Have Edmonton Home Prices Hit Their Peak? Part 2

by Sheldon Johnston and Sara MacLennan on 06. Feb, 2007 in Edmonton Real Estate Market

The home price story in Edmonton gets even more interesting when you look at it graphically. First, average price per year (note: the average price for ’07 is calculated using only January’s average sale price).

Jan07priceperyear

As you can see things appear to just be chugging along. Kind of makes you wonder about the economist quoted in our previous post. Next, average price per month:

Jan07pricepermonth_1

In this graph I have plotted January’s average price twice – once as an extension of ’05, so you can see the price increase related to ’05, and once on it’s own as the start of this year’s plot line. Obviously we’re looking at the biggest year over year increase in over 15 years (possible ever) which is the first sign of a potential bubble. All other indicators do not suggest a bubble – this will be discussed, along with more charts tomorrow and later this week…forgot to bring my laptop power supply home and my battery is about to die, so I’ll have to log off for tonight.

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One Response to “Have Edmonton Home Prices Hit Their Peak? Part 2”

  1. BearClaw 06. Feb, 2007 at 11:41 pm #

    I would be surprised to see things reverse quickly as the economist in the previous post suggested. Inventory is just too low for that right now.

    However i think there is irrational exuberance in Edmonton’s market right now even though we are still more affordable than Vancouver and Manhattan. My perception is that all the good news is currently priced into todays markets and there are several indicators of a bubble.

    1. 50+ YOY price gains. Even though technical analysis may not apply to real estate – charts of speculative bubbles tend to go “hyperbolic” before they crash. See NASDAQ.
    http://en.wikipedia.org/wiki/Image:NASDAQ_IXIC_-_dot-com_bubble_small.png

    Replace “The internet will change the world” with “HOT Alberta oil economy” as talking points that fueled each bubble. Both being true.

    2. Available credit. I see billboards advertising with 0 down / bad credit. Our friends at Genworth financial offer 35+ year mortgages. HELOC used for investment properties.

    3. Separation from fundamentals. There is an increasing gap between rental and ownership costs.

    4. Everyone seems to be talking RE these days :-)