Here is our weekly update on the Edmonton real estate market. (Last week’s numbers are in brackets.)
For the past 7 days:
# New listings: 233 (319)
# Sales: 198 (207)
Ratio: 85 (65)
# Price changes: 148 (214)
# Expired Listings: 285 (157)
# Canceled, withdrawn and terminated listings: 138 (158)
Net loss/gain in listings this week: -388 (-203)
Active listings for single family homes: 3023 (3223)
Active listings for condos: 2065 (2183)
And the inventory continues to drop. As expected we see a seasonal slow down in December, both in listing and sales. I can tell you we had our busiest week at our office in a while this week…. Happy Weekend everyone!!!
To make a point clear,
If the average SFH price in November fell 5% in november is it because:
1. The SFH that sold were simply of lesser value on average for November comparatively to October, or
2. A $400K home that sold in October could only fetch $380K a month later?
I’ll add the stuff Sheldon and Sara doesn’t think we need to know… from good ol’ Bobby…
Dec 1-20
Inventory 3786
New listing added 563
Sales 375
Average Price 386,955
Median Price 370,000
SP/SF NA
DOM 54
Sales/New Listing Ratio 67%
The link for anyone who wants it…
http://www.bobtruman.com/Edmonton_SFH_stats/page_1918017.html
Thanks Yogi. We have never included that information in our weekly update. It’s got nothing to do with what we think people should see or not. This is not Yogi’s blog where yogi gets whatever he/she wants. That is information I find relevant on a weekly basis. btw I hope you and your family have a great Christmas.
Sheldon, from your weekly update we were seeing a different picture…sales are picking up and inventory is going down…Yogi just brought some good info..
Thanks for the only current info again Sara.
I think the sales ratio looks good, in fact I think things look fine. For all the bloggers that love to keep telling us prices will no longer be going up…..I think we all know this. Do you think we are not as smart as you. We are happy if the market just simply remains the same. For everyone this has hurt there is another out there this has helped. If you were home owners you would know this.
Sara and Sheldon the blog has gone to &*^$#. I know it’s not your fault. The new posters are a waste of time, I do wish you could weed them out.
I appreciate your posts and sincerely wish you a Merry xmas.
Yogi, you could be more clear by telling that bob truman includes edmonton and surrounding areas, where as sara and sheldon focus only on Edmonton, they are not twisting any fact.
This is the third time in a week (second time today) that I ask the following very important question that is unanswered so far:
What could be the reason for a 5% decrease in prices for resales for the month of November comparatively to October?
1. Would it be because what sold in November were a bunch of smaller sized (and for sure cheaper priced) homes than the homes that sold in October? (which would be a misleading stat)
Or:
2. What sold in October for $400K could – if listed and sold again in November sell for 5% less – or $380K? (which would indicate a bust?)
I would appreciate an answer, please, from anyone who would know.
Hi Ray, my theory is that more expensive properties sold in Oct because those who have the most amout of cash used it to buy a “good” property and the less desireable and consequently cheaper properties have not sold. I think we are about to enter a time of only “good” properties that will be selling at reasonable prices. What do you think?
Oct-Nov 2007 Average: -6.3%
Oct-Nov 2007 Median: -6.8%
Oct-Nov 2007 SP/SF: -4.7%
Ray, I’m guessing that a same sales pair would have dropped 4%-6% due to averages, medians and sales price/square foot all dropping. I would assume if sales price/square foot had stayed the same then it would be more likely that different segments of the market were selling.
However, higher priced inventory typically has a higher sales price/square foot so there is no way to tell forsure.
It would be useful if there was a Case-Schiller index so that a hedonic regression could be performed.
In the meantime, I’ll be using averages, median and sales price/square foot to determine the direction of the market.
Ray, the lowest priced houses are getting offers that are 20K to 50K away from the listed price. And that’s the lowest priced property in nicer communities. The properties priced at last years prices don’t even have lookers. Why bother when there are 40 other realistic sellers out there.
