Is the Edmonton Real Estate Market Toppling? WhatYou Need to Know NOW
Calvin: Patrick, my good friend, Patrick Franci with the RAIN Network. We are talking about is the Edmonton market toppling. We’ve been in this like level of confidence for so long in the Edmonton market, not so long, but a really long time, longer than usual. Things are moving fast, lots of multiple offers, but are things about to change? What do you think?
Patrick: Well, I think, you know, the word toppling is probably not quite the right word to use because toppling would imply things are coming off a cliff kind of thing or falling down. But the reality of it is, is that it isn’t toppling, but it is definitely shifting into the next phase of the real estate cycle.
You know, we’re coming from a boom cycle. We’re now moving into a slump cycle. But let’s be clear on that, Calvin. I’m not talking about toppling. I mean, this is a slow and steady trend that is going to see the Edmonton market continue to soften. So we’re coming out of the boom cycle where it’s all exciting and all fun and everybody’s cranking deals into a slump cycle, which is where lots of opportunities exist, but you have to be a little bit more cautious.
Calvin: Definitely. And what are some of the indicators? Because I know a lot of people are like, okay, well, you know, why do we feel like it’s going this direction? What are some of the things that you get to see that a lot of people don’t get to see that shows us that we’re merging in this direction?
Patrick: Well, I think there’s a number of factors. When you look at a real estate cycle, we actually look at about 65 data points, but in determining for yourself, like if you want to look at into that slump cycle, we start to see the uncertainty in an economy. We start to see GDP start to soften. We start to see unemployment start to go up. We find that financing gets more difficult.
There’s a political, which is the shift of political, we’ll call it controversy, has people being uncertain. So then in this case, which is rare, this is something that’s brand new for everybody, which is a global macro shift in what’s happening with central banks around the world, with the potential of a World War III and all the things that are talking about with that. We’ve got the uncertainty that Trump is causing given the lack of clarity in what we’re doing with tariffs, for example. So when we start to see all of these things, what happens is they start to add up. And what it really boils down to, Calvin, is that Canada has been driven by real estate and by consumerism. We have often talked about the lack of productivity in Canada. Now that’s a kind of, we can diss a lot of politicians around that guard, but I mean, really, senior person, Carolyn Rogers with Bank of Canada said, in case of emergency, break glass.
She said that two years ago. And she said, it’s time to break the glass. And what she was referring to is productivity. So what’s happening right now that we have to be really aware of, real estate market is softening everywhere, but Edmonton, by the way, Alberta as a province remains strong, but we’re at the effect of all of these things that are happening again with productivity. So when you have consumer confidence lower, immigration lower, we have less consumerism. So now we’ve got two things going on. We’ve got a breakdown of real estate, which is part of what drove our economy. And then we have consumerism, which is the other part of what drove our economy. Those two factors alone and manufacturing being at the effect of what’s going on. So the point of it is, is that our productivity is dropping and it’s been very low. By the way, it’s at all time lows, not good news. And then add to that. So it’s all to say this, is that things are softening and in the real estate market that spells opportunity, but as sophisticated investors, we have to then just say, okay, I’ll take advantage of the opportunities, but I’m gonna pay particular attention to financing and management and all the things that go with it. Of course.
Cause I mean, when things were going off, like, you know, let’s talk about a year and a half ago and we started to see shorter days on market, we started to see less inventory. And then every month we were just expecting to see less and less inventory. So, you know, we’d go from, you know, even five years ago, we’d be at five to six months of inventory, which is very normal and kind of like Edmonton’s comfort zone. We’ve been in that realm for so long. That’s just where we know how to play. And then we went into this territory where we were like going into this balanced market as we were progressing through COVID. And it’s like, hey, this feels a little bit different. We’re seeing property sell a lot faster. We’re seeing prices go higher than we’ve seen in the city in a very, very long time. Well over a decade. And then we started going farther from a balanced market into a seller’s market. And it’s like, hey, this is really unfamiliar territory to us. This must be what, you know, those guys and girls in Toronto experience and in Vancouver and in Montreal. And now we’re experiencing it for ourselves, right?
