressures, dwindling rental stock, international capital flows and global trends, etc.
It's complicated, a mixed bag of all the above things for each individual region with no single easy answer. I keep hearing from people that the coming boom in housing starts we are expecting to see across the country with federal policy changes will solve the problem; but how do you build a million homes and not expect raw and engineered materials to face inflationary pressures? Thus driving up the costs of said starts? Are people prepared to spend 800 dollars per square foot on a home? Can they? Is that plan economic?
Or, should we be rubber stamping mining projects, subsidizing mills, and encouraging the development of engineered goods manufacturing in the country thus driving prices down and making it easier to build?
I honestly don't know the answer.
David A
Senior Member
For a number of reasons such as regulation, taxes, constrained land availability in our biggest cities and labour supply it seems very difficult to boost housing supply a lot, particularly in the short term.
Adding too many people only makes housing affordability worse, both for those wanting to buy and those renting. So we do have to take some of the pressure off of housing demand until we can do things to fix supply.
Adding too many people only makes housing affordability worse, both for those wanting to buy and those renting. So we do have to take some of the pressure off of housing demand until we can do things to fix supply.