Here is our weekly update on the Edmonton real estate market. (Last week’s numbers are in brackets). Forthe past 7 days:
# New listings: 601 (562)
# Sales: 228 (170)
Ratio: 38% (30%)
# Price changes: 242 (235)
# Expired Listings: 151 (136)
# Canceled, withdrawn and terminated listings: 53 (82)
Net loss/gain in listings this week: 169 (174)
Active listings for single family homes: 2625 (2584)
Active listings for condos: 1928 (1817)
Just like last week, lots of new listings this week, but the inventory hasn’t jumped asmuch as I thought it might. I still expect to see more listings comingonline in the next few weeks, still at a faster pace than sales. Have a great weekend everyone!
If you look closer at the yearly EREB statistics, you’ll see some very fuuny stuff. On average year before 2007 (2003-2006) there were 25k listings and some 21k sales. Then 2007 broke all trends – 40k listings and 20k sales.
So, dear bulls, please let me know what gonna happen with that unsold 20k inventory in 2008 when we clearly see that the demand is still sluggish? I mean what is going to happen with the market where there are 20k unsold properties from the previous year and some 25k properties added (based on average from 2003-2006) which makes 45k listings, when there are only 12k buyers?
I think demand may be there but in limbo as people play the wait and see game. Less new home construction should help with high inventories but it will take time.
Besides, isn’t the rule of thumb to sell in a bull market and buy in a bear? Too much heard mentality going on. I know I love to shop in this market, before it was waaaay to crazy but easy to get caught up in if you were not careful. I don’t think prices are going to change much more now. There are good deals out there now, you just have to find them! Good luck to all!!
What constitutes a good deal. Paying 10% less then current market value when the market drops another 20% by year end?
Population has increased significantly over the last 5 years in the Edmonton area, also there are people like myself who are buying now but renting out the property they bought 2+ years ago. With rental vacancy rates still low – all these factors can help eat up ‘excess’ inventory. Overall, a good time to be buying if you are holding for more than 2 years.
Just my $.05 (worth more cause it is Friday!) (:
R
Eventually, inventories will go down, historically, RE inventories never stayed high for an extended period of time.
hey bullear, you don’t know where prices are going any more than I or anyone else. So don’t make promises you can’t keep. Fact is prices are decent now, will they keep going down? Heard says yes but then again who ever got ahead in life just following the heard? Nothing risked, nothing gained.
honestly offering any opinions on which way the RE market will go is more of a crap shoot then sure science. The most anyone can do is keep an eye on things, make the best informed decision you can with the facts at hand, and just be sure that the price you buy into is one that you can accept. Really this is the most anyone can hope for.
Suggesting otherwise with buying and selling given the state of the stock market with many reports of individuals loosing 10′s of thousands in retirement funds (in Canada), oil prices finally becoming somewhat stable on the market, and many financial institutions claiming billion dollar losses, its going to be challenging making the right decision, but it can be done if you do your due diligence and pay attention to whats not only happening here in Edmonton, but Alberta, Canada, and the US at this time.
$0.02
Okay, it’s time for another survey.
Remember the rules – don’t make childish jabs or try to rip down other people’s credibility when you know you don’t have any either. Just simply state your projections (in this form):
“Compared to the December 2007 average price for single family homes ($382,022) I expect average prices to be”:
March: -5%
June: -9%
August: -15%
December 2008: -18%
My expectations are wild guesses based on the observation that the only thing that has changed in Edmonton’s real estate market since June is the average price. Obviously, price is a big factor – but all of the other big factors that could be blamed for this seven month “correction” still exist (and some downward pressures are picking up strength).
If we could only get some optimism into the market – maybe eliminate 8,000 listings and get people to forget about “economic slowdown” for a month or so. If we could only convince the banks that they can recover their multi-billion dollar writedowns by going back to lending ridiculous amounts of money to people who are a credit risk. Does anybody have some ideas of how we can do this? I would appreciate a discussion on this topic.
Good indicators to watch to get a sense of the market are average price and median price. But, in my opinion, comparing Sales Price per Square Foot (SP/SF) each month is an even stronger indicator. I would probably feel more bullish about the market if we could get just three months of increases in a row. Unfortunately, Bob Truman’s website suggests SP/SF has come down every month since June. This says to me that we are far from a market that is ready to turn around in the near future.