And we’re still very much in a seller’s market with only 2.4 months of inventory, but we’re definitely growing that inventory. And it’s not getting consumed at the same pace, which is allowing buyers a little bit more breathing room. But just like you said, you know, there’s opportunities in every single market. You know, if you bought a home in 2000, pretty much any time in the past and you sold it last year or this year, you’re probably gonna see some type of appreciation as long as you didn’t overpay for that property. And now we’re in a position where it’s like, you could be buying properties, but it may not be appreciating the same, you know, at the same pace if you were to sell next year. But it is gonna open up some more opportunities. I’m excited to talk about that, but also where you need to be very cautious because this is where a lot of people can get slaughtered, right?
This is, you know, when the market’s shifting up, confidence is at an all-time high. Everyone’s like, I’m gonna buy everything. I’m gonna buy this lot. I’m gonna buy this lot. I’m gonna build here. I’m gonna buy this rental property. But we’ve seen it before in previous market cycles. When things start to shift, people start to have to exit many properties because they don’t have that allowance. They don’t have that stress test of their portfolio. And then all of a sudden, everything comes crashing down, all their hard work because they’ve over leveraged themself. How many times have you seen that?
Patrick: Oh, more of the times than we can count. But I mean, there’s a lot of what you just said to, there’s a lot to unpack in all of what you just said. So, you know, first and foremost, let’s go, I’m gonna go back to one thing.
You know, boom cycle. We know we’re in a boom cycle because everybody we talk to is investing in real estate. You know, you talk to the Uber driver, they invest in real estate. You know, you talk to the server at a restaurant, they invest in real estate. And you know, you’re into a boom cycle when everybody’s talking about real estate, which is, of course, what’s been going on in Edmonton. But here’s the thing about the shift. You know, what we’re starting to see now is fewer people chasing those deals because now financing is a little bit harder, etc.
So my point is this, is that when we look at the economic fundamentals, Calvin, and when we’re coming out of a boom cycle, everybody’s caught up in it. Our job as real estate investors is to do what? Look into the future and say, where is real estate going? Because we’re not actually investing for today, we’re investing for the future. This is the challenge because these things don’t show up in the moment and then we react. What happens is we got to look down the road a year, two years at minimum and say, where do we see this market going? So when I talk about Edmonton, you know, you use the word toppling and I said, well, it’s not toppling, but we’re going where the trend is down.
So that means we have to start planning for the inevitability of rents getting softer. So this goes back to something else that you said, which is we have to plan for that. So we have to be a little bit more conservative. We have to back test and stress test our portfolio to say, okay, well, right now I’m cash flowing X amount of dollars. Will I be able to, you know, what happens if it comes back?
What happens if rents drop 3%, 5%? What happens if vacancy goes from 3% to 6%? These are all probabilities right now in the Edmonton market. We don’t know the timing of that, by the way. But the thing is, is that we need to look into the future. So as we look at opportunities today, you’re saying it’s a seller’s market still. And there’s another side of this, Kelvin, I think we have to shine a light on.
And that is if you’re in the trenches, if you’re that person that’s, you know, doing small development, but every day you’re doing real estate, you know, you’re, whether you’re managing, doing deals, renovating, that’s a totally different way of operating than somebody who’s saying, okay, I’m going to go to work. I’m going to put in my 40 hours a week, but I want to invest in real estate over here. Those are the individuals that can get really caught because they’re not paying attention to the future. They’re going, okay, I got some cash, real estate in Edmonton looks good right now. Hey, realtor, can you buy me or can you find me a property? And they don’t really have the level of sophistication. So those are the cautionary notes to anybody listening to this for those individuals.
For somebody like yourself, you’re in it every day. You know, you understand the market. I mean, you see the ebb, the flow. You even understand you, like, you know, the breadth of that market. And that’s why sophisticated investors always surround themselves with a great team because they’re looking into the future.
