The end of the month is near, which means the Realtor’s association will be releasing the month end stats for Edmonton (I don’t know when this will happen…could be anywhere between Aug. 2-8). As always we’ll post them here as soon as we can, along with our own market trend reports. In the meantime we do have some thoughts about what the stats will show.
First off, we thought the price drop in June would have been higher than it actually was – about 5% instead of 2% – based on what we were witnessing "on the street." We realize now though that since so many properties listed in June didn’t sell in June, their eventual sale prices and number of days on market were not reflected in the June stats….those that sold in July will be reflected in the July stats which is why we are predicting a further drop in prices in July, most likely a larger drop than we experienced in June.
The other thing we expect to see is a very low list to sale ratio – probably in the 30-40% range – that will not accurately reflect the true state of the market. Why? The re-listing of properties… we suspect (but have no way to prove this) that 20-30% of new listings coming on the market, are actually listings that have been canceled and then brought on the market a second time, with the same agent, usually at a new, lower price. There are a number of reasons this is done:
- Every time a new listing comes on the market it is automatically e-mailed to hundreds of buyers registered with agents – buyers looking for a home in that area and price range. By re-listing they hope to make a new "splash" on the market.
- Some buyers may be fooled into believing it actually is a new listing, instead of just a price reduction which can have a negative connotation in some buyer’s minds.
- Re-listing resets the clock – the listing will appear as though it has been on the market for far fewer days than it actually has.
See our article on The True History of a listing for more information.
So, with all kinds of homes being listed twice, but only sold once, the list to sale ratio will be negatively affected.
Why is the listings to sales ratio so important?
This stat is used by analysts to define whether the market is a seller’s market (60% listings to sales ratio and up), a buyer’s market (40% and below) or a neutral market (40-60%).
While the Realtor’s association is working to dissuade the practice of re-listing homes the problem is far from solved, so don’t be surprised when the stats come out next week…they may reflect a worse list to sale ratio than we’re actually experiencing.
So, 20-30% of homes being relisted. That would mean something like 2000 homes on the MLS are just relists?
That would completely hose hose the stats wouldn’t it?
Sheldon – Is there a program built in MLX that shows a report on all the re-lists? Or does one have chk the listings manually? I would be very curious to see those numbers.
As far as we know there is no way of getting that info. Perhaps the board will include it in this month’s press release.
As for the 20-30%, as I said in the article we have no way of proving that, it’s just the sense we have from watching listings in the areas our clients are looking for homes. And yes, we think it is going to royally skew the stats for July.
BTW…this is SARA! We’re partners! You guys are going to give me a complex addressing everything to Sheldon!
There can be re-listings though the number of houses still listed at the end of the month i.e. say 6500 divided by the sales that month is an improtant piece in the analysis.
The way I understand it, the listings to sales ratio uses the total number of new listings for the month…so if a house gets listed twice (ie listed and re-listed) it will get counted in the stats twice. The end of month inventory will only count those homes still actively for sale on the last day of the month. So for inventory re-lists don’t matter, but for for the listings to sales ratio they will skew the results.
I understand what you are saying. However, I believe after a minor correction, housing prices will go HIGHER again by March-2008, the latest. We are still behind Calgary housing prices, Edmonton will go up…again. Parking lot in Calgary costs HOW MUCH? lolz.
Paying too much attention in the short term will lose focus & much bigger gain in the future.
July Stats Predictions:
<1 % decrease in Single Family Homes
~4% increase in Condominiums
Anyone wanna bet?
The Edmonton market seems to lag the Calgary market trends by about 12 months. Last summer, the Calgary market cooled down and there was a big increase in inventory as speculators and investors took profits. It was a good opportunity for Calgary home buyers to get into the market. This pause in price appreciation we’re currently seeing is keeping potential buyers on the sidelines, but it may be the wrong strategy for buyers. By Jan 07, the Calgary market was steadily moving upwards again and people who bought during that pullback were able to get into the market during a correction and avoid the bidding wars and other drama. Also, if you look at the trend of people moving back to Saskatchewan, that should begin to slow as decent homes are now getting into the 220-250K price range in Saskatoon. Vancouver homes are still much more expensive, however Edmonton boomers selling their typical bungalow for 400-500K can now afford a decent condo in Vancouver with little or no mortgage. I feel the fundamentals are strong and property in Edmonton is a solid investment. Hopefully I’m right!
