Catchy title huh? Nothing snoozy about the stats for the month of May though. The Edmonton Journal leads with "Through the roof" but we’ll give you some objective analysis as well with some graphs that we (Sara) has put together for you.
To start with. The market is more balanced today then yesterday or last year. Inventory is up significantly giving buyers more choices. Prices are up all across the board and demand is at a record high level with more sales occurring year to date then all of 2005.
So where do things go from here? By all accounts in previous posts I predicted a slow down in price growth and that is what I still foresee. If inventory continues grow at this rate prices will reverse, even though the total number of sales are literally through the roof. Buyers now have the opportunity to relax somewhat (this is fantastic news and from my perspective – more like a healthy market).
Inventory vs sales suggest this market is fairly close to a balanced market and not a sellers market.
Average Price to Inventory Comparison & Listing Inventory
This is probably my favorite representation of the market. It is curious to note that prices still managed to rise even though inventory went up so dramatically. Will next month show inventory has peaked or have the prices peaked? Time will tell but demand is still very strong. What this graph could also suggest is that things have returned to normal. Especially if you consider previous inventory levels from previous years are fairly consistent with current inventory levels.
Total Residential sales
This graph has an interesting story as well. Wow are sales strong! Last year sales for June were down significantly from May – maybe that was because there were no listings to sell. 2005, 2004 saw roughly consistent total sales from May to June. If sales follow the patterns of 2004, 2005 – from what I’ve seen from early sales numbers and our own stats that is what I predict will happen – look for strong sales in June.
Listings to sale ratio
We don’t always include this one but it shows how the listing to sales ratio made a dramatic turn from 76% in April to 59% in May, which by our estimation puts this market into balanced territory.
In the mean time we will see continued growth of listings. Buyers should continue to see improved conditions with continued inventory increases. June will be a very brisk month for sales as well. Since its almost midnight now I’m going to sign off, perhaps I’ll have some more analysis tomorrow, or perhaps our readers will share their insights on the market.
Are you saying that you think house prices will drop? A few months ago you thought they would hit at least 30% this year.So which is it??????????
I believe that he said they COULD drop if inventory levels continue to out pace demand.
It’s obviously a possibility given the influx this month. Yes?
The market is not static. at the time of our earlier predictions we were looking at inventory levels comparable to 2006 which were well below norm. Inventory levels are currently up to 2005 levels. January’s average residential price was 303,820 and in May it was 354,410.
I will have to amend my prediction but the growth of this market is not done yet. The only caveat to that is the past market was shaped by supply and demand and will continue to shaped by supply and demand. If Sales volume for June drops like it did last June then you’ll see prices soften even if its temporary. I personally think that total sales will be way above last June’s level because there is more product to sell.
Here is the other caveat to the pricing. I did not predict the amount of lower end product that has come on. If the demand is strong then we will see the average price skewed by these sales in the lower price range.
Forget the board stats for a sec our own market Coldwell Banker Johnston trend report (sounds more official that way) indicates that the market is still very strong in all sectors across all price ranges in the Edmonton region.
I hope this helps, and for the record I’m the last person to say I’m always right, I just always try to be. I’m not writing off my prediction yet btw, but at 200 new listings at day it will be harder to get that 30% increase. The fear that has driven buyers will also ease making price growth that much more difficult as well. Good properties, properly priced and marketed will still see multiple offers, and there are other factors that will play on the pricing.
Sheldon,
Could you give us insight to whats driving the listings increase.
Could it be from higher levels of new construction working its way to resale market?
Bearclaw.
A little of everything, but mostly apartment, condo projects that are coming on line. Where the sellers used to drip the units on the market they are now just putting the whole thing on at once.
Additionally it is mostly in line with seasonal inventory. Last year was the anomaly in terms of the low levels of inventory. This is pretty much the norm (slightly higher then usual)
Another aspect is the investors/speculators trying to cash out. Most have timed or given consideration to this as a prime time to sell.
Remember, along with a big increase in inventory came a new record in monthly sales. Also just over 1.5 of inventory at present absorbtion rates. Sheldon mentioned a large increase in lower priced inventory hitting the market. I assume a majority of it is condo conversions – which when you think of it does not help the housing crunch one iota. All of these displaced tenants will have to find somewhere else to live and there is a good chance many will become buyers. I also wonder about the quality of these lower priced conversions, some seem pretty cruddy to me. Which ones are the better ones, any opinions out there?
We were curious about vacancy rates today so Sara blogged an article that she posted today.
Vacancy rates are still very low.
My speculation is that many of the unsold units will stay in the rental universe and drop of when they are unsold. This will again cause a drop in inventory when they are no longer listed. CMHC could probably speculate as to how many units are in this spectrum but my thoughts are it is significant.
I have talked to numerous buyers and sellers today. All of the people I am working with are aware of the potential risks that they maybe selling to soon or buying to late, but all of them feel good about the long term prospects Alberta at this time. I’m not working with what I would term as recent investors.
Cruddy construction! That is an understatement for how construction standards have slipped. Unskilled labour, lack of pride, cost cutting & rushing have created a perfect storm for quality. I knew this when we were asked to fix a condo complex with shifting concrete and cracks…before it was even finished! These last couple of years guys have been loading up concrete with water (to make it easier to work)and calcium (to make it set faster), but it makes it weaker. Theres a condo complex on 82 ave where OSB board was expose to the elements for many many months. In years to come I am convinced there will be enquirys similar to Vancouvers “leaky condo’s” In the meantime I will pray a tornado doesnt hit. what did I do?…I bought a building constructed a few decades ago with plywood and a sense of pride, and professionalism.
There seem to be 2 downtown highrise projects – recent conversions making up a lot of that inventory, The Hargate Condominiums and Lamplighter Tower Condominiums. They seem to be pretty decent – are they? I know there are a bunch of old walk-ups recently converted that I put in the cruddy catagory that like you say may never sell and go back into the rental market. Will there be a significant impact on the condo market when a lot of these displaced tenants enter the condo market as buyers?