Calvin: Absolutely. Absolutely. And I want to touch on, say you’re an investor right now and you just purchased a bunch of properties or you just purchased a property. I want to talk about how they can win through this transition. So let’s go through a scenario, Patrick, say we go through a scenario where we’re in a seller’s market and we slowly start to merge towards a balanced market. And eventually we start to see vacancies rise. We did see vacancies rise from 2024 to 2025. Last year, I think we clocked in at an all time low, 2.4, 2.5. Now we’re above 3. Rent prices, actually, Edmonton, interestingly enough, was one of the few major cities that actually saw rental increases. Calgary saw a decrease. Toronto saw a decrease. Vancouver, Montreal, they all saw decreases. Edmonton was one of the few that actually saw an increase. Go Edmonton.
But let’s talk about how, if you have a rental portfolio right now, how can you weatherproof this potential storm that might be coming ahead? I’d like to be able to give the people some tips here of what to actually do. What are some things that you can do right now in case it does go in that direction? And if I were to look through a crystal ball, again, I would say that the days on market is going to increase. I would say our inventory is going to increase, not only because we’re starting to see a less volume of buyers right now in the two busiest months of the year, June and July, but also the season that we’re going to be moving into. The momentum has shifted. We’re not seeing the same momentum that we did last year, and I do see this shift happening through quarter four and quarter one next year.
I do not foresee next year beating our previous inventory. I’m not seeing our days on market, everything. I’m not seeing it. I don’t think that we’re going to get back to 1.9 months of inventory. I don’t see that happening for some time. That’s just me personally.
And let’s say that we go and we continue to go through this process where things do change. What are some tips that you offer some of these investors that they can look at implementing now to get ahead of it? Because you said it, we’re not making these changes for right now. We’re doing it so we can be successful in the future. What do you think some of those things look like?
Patrick: Well, I think there’s a couple of things around. So, first off, I want to make one fundamental comment here, Calvin, which is that all of the data is indicating a future slowdown and a future pullback. So that’s just that we look at data. We get out of the emotion. We just keep looking at the data because of what’s happening. Global, macro, US, all the things that are happening, you know, we have to, we can’t really push out too far, look out too far into the future. So we have to look at the data now and then kind of analyze it and say, where is it going as we go down? So to your point, I would be very surprised to see Edmonton outpace this past year, for example, as we go into 2026. I don’t think that’s going to happen. But having said that, this is the time right now for patience.
Don’t chase deals. Do not chase deals. There’s lots of deals that are beginning to come down the pipe. Be patient. You know, when you look at even the biggest investors in the world, and whether that be stock market or real estate or whatever it is, they got patient money sitting on the sidelines because they’re seeing where it’s going. That’s the first part.
Second part is that be conservative. This is not the time to be over leveraged. Now, if you’re going to go in light and you’re going to say, well, I’m going to finance 95%, let’s say you can get that kind of financing. That’s fine if you want to do that. But you want to have liquidity sitting off to the side. You need to have access to capital at some point, should things. So conservative is really key in this market. Secondly, I would suggest if you’ve got an existing portfolio, you’ve got some tenants that you’re happy with, this is a time to touch base with them.
How are you doing? You know, if their lease is coming to an end in, let’s say, 90 days, what’s your thoughts? Are you planning on staying? You know, you’ve been a great tenant. Why don’t I offer you the same rent or I’m even going to, you might even want to throw in a little incentive. But definitely, if you say, hey, listen, you know, rents have been really crazy. You know, you’ve been a great tenant. I don’t want to lose you. How about if I extend the lease for another year from your existing lease and we’ll keep the rent the same? So you’re being proactive to stay ahead of the inevitable slowdown and downturn. And when you’re talking to those tenants, it’s good to say, you know, how’s your job? How are you seeing it? Like if you’ve got some relationship with them, either way, make it a casual conversation. But the point is, is start to get a feel for where they’re at.
But that would be a couple of really significant and meaningful kind of tips and things. Is that you can do to be proactive in seeing a slowdown into the future.