Paying 70% after tax income every month to the bank for 40 years is the definition of modern serfdom in my book. Paying 70% of after tax household income to put a roof over a families head is downright outrageous. Banks and everyone can go on as to how things are “different” in Alberta. However, buyers ( who actually qualify under the newer more stringent mortgage rules ) finally are waking up to reality and stating out loud “No” to 40 years of serfdom.
Merry Christmas to all. Thanks for the blog Sheldon and sara, it’s a great place to get where the market sentiment is.
I had to post this to see what others would think. I found this add in the tony Plain Reporter/ Spruce Grove Examiner. 5 new rentals, cause I assume he can’t sell.
brand new – AVAILABLE IMMEDIATELY. Close to Tri Leisure Centre. Your choice of 2,000 sq.ft. 2 story, 3 bedrooms, bonus room, 2 1/2 baths, double attached garage or 1,250 sq.ft. bilevel, 3 bedrooms, 2 full baths, double attached garage or 2 story town home, 3 bedrooms, 1 1/2 baths – 5 to choose from. Rents $1,400-$2,500 per month. Appliances included. No pets. Call Eehab 266-1100.
To think that when prices were going up so fast, I think it was an RBC forecast that stated that they anticipated prices going up on into 2008, because they determined there was not much speculation in the marketplace. What were they on? I hope that this individual is property manager, not the owner. If I had 5 new properties I think I would sell to get rid of them at what I paid. You got to wonder if people are just stubborn, that they will try to get to the Spring to sell. There is real disconnect between what people will pay and what people will sell for lately. I have watched for rent adds in Stony and Spruce for years, and I never ever saw new houses for rent till this past while. There has easily been 10-15. It is nuts… I don’t wish for blood, but I imagine there has to be some sweet deals coming this spring.
Frank:
If we assume the average house is $387,000 as above, people who can’t afford it are putting down 5%, and CMHC fees anothers eat back into that 5%, they’re basically mortgaging 100%. Lets say 40 years, 6%, so it’s about $2100/month.
If $2100/month is 70% of after-tax income, then their full after tax income is about $3000/month.
If we assume that they’re paying about 40% tax, then their actual income is about $5000/month or $60,000 a year. If this is a couple, then this is $30,000 a year each or about $15/hour.
I understand everyone has their points to make on the up or downside of the market, but exactly how many $15/hour couples are buying the “average” home? Wouldn’t they at best be buying “starter homes” or duplexes, condos, etc?
Paying 70% of after tax income would be close to serfdom, but I don’t think that’s happening a lot.
I’m not suggesting people should pay that much, wether they make more or less than that. But if you’re two people on a pretty basic wage in Alberta (heck, I know I’ve seen places where McDonald’s and equivalent are paying $11.00/hour, how hard can it be to get $15.00/hour), you can afford things – more so if you buy closer to your means rather than trying to keep up with the Jones’ and buy the average house.
Any reaction to Harper’s last comments on the slowing down economy? How does consumer’s confidence will impact the housing market?
Posted by: NetWise | December 21, 2007 at 10:11 PM
If we assume that they’re paying about 40% tax, then their actual income is about $5000/month or $60,000 a year. If this is a couple, then this is $30,000 a year each or about $15/hour.
——-
Your math doesn’t add up. @$15/hr you don’t make 60K a year before taxes. And if you’re suggesting both parents work at McDonalds you’re forgetting that child care cost for one child pretty much eats up one parents income. And that’s not even factoring in basic life necessities such as clothing, food, diapers , gas, insurance etc.
Anyway, my comment was based on those couples who actually do qualify for a mortgage. If you haven’t had a talk with your mortgage broker yet, you should. Not many families are getting approved for mortgages. For individuals making 100+ K/year with impeccable credit, I used to be able to get them prime – 0.8, now I have a difficult time getting prime – 0.5. I believe the Canadian prime rate will drop early next year, but that necessarily will not mean more people get better rates. In fact Canadian lenders will get even more stringent next year.
This is because Canadian banks have as much exposure to American mortgage backed CDOs as the American banks and lenders do. CIBCs off-book exposure is so massive it might very well go under. That story is unfolding, but the other Candian banks don’t want any more mortgage backed risk exposure. Hence tighter requirements.