True to my bearish attitude, I am still anticipating an ugly newspaper headline after February’s stats come out. Just in time for spring: “Homes in Edmonton Now Cheaper Than A Year Ago”. Now the question is – will that motivate buyers to come out of the woodwork and scoop everything up or will it motivate sellers?
One last comment. The EREB was once again able to make me smile. Does Carolyn Pratt write those monthly reports on the website? Whoever it was – can somebody explain the last sentence from the most recent report? “…the number of REALTORS® increased through the year from 3,104 to 3,241 which indicates some optimism in the market potential.” I don’t understand how more realtors indicates optimism. Does it imply that there is optimism for 2008 or am I misinterpreting it? I read that and think, “How sad, we need lots of realtors to represent the huge inventory… but how does a realtor get paid if nobody is buying?” I think even Carolyn is aware that more realtors is just a lag effect of a greedy market. Whoops… I hope that doesn’t count as a credibility jab.
Who pays 382K for a dump in millwoods?
I still think we’re in part one of a two part correction. I also think that having the current cycle perfectly aligned with the “seasonality” of the market hasn’t helped.
In the SFD market prices have been falling since May based on lower in migration; affordability; peoples unwillingness to pay; and a large supply of homes on the market. But people have been convincing themselves that this is just a seasonal slowdown. That this always happens through the winter. And I think the majority have said “it’s ok we’ll just sell in the spring”. But the most important part is that people still believe that prices will resume increasing in the spring and all will be well as we do a 10-15% increase for 2008.
We’re still in this phase because people either don’t know there has been a contraction in prices; or they’ve believed the economist and realator forecasts; or they just think we’re still going to keep rolling along getting all these people to fill all these jobs; or because they’ve become use to the type of increase stats seen through 2006 and the first 1/2 of 2007; or their in love with the major project list stats; or they think that housing is this new great investment vehicle; or they’ve forgotten the years and years that sleepy Edmonton had prices in the $200,000s.
The start of Phase 2 of this correction will be in Mar-May when people start to realize that this perception is false and that prices are going to continue to correct. It’ll be marked by the SFD price being reported as a negative number year of year in the press. Which will likely occur in March or April given the current trend.
It’ll be assisted by the U.S. economy going into a recession (which it’s already in) and all the slow down news that we get up here on the same; by the U.S. economic slowdown impact on Canada, Europe, China and the world; by all the lagged supply we have coming into the market here in Alberta; by the oil and gas slowdown; by the fact we’re not going to see the same net interprovincial migration which caused 2006/07 price run ups; and by the growing stories of people ether loosing money on their “investment” or being pissed they have to pay off a 35 year mortgage on a house that is worth 20-30% less than they paid for it.
Economically speaking 2008 is not going to be a comfortable year. Just check out the weekly drop in the stock market to see that.
And to be clear for all those bulls who are going to call me Chicken little. I’m not a renter. I live in a nice house in a historic neighborhood in central Edmonton. Sorry guys and gals if you wanted to fall back on your typical defense. I’m open to hearing the bull side if they can convince me that we’re going to see the massive influxs of people and euphoria we saw during 2006. That’s where the bull arguement should be concentrating. Not the major project stats and the lowest unemployment rate in the country.
Because even with those factors our net interprovincial migration still went net-negative for the first time since 1992 during the last reported release. And the fact that people list there houses like crazy with prices at current levels tells me even Albertan’s don’t think their houses are worth that. And they’re willing to sell and move elsewhere despite all the projects and the great labour force.
Let’s just face it, people move here because Alberta makes them better off financially. When they retire they move back to where they come from. Make them rich sooner than expected with a positive wealth shock and they move back sooner than expected.
Just my thoughts…
K
I’m a real estate broker in Winnipeg. Can someone explain to me why Comfree have over 3000 listings in Edmonton while Winnipeg where Comfree is from only has say 225. Why are so many Edonton consumers selling privately and not using the services of a professional real estate salesperson. Just curious.
Comfree was started in Edmonton by two young real estate agents who are now very rich and live the jet set lifestyle between here and Australia.
They’ve done an amazing marketing job here in part because of timing and some good luck. Their marketing blitz and growth in popularity coincided with the real estate boom of 2005/2006 boom. To put things in perspective, in July 2006, a baboon holding a “For Sale” sign on your front lawn could have sold your home for top dollar in one day. Prices were increasing by thousands each week and buyers were lined up in a greedy frenzy to buy everything in sight.