Calvin: I absolutely love it. I mean, rents are up right now. This is the time that you want to lock your tenants in to a respectful rent that they can hold. Don’t go out of this world. I mean, if you know, you can get an extra hundred and fifty dollars, but you run the risk of losing that tenant. Are you willing to gamble with that? You know, they can do way more destruction on a property with a bad tenant. A bad tenant can destroy a property way well more than a hundred and fifty dollars a month and it’s not worth it. That turnover is going to be expensive. It’s just, in many cases, not worth it, but it’s your choice on how you want to go about it.
But I definitely say like, you know, vacancies good right now. Rents are good right now. This is the time to get these fixed leases in. Even if you run your business off periodic, do you want to, do you want to have the chance of losing your tenant? I mean, it doesn’t mean that you’re not going to lose them when they’re on a fixed lease, but it does significantly decrease the chance when there’s a piece of paper tying them to certain dates. And if those dates tie them to quarter two or quarter three of the following year, you’re going to be put in a position where vacancies tend to be lower and rents tend to be higher, putting yourself in a better position to win, not allowing these, these, these rental turnovers to happen at the convenience of the tenant because you’re the rental housing provider providing them that service and there should be, you know, there should be direction from your end. Treating it like a business.
Patrick: A hundred percent. So, you know, in, in, and to your point, you know, something that we consider is that I look even at my retail business in Edmonton and I’m looking at what’s going on economically. I mean, although our retail is very strong, we also are anticipating a little bit of softening. So we’re buying different. We’re, we’re actually picking up and investing in our inventory differently. So, you know, we’re anticipating and looking now that the downside there is, let’s put it this way, you weigh your risks and rewards, you know, what is the risk of being conservative? What is the risk of not chasing a deal? Will you maybe miss a couple opportunities? Maybe, but there’s always another opportunity in real estate.
And just for anybody listening to this particular live, Calvin is that, you know, if you’re an investor and you’re going, well, I don’t know. I don’t see it in this market. You want to do a little bit of research. Just look at Calgary. Now we were talking about Calgary slow down. I would say eight for sure months ago, maybe 10 or 12 months ago, I was starting to put up signs. We can see where it was trending. And one of the things that Edmonton has an advantage of, if you’re looking, just look at what Calgary and then, you know, what’s coming down the highway, you know, you know, because where Calgary goes, Edmonton follows now that’s in the up market. And by the way, it’s also in the down market. You have access to all that data. You can go look at that and you watch the, you watch the charts and man, it’s like a mirror of what goes on in Calgary eventually hits Edmonton and it’s just a mirror. It’s really quite amazing how that works. But ultimately we’re seeing Calgary go through their slowdown, particularly we have to be let’s let’s talk about a couple things, which is this is very property type specific. You know, it’s like, you know, you can’t look at a duplex, triplex, fourplex and say, well, that’s the same for a townhouse or for a, you know, up down or for a multifamily of, you know, 10 units or 12 units. They’re all different kind of property types have a different impact in any given market. So you have to kind of consider that as well.
Calvin: Absolutely. Yeah, and I want to talk about the opportunities. So, you know, we know you need to be conservative. We know that if you’re over leveraged right now, there’s certain ways that you can mitigate your risk from what could be a disastrous storm ahead that might require you to sell at a bit of a haircut, which obviously nobody wants to do because you spent the time, energy, the money to be that acquisition. So let’s talk about the opportunities that we typically see in a shifting market when you go from a seller’s market. And if we’re moving into what could be a balanced market, there’s actually a lot of really exciting opportunities. And I think looking at the time of year as well, you know, let’s go into the mindset of the individuals involved. Okay, so let’s use the seller for example, okay, because you should always dive into like, what are the things that the people are experiencing so you can actually understand the why, instead of me saying there’s great deals out there. Okay, perfect Calvin. Thank you. You know what I mean? Like, okay. Okay. Now what? You know what I mean? Like, like why? Why is there good deals out there?