The entire inflationary cycle was underpinned by rampant speculation which has been wiped clean with the elimination of assumable mortgages. Last year Dec 2006 a large local brokerage (to be un-named) cleared close to 1500 deals. This year Dec 2007, 460 deals to date (with a week left to month close). Now that Specuvestors have left the scene, housing prices will correct to reflect prices based on affordability. We might get the seasonal move higher in number of homes sold this spring, but I think the rest of 2008 will be a replay of the 2007 trend after summer.
Frank,
Good post on the tightening of credit. I didn’t know that you can’t assume a mortgage anymore!
When did that rule kick in?
That’s big, because their would be a whack of homes with assumable mortgages for sale in a falling market.
To let you in on a little dark side to my younger years, I got caught in the 80′s housing bust with a condo I had bought at the peak. Actually the market had already started to head south before I took posession but the seller dropped his price 10% from our original aggreement so I went ahead with the purchase and assumed his AHMC mortgage. The housing market continued to slide and soon I had a condo that was worth less then the mortgage on it. I went and saw a lawyer regarding what would happen if I just stopped making my mortgage payments. He pulled out a sheet of paper from his desk with about 14 steps on it and said this is how it will unfold. You got 6 months after you stop making your payments. Leave the keys on the counter and the place in good condition.
So I did just that and saved my paycheques for those 6 months and walked away from the condo and assumed the mortgage on a house that had dropped in price drastically.
I never skipped a beat and actually upgraded. It never became an issue either. It was pretty slick really.
So, if there is no assuming mortgages now that is going to hurt both buyers and sellers.
That would be typical of a guy like picasso to walk away from his commitments. LOL!!!
Looks like picasso has another market crash on his wish list for xmas!!!
Seriously, I hear that smaller homes and townhouses in the $250K-$300K that show nicely are very popular and don’t stay on the market as of late. Is that true?
Because if it’s true that would explain that it would take a larger section of sales and of course tends to draw down the average home resale price, no? PLUS, a typical mortgage of that size is typical for a family income of $80K which is -according to RBC – the AVERAGE Edmonton area family income.
BTW, in Castlewood, two homes sold in 10 days at 98% their asking prices… and they were in the $500-$525K range.
If the reason that the AVERAGE resale prices have been down, it could partially be because what sells on AVERAGE are lesser value homes. And not so much the $1/2 million ones.
Which begs the question: Where is that housing bubble? Where’s that crash?
Sheldon,
Where I come we have this saying that when translated piterally means you cannot hide an elephant with tusks in a sack!
Your quantitative stats show a deceptively positive picture. For those who think prices may be falling due to lower value properties selling…how come noone ever questioned what types of properties when prices were going up?
Anyway, according to Bob’s stats above, for the area covered by his stats, prices are down to $386K from $391K. A small fall but one all the same.
It is not evil to be preparing consumers for anything negative that could happen. Harper’s talks about implementing climate change related regulations in 2008, now does that not add to the list of similarities with what happening late 70s early 80s? Not to mention what those headlines mut be doing to consumer confidence. Unfortunately most things economy are self-fulfilling prophecies.
ray,
Morally it might not have been the right move but it was the right move financially. That $65,000 condo fell down to $25,000 before the market hit bottom and my mortgage was $55,000.
I put $8,000 down and assumed a $65,000 mortgage on that house that had fallen from $120,000
and it was in a much better area. It wasn’t condoville
Fencesitter
The updated(Dec 1-21) stats show SF avg price is down $3,000, but the median is up $8,000. Condo prices are up considerably, both avg and median. In my opinion, the median is much more indicative of the true picture because it eliminates the extremes.
Fence,
Where I come from we have a saying. “You can’t please everyone”.
I personally don’t believe in weekly averages as they don’t truly express a large enough sample size.
The prime example for this is townhomes. They increased in value one month by 15% and decreased by 15% another month. Mainly because of activity outside the norm.
We do publish the monthly averages.
Sheldon wrote:
“The prime example for this is townhomes. They increased in value one month by 15% and decreased by 15% another month. Mainly because of activity outside the norm”.