About 10 months ago, that greed driven frenzy ended, however Comfree is still enjoying significant success. I think it’s in part due to the ongoing sparing match that they’re involved in with the Edmonton Real Estate Board, which gets them local media attention. My guess is that in a more balanced market, they’ll lose some popularity. However, they have dominated the market here in Edmonton and have signed up hundreds of private sellers looking to save commission. If you google “We-List”, they’re the exact same type of company, but they’ve captured the private sellers market in Calgary.
O,
I have to disagree with you on many things in your comment:
-the large number of properties on for sale is not the result of an economic disaster,
-more and more people call Alberta home for a life time and won’t move, ever;
-high unemployment rates and high interest rates are not on the horizon to endanger the current RE situation;
-dispite the US economy and housing sector having difficulties,
in the same time, our RE prices went up considerably
( countrywide for that matter and they are not falling, no matter, what’s happening in the US )
-out-migration from the province is only temporary ( as it’s always been in the past )
karl,
The “the large number of properties on for sale is not the result of an economic disaster” statement is correct. It is a result of oversupply. What is troubling is the fact that U.S. recession will slow the growth of Alberta economy which in turn will lower the demand for already oversupplied RE.
””We don’t have exact numbers yet, but we’re definitely seeing a slowing trend in Alberta from 2006 to 2007 and again into 2008,” says ATB Financial’s erudite senior economist, over a coffee at Calgary’s Bankers Hall.”
http://www.canada.com/topics/news/story.html?id=c1f0886b-c965-4602-be49-dc0a831d7e1d&k=23913&p=2
As you can see the economy has been slowing already. The U.S. (and possibly world) crisis will make things worse and the rebound predicted (Nov. 8, 2007) in the above article may not happen especially if oil prices keep dropping.
http://www.financialpost.com/story.html?id=253262
Karl my comments follow…
-the large number of properties on for sale is not the result of an economic disaster ==> I agree, the oversupply issue is the primary issue causing the downturn in current AB housing. Speculative building; massive multi family coming in the spring; Albertan’s listing houses because “why not sell if someone will pay me THAT for my house”; Albertan’s cashing out and moving back to home provinces; etc. These are all Supply side variables. And I think it’ll be a supply side correction. But a softening of demand is inevitable on poor affordability AND lack of consumer confidence given negative economic news – from the USA; CDN; or whereever…
-more and more people call Alberta home for a life time and won’t move, ever ==> Yes, they are, but in a housing market where the whole stock of Alberta housing is priced given what’s listed, all we need is a correction on the margins (as we call it in economics). And these people are leaving during good times, not bad economic times. So what should really be of importance is the amount of people leaving relative to the inflow of people and the stock of new housing coming to market. Just a hunch, but right now I doubt this is in balance.
-high unemployment rates and high interest rates are not on the horizon to endanger the current RE situation ==> Your right, they are not. But what I find troubling is how people are leaving this province and “cashing out” despite our super positive labour market. And again, the supply issue is one where I think allot of housing was built with a lag to house the thousands of people that were going to come here to work. Who aren’t coming, because the price of housing is too high.
-dispite the US economy and housing sector having difficulties, in the same time, our RE prices went up considerably (countrywide for that matter and they are not falling, no matter, what’s happening in the US ) ==> The Canadian economy lags the USA traditionally by about 12 to 18 months, and Alberta’s SFD housing prices have been falling since last spring. Sure the headline number hasn’t if you want to believe EREB and CREB. Granted our market won’t fall for the same reasons since we don’t have a sub-prime issue. But it could fall for other reasons.
-out-migration from the province is only temporary ( as it’s always been in the past ) ==> You must know more than me cause I’d not make that bold of a statement. Things will need to get pretty bad in Ontario and Quebec for those people to pack up the wagons and head west. And given our relative housing price, those are increasing the only people that will move here. We’ve priced ourselves out of getting everybody else and the interprovincial in-migration distribution shows this growing concentration.
Last time I check Edmonton was still about 20-30% above comparable cities (Ottawa; Montreal; Hamilton/Burlington; Duram Region) and fourth most expensive in the nation behind Toronto. Just don’t think that’s sustainable and it’s not in the long term benefit of the province. We need to have a fall in housing prices to enduce people to move and stay here so that we can deal with our labour shortages.