Our Job participation rate in alberta is one of the highest in the nation, and increased again for the first 6 mons of the year, which means that the retirees are moving away and younger workers are taking their place…so low income earners are being replaced by higher wage earners…any one care to guess what that will do for the economy…I guess higher retail sales, more people buying cars, eating out ect and furter fuelling the economy…Economy and jobs create a demand for houses and with all the economists predicting stable interest rates, and an economy that is charging along, there is no fundamental reason for the market to crash, slight correction maybe, gradual increases after that.
I just feel privelidged to be able to observe all thats happening. I really feel I’m in a no lose situation. If prices go up again we move to my wifes home city (Regina)If prices go down well thats good for OUR younger citizens….I feel sorry for the younger folks though.The ONLY thing I know is I don’t know whats going to happen! I’ll sit back and enjoy the ride. Take care all.
Although May and June didn’t spook me as much, I got worried as newly built investor homes began selling at much lower prices than the 2-5% depreciation. so i called in a Remax agent. According to him, housing prices were not just dropping in waves, but there was an active “tsunami”. i didn’t sleep that night, but later realized this was a scare tactic sales pitch. the fact however, is that prices just can’t keep foolishly going up. this summer, i believe we reached a “temporary balance”, but December and early spring, we can expect to see the prices rise again. Edmonton sellers, no need to panic !
I am a young Construction Professional in the Oil Industry in Alberta. I earn a salary of $126,000 a year and my wife earns $44,000 a year. We are first time home-buyers trying to get into this market for the long term, but I think this is a very poor investment. Everywhere I look I see remnants of famous last words such as Nortel, dotcom, and Sub-prime. Prove me wrong. 1000 sq ft. 65 yr old wartime dump for $430k in Edmonton or 32 acre ranch with 3400 sq ft 10 year old all brick home for $472k 25 minutes from Toronto? Was just in Toronto last month, 800 sq ft brand new condos downtown executive living starting at $139k? Can’t buy a 30 yr old trailer in crime plagued area in Edmonton for that money. The writing is on the wall people. There’s no point in making $100k+ a year if you need 60%+ debt ratio for 20 years just to have a decent home.
what are the Nov. stats like
1. Nobody can find a job out of Edmonton. All people should come to Edmonton.
2. The people working in the other cities will resign and then will move to Edmonton because of the lowest unemployment.
3. The unemployed people will bring 10 tons of gold to buy a lot of houses in Edmonton.
4. Most unemployed people with no gold love to have the 40-year mortgage and work hard for this mortgage in next 40 years.
5. Some unemployed people prefer to pay $2000/month out of the $6000 income (33%) in Edmonton rather than to pay $1300/month out of the $5000 income (26%) in other cities.
6. All Canadian love to have 6-month winter and 2-month summer. They love to stay under -40 deg C rather than 2 deg C.
My conclusion is…. the house prices will go up again by 100%. Is my logic correct?
I moved from Vancouver to Edmonton 10 years ago based on
- Low living cost.
- Low house price.
- Good traffic.
- Nice people.
Now…………
The living cost is not low anymore.
The house price is still low comparing with the other cities, but I could see the big difference to attract me to come here as 10 years ago.
Traffic is not good anymore.
Some people are still nice but some……
If I were the newcomer, I might not consider Edmonton anymore.
You may ask me to leave. Keep it in mind. I am not the newcomer. I am talking about newcomers only.
Without a lot of newcomers coming to Edmonton, how can we get rid of the highest inventory? How can the price of the houses go up again?