If you scroll back up i posted a question about the inconsistencies from month to month. My theory is as per the following example:
1. In September 200X, 1000 homes sold in Edmonton. Regardless of condos, SFH, etc they were all valued at $400K and all sold for $390K
So the average resale for a dwelling that month
was $390K.
2. In October 200X, again 1000 homes sold in Edmonton. Again, regardless of condos, SFH, etc they were all valued this time at $445K and all sold for $425K
So the average resale for ALL dwellings that month
was $425K.
Now… how would this be interpreted by an analyst?
Would he assess that “wow!!! month over month the average value of a house went up by 8% ! Edmonton is booming!”
Is this how EREB reads these monthly sales stats? Is this what we’ve seen since summer?
Or… “it does not mean anything trend-wise as what sold in October were upper class SFH in the Riverbend area while no townhouses, etc sold at all”
Of course the sales of lesser value townhouses would have DECREASED the average value of what sold.
Anybody here guessing what I am getting at here?
If EREB state that the market is “tumbling” beacause only small, inexpensive townhomes sell lately due to affordability while more expensive homes are slower to sell, that would be both irresponsible and superficially naive on their part.
Any thoughts on this?
Nice warm day in Edmonton. NOT!!
Picasso:
go to this blog, they’re waiting for you:
http://www.realestateblogfortools.com
Should I sell my house now, regardless of the price? I WOULD LIKE SOME ADVICE
Up until now, I believed the EREB and Comfree reports. I am starting to panic now!
I bought the house back in 2005 for about half of what it was recently appraised for. But this report from the City of Edmonton gives me shivers!!
Although it is largely positive about the distant future (distant future is much more difficult to predict and is based on oil price), it shows a DECREASE in real income y/y in 2008! I mean, not a slower increase but a real-life decrease!! Despite sky-high oil price. If Edmonton goes down in real income per capita when the oil is so high, when is it ever going to do better????
I mean there are many other positive indicators but I always believed that real income per capita is the most important one.
Does this not mean that the housing prices will plummett within 6 months?
Is it best to sell it now?
It’s hilarious, watching people doing the fast walk or slow trot with one hand clenching their coat tight around the neck and the other hand buried deep in their pocket going from the car to the store.
If they don’t have to go out, they don’t, they hermit!
Yup, sure makes you want to drop $400,000 grand for a card board box here don’t it? NOT!
Hi!
Mortgage rates went up 0.2%, so at first is say pfffft big deal!
Lets say the most house TD Bank will lend me at 40yrs/7.39% is $400,000.
That “little” 0.2% increase in rates recently means now TD Bank will only be able to lend me $391,400 worth of house at 40yrs/7.59%.
This translates into an automatic fall in house prices in my range by 2.15% … since a couple of days ago.
I just want to illustrate the fact that regardless of “fundamentals” here in Edmonton, or elsewhere … tightening credit dictates the price.
Sam,
If you plan on living in Edmonton long term and you bought in 2005, then STAY PUT! Live in it happily for half of the price that people paid THIS spring, sleep well, enjoy (or save) your disposable income through your lower monthly payments – unless you dragged a bunch of equity out of it for consumer spending
If this was an Investment for you, then you should behave like an investor; educate yourself beyond our borders, and then take a guess as to what the local markets, world economy, and other factors will be like in 2008 and beyond.
It’s all guesswork. Factors outside of reason, and beyond your control caused a worldwide credit-bubble and house prices skyrocketed.
So once again, factors outside of reason and beyond your control will depict the future price of your house.
Sheldon,
I wrote a lengthy response the other day and it was detected as spam. I had thought it was because I was blocked from this site.
Now I think I was just too long-winded?
Anyway, I think people who post on this site including myself should be allowed to have as positive or negative of an outlook on Edmonton RE as they choose. BUT they should be Respectful of everyone else, and really need to have some intelligent arguments and content.
Apologies if I was just too long winded and not actually blocked.
Merry Christmas.
Michael,
It was not blocked unless you did it from an IP address that has been blocked and you post under several different aliases such as Radley 77. If not then it was not blocked.
I have said time and again that I have not wish to control content but certain people have been abusing the spirit of debate. By posting under false identities and so on.