Today Re/Max released their "Housing Market 2007" report that forecasts what is going to happen in the real estate market. They’ve made lots of predictions, just as many people do. So what I thought I would do is compare what they predicted last year (as reported on this blog) with what actually happened, then look at this year’s forecast.
The RE/MAX Housing Market Outlook 2006report found that the vast majority of major Canadian markets surveyedare expecting modest price appreciation ranging from 2 to 5% in 2006.The only exceptions are Vancouver, Kelowna, and Calgary, all of whichare forecast to experience price increases of about 10 percent nextyear, the companies reported.
Pretty good, nationally prices are up about 10% and in Calgary prices are up over 45%. Edmonton is up 46.3%.
Regarding the number of sales, "Edmonton and Regina are predicted to lead the country with a 5% increase over 2005 levels."
They got it right that Edmonton would lead the country, but in fact Edmonton is up 19% over 2006.
Average price appreciation is expected to post a 9 percent gain, bringing the value of a Canadian home to $246,600.
The average price for a Canadian home is estimated to close out the year at $275,000.
So…keeping last year’s forecast in mind, here are some of the highlights from this year’s report (the complete report is available here).
Residential housing sales are expected to moderate in 2007. Nationally, 462,000 properties are forecast to change hands next year, making 2007 the third best year on record. After four years of double-digit gains, average price is predicted to climb a modest five per cent to $290,000 by year-end 2007, up from $275,000 one year ago.
Sounds a bit like last year’s report.
Here are all the comments Re/Max have about Edmonton for 2007:
Financial spin off from a prosperous oil and gas industry has stimulated unprecedented economic performance and bolstered residential housing sales in Alberta in 2006. An abundance of employment opportunities throughout the province has served to attract job seekers from all parts of Canada. Employment growth is up in the province overall and, as a result, the unemployment rate has dropped to just under four per cent.
The impact of extraordinary demand on housing is perhaps most evident in Edmonton, where shrinking inventory levels have given way to substantial price increases. The number of homes sold in Edmonton is expected to top 20,300 units by year-end 2006, representing a nine per cent increase over 2005 levels. Average price is forecast to climb a considerable 25 per cent to $241,750, up from $193,394 one year earlier. A dramatic reduction in the supply of residential properties available for sale– down almost 50 per cent from normal levels – has led to a sales to listings ratio of about 85 per cent for much of the year. Multiple offers have been a daily occurrence; particularly on ‘affordable’ homes priced under $500,000. Robust demand also exists for product priced at $500,000 plus, with sales up about 200 per cent over last year’s levels in this segment of the market. Days on market hovered at 20 throughout 2006, down from 36 in 2005.
Both single-family homes and condominiums were popular with purchasers this year. The lifestyle aspect of condominium living has given a serious boost to unit sales activity. A recent opportunity to buy in the first phase of a new condominium complex on the old Heritage Mall site had buyers camped out overnight for units ranging in price from $350,000 to $800,000. The project sold out in a day with upper-end product selling first. Clearly, condominium living has ventured beyond the ‘affordable’ alternative moniker to an acceptable, if not coveted, type of accommodation.
Interest rates, which edged upward during the first half of the year, did little to deter buyers from entering the market this year. With interest rates expected to remain relatively stable for the remainder of the year and into 2007, demand for housing isexpected to remain solid. Rising inventory levels should serve to hold significant price appreciation in check next year. First-time buyers will remain a force in the residential marketplace, working in tandem with move-up buyers who are cashing in on substantial equity gains in recent years. A strong economic base is expected to further stimulate growth in the real estate market in 2007. Capital expenditures abound, with five oil plants under varying levels of construction or approval are expected to bring an additional $10 billion into the economy. A $750 million expansion to the Northern Alberta Institute of Technology will make it the largest technical school in Canada. Building permits rose over the billion-dollar benchmark by mid-year 2006 and most of those projects will be well underway or completed in 2007. GDP is expected to outperform the Canadian average, sitting at about three per cent for the next five years in Edmonton.
With all economic cylinders firing, housing in Edmonton is expected to enjoy another year of record growth. The number of homes sold is forecast to climb five per cent to 21,300 by year-end 2007, while average price will climb an estimated 10 per cent to $265,900.