Let’s talk about that. Why is there good deals out there? You’re a seller Patrick. You’re a seller. You went live on the market a week ago. You see on the news, everything’s selling every time you drive home from work. You see a new sold sticker up on that lawn sign that you drove by two days earlier that just got put up another holy crap. That was quick kind of what we’ve been seeing in Edmonton for the course of the last year lawn sign goes up sold sticker goes on a few days later. Lots of multiple offers. The news is talking about how hot the market is migration, you know, everything like things are just happening. Lots of movement. And now you went live and you’re expecting the same activity except you’re not seeing it except you’re not seeing the same amount of activity. You’re not getting the showings at the same pace that your realtor said that you were going to and what’s happening is that you started under the gate with three to four showings and now it’s two to three days before you get another showing and unfortunately as a listing the space between your showings is going to grow based on your days on market. So if you’ve been on market for 10 days, you’re going to have a greater spacing typically as long as the season doesn’t change, right? If we’re going from like February to March, you might notice an increase in activity, but where we are right now, you’re going to see a greater space between each one of those showings and you know, you’re not going to get offers until you get these showings.
So you’re actually increasing your days on market and decreasing your probability of getting a strong price, especially a multiple offer because there’s no longer that excitement around the property and instead of you being in a position — So the seller in this position, you know, is thinking why isn’t my property selling, right? What’s going on? What’s happening? Is there something wrong with my property? Is the market changing? Whatever it is. A lot of these sellers don’t necessarily want to adjust their price to be able to reflect what’s happening in the market, right? They’re like, no, I’m going to stay here. But if I get a price that’s lower, I might accept it. This is where we see more seller vulnerability because they’re also going into the fall and they don’t want to be selling in the winter. They want to be able to move now while it’s warm, right? So there’s all these other factors that are putting pressure on the seller to sell now knowing that if they were to sell right now, it’s pretty much 60 days in the most average sense to actually give up the keys to a new homeowner 60 days from. Putting you into September, you know, 60 days from August is putting you into October and that’s when we start to see snow fly, right? So you have to understand the pressure that’s being put on the sellers, but also how the how the what the shift is happening with the emotions. This is the time to start offering in and not chasing deals, but providing the offers that make sense for the deal, and you’d be surprised when we’re in a sellers market. We’re seeing 98 to 99% of list price to sale price in these markets. When we start to see shifts, we’ll see 90% of list price offers get accepted, you know, you can have a property that 400,000. I’ll put it in context.
You have a property that’s listed at 400,000. It’s not unusual to get a property accepted in certain cases at an offer of 360. That’s quite the discount on it and it could even get, you know, it allows you to get ahead of what the current market expectations are. So that’s just one of the many ways that, you know, sellers are feeling right now. And if you understand the seller mentality and how they’re feeling, it allows you to go in and make stronger offers as well, right? They want the confidence that they’re going to be able to sell.
Patrick: Well, I think there’s a number of things.
So first off, you know, it’s interesting because I have the perspective of looking across Canada nationally and talking to investors and realtors and all the rest right across the country. We’re starting to see, for example, when you look at what’s happening in British Columbia and in Ontario, we’ll talk about Vancouver market specifically or Toronto market specifically. We’re seeing inventory pile up now for all a lot of reasons, but the sellers are not are only now starting to go. Okay. I got it. I got to drop my price, you know, a lot of sellers. So there’s the investors who are selling who are in trouble and they’re, they’re getting out and there’s the homeowners of people who actually lived in the property. They’re being really stubborn. They don’t want to drop their prices because they’re still caught in this market. That was really hot. So those particular sellers are still in the illusion that they’re going to get their asking price. And it seems to be, they just haven’t got the message yet. Now, some are getting it. So we’re starting to see prices come down, et cetera.
Now, when we get into, you know, when we talk about, so that’s one of the mentality of the seller, but I have to stress from an investor point of view is that you’re looking for motivated vendors always. Now, some would argue that in a hot market, no vendors are motivated and I’m going to go. No, that’s not true. There’s just different reasons. So, for example, in a hot market, if you don’t have to move, you say, I’m going to sell it. And if I can get my price, Hey, listen, you can buy me out for any price. You know, like there’s always a number that will motivate somebody, but then there’s those individuals right now.
