2017 was forecasted to be rough for multi-family building investors with property in Edmonton. Now that we are well into 2017, we now have a better idea of how the year will unfold. Although our economy is slowing starting to pick up, the multi-family rental market is experiencing a decline in Q2.
Q2 Stats for Edmonton’s Multi-Family Housing Market
Edmonton’s housing starts have seen a decrease in Q2. Single-family units skyrocketed (more than 51% compared to Q1 2017), but it didn’t do much to address the overall decline. It was multi-family units that caused this number to dip. After seeing a solid gain in Q1 of this year, multi-family housing starts declined 22.5% this quarter.
On a year-by-year basis, multi-family housing starts have seen a decline in this area, too. Overall, housing starts have increased by 10.4%, but that number is largely carried by single-family homes. According to the City of Edmonton, “new single-family homes increased by a very solid 36.5% in Q2 2017 when compared to Q2 2016, while multi-family units saw a 4.5% reduction.” It seems that investors are still experiencing some trepidation with our current economy and are continuing to reduce their activity until this market picks up once again.
The same negative stats are seen in the Edmonton Census Metropolitan Area (CMA), too. The number of housing starts in this area increased by 6.7%, but, again, were largely comprised of single-family home starts. Multi-family homes were down by 12.3%. Q2 2017 only saw 1,601 multi-family starts, compared to 1,842 in Q1. Q1 numbers were much more comparable to the numbers seen in Q2 of last year.
Edmonton Multi-Family Property Outlook for the Remainder of 2017
The City of Edmonton’s housing starts in Q2 2017 have decreased compared to Q1. The main source of the City’s weakness is the multi-family housing market. Edmonton still has a high inventory level of multi-family properties waiting to be purchased and a high vacancy rate in the overall rental market. These factors will continue to repress starts at current levels for the remainder of 2017, meaning below average activity will be seen in this market.
At the beginning of the year, many had hopes that a change of tune in the rental market would be on the way. Q1 let this hope grow as more multi-family starts were seen. Now into Q2, the bright outlook is receding, and the remainder of 2017 is forecasted to have similar lower numbers.