So here is a bit of a closer look at what has happened to real estate prices in Edmonton. The chart below shows the average price per month for the past 10 years. As you can see prices in Edmonton were on a long, gradual incline for many years. Then all of a sudden 2006 happened. No one could believe how much their home was all of a sudden worth, or how much it was going to cost to get into the market:
This brought about a bit of a frenzy: buyers who wanted to get in for the first time were rushed to buy before prices went to high, and home owners started to invest in more real estate to take advantage of escalating prices. This continued for half of 2007 as well. Many people didn’t notice the inventory that had been steadily increasing since February, until later in the year:
Once people did start to notice the mood shifted from "buy, buy, buy" to "sell, sell, sell!" and the inventory continued to climb. What continued to surprise Sheldon and me was that prices didn’t significantly drop when inventory was at record levels, and sales were nearing record lows.
With our clear hind-sight goggles on, we can see that prices didn’t immediately drop, because the good properties were still selling (those that represented good value for the asking price). Many properties that were priced too high, or were less desirable for other reasons such as location, competition, or layout did not sell. As sellers became more motivated we’ve have seen asking prices drop. Now those houses are selling at a lower price, and their sale prices are reflected in the monthly stats.
Many people are asking for proof that prices will rise in the spring. I can’t provide that proof anymore than I can provide proof there will be snow on Christmas, although there are many signs that there will be 
What I can say is something we all know: prices will depend on supply and demand. There are many buyers who have been holding off buying, waiting for prices to drop. Prices have dropped. Are they going to jump in now, or wait until spring, or wait until next fall? I can’t say for certain. As for supply, inventory is dropping, but much of the decrease is due to expired and terminated listings. When will those listings come back on the market and how many new listings will come on? I can’t say for certain. I do know the builders are scaling back. Most have dropped pricing on their current inventory, and many have filled in or capped a significant number of basements, which means new construction will have a less significant affect on inventory than once thought.
So, we’ll keep watching sales and inventory and try to get an idea of what to expect on month at a time. For December, expect fewer sales and lower prices – that is the seasonal norm and I don’t see any reason why that won’t happen this year.