Calvin right now in Alberta, we’ve got a lot of people coming into this province that aren’t working. We’ve got a lot of people who are afraid of losing their job, given what’s going on in the global macro.
There’s always divorces. There’s always deaths. There’s always a reason that people want to sell and they’re motivated to sell for all the reasons that they’re motivated. That’s the seller that you’re looking for. And that takes a specific kind of thought process because when you start to filter it that way, that’s when those opportunities start to show up. And then the next thing, you know, you’re going, Oh, this is a very motivated vendor going through a divorce.
Oh, not a lot of equity. Oh, maybe we can do an agreement for sale right now. For example, with affordability, it’s shifting. The market is shifting, but there was a real opportunity for rent to own in that hot market. Some still exists in the Edmonton market. If you want to play that strategy. So the point is, is whether it’s a vendor take back mortgage or an agreement for sale or a rent to own, there’s always opportunities and there’s always motivated sellers in that market for whatever reason.
And it may not be what you think it is. This is the challenge of a good investor is the patience and then the methodology, if you will, to say that’s what I’m looking for. And then finding, to be honest with you, to find a great realtor that is understanding and is willing to be patient with you and go through the grind with you. And that’s, you know, that’s the other side of that coin.
Calvin: You know, it’s funny that you touched on that, patience. So they did a survey last year. I think it was across North America to like thousands and thousands of consumers that were utilizing a realtor or have utilized a realtor. And they wanted to come up with the three points that they could go ahead. And what are the three things that all consumers or most consumers are looking for when it comes to working with a realtor? And one of them was patience, right? Having an understanding that this is a very large purchase, whether it’s primary or investment and not feeling the pressure behind the realtor to go ahead and just purchase anything, knowing that if you actually wait and you find something that you’re genuinely excited about, it’s totally worth the wait. You know, when you don’t just jump into something, but you find a property that actually checks those boxes. And Rain has a very comprehensive guide of which boxes that you can check that actually meet your investment goals, which I think is a very, very handy tool that people can reach out to you for. You know, that’s patience is a big one.
Transparency is another one that people are looking forward to. They want to know whether they feel, does the realtor advise them on whether they feel like the property is actually a good fit for them or not? Are they being transparent on potential red flags, right? Are they? Are they not?
And the third one is education. So are they educating them on how to win in today’s market? Are they using the proper strategies? Are they spending the time to actually go through the different communities and how the location of these properties might actually affect the value of their asset, not only now, but in the future? And so I love that you brought up on patience because that is top three things that people, the consumers are looking for. And unfortunately, most of realtors, I’ll be honest, don’t have it. They don’t have it. They’re looking for the transaction. They just want the deal. They don’t want to be shopping more than four or five properties with you. It’s just, it’s the reality of it. And I think if you feel like you’re getting pressured in to moving forward, I think that might be an opportunity for you to have that conversation with the realtor. Press the pause button, have that discussion. But I love that you brought that up, Patrick.
Patrick: Well, I think there’s a, you know, it’s interesting about realtors in a hot market, right? In a hot market, you know, it’s burn and churn. You know, I don’t have time. I got another deal. We’re doing this, you know, we’re moving and grooving and, you know, it’s like, I don’t, they don’t have that patience. They’re trying to accommodate and make as much money as they can.
Like, I’m not making that wrong, but the veteran realtors understand that this too shall pass. And so the investor that you have today that you didn’t necessarily have enough time for moves on to somebody who realizes. And so a really savvy realtor has that patience and understands that when the market slows down and he’s really or she’s really. Looking for the business, they’re going to tap on that sophisticated investor who’s doing another deal who’s still working through the slowdown market. And so it’s relational, not transactional. And when, you know, and for those realtors who might be looking, but, and I know, you know, this is that as soon as you shift out of being transactional as a realtor in an investor focused world, and you get into relational man, you know, the deals are, well, then you have, you can have client that does 10 deals, you know, so that’s the patience part of it is working with them through the different cycles – that comes with experience. I think a really experienced realtor knows that
Calvin: Long-term mindset versus short-term mindset. There’s a big difference there.
