Here is our weekly update on the Edmonton real estate market. (Last week’s numbers are in brackets, and the week before after that). For the past 7 days:
# New listings: 648 (599, 632)
# Sales: 275 (246, 243)
Ratio: 42% (41%, 38%)
# Price changes: 384 (372, 286)
# Expired Listings: 201 (134,109)
# Canceled, withdrawn and terminated listings: 51 (44,52)
Net loss/gain in listings this week: 121 (175, 228)
Active listings for single family homes: 3048 (2971, 2866)
Active listings for condos: 2351 (2301, 2246)
The slow creep in inventory continues…new home builders seem determined to add to the inventory. CMHC released their monthly report today showing that multi-family units are up 4% over January 2007. At least single family starts are significantly down. Also interesting is the steady sales to new listings ratio, seems about the same as the Oiler’s record (except for the past three games! go Oilers!).
Also of interest…TD Canada Trust released a study about female homeowners today. Apparently in Edmonton and Calgary women are more driven to get into the real estate market that in any other major Canadian city. Twothirds (66 per cent) of women in the Alberta cities cite wanting to getinto the housing market as a reason for buying their first home,compared with an average 54 per cent of women respondents acrossCanada, says the Women and Home Ownership Poll. Nationally most women preferred condos, but in Edmonton and Calgary 31% opted for condos, 33% for houses and the rest for townhouses/duplexes etc.
I wonder if everyone on this site will still be bearish if the central bank reduces another quarter point on Tuesday and if the EREB comes back with a slight price increase in February.
Both of those events normally increase consumer confidence.
Count me in on the bear side. Feb will be the last month that we see YOY gains in Edmonton real estate for quite some time. The “consumer confidence” will be short lived.
Cheers!
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Actually there is a good chance that the central bank will reduce rate by 0.5%
http://www.reuters.com/article/companyNewsAndPR/idUSN2943564220080229?pageNumber=1&virtualBrandChannel=0
Nonetheless I don’t think that it will help the Edmonton RE market that has high inventory and low sales. Aggressive rate cuts with signs of slowing economy may actually sink consumer confidence as they are an indication of possible bigger problems and IF we do hit recession then low rates or not it will not encourage people to go deep in debt. Also it will be interesting to see what will happen to the mortgage rates.
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can some one suggest what to do in this scenario, we signed a contract with builder to buy a condo and possession is in june, if prices keep falling then we probably will loose more than the initial deposit. if we don’t take possession then is there any legal action builder can take against us.
aa,
Of there is! They could sue you to compel you to buy or to pay damages.
Will they? Well if the market has dropped and they can’t sell the condo to someone else for the same price they stuck you at, they just might.
If the value has gone up since you purchased it they will let you walk and sell it some else at a higher price.(Not likely in this market) Good Luck
aa,
This blog is probably not the best place to find answers on this simply because every company and situation is different.
Check your agreement to purchase for info on this. Also check with your bank on possible mortgage penalties (and what happens to your credit rating if anything if you walk away). Finally I would talk to a lawyer. Get all your ducks in a row and be fully informed of all the consequences before you decide what to do.
I do however know, that if you are an investor and doing a quick flip and want to back out, builders are a whole lot less sympathetic to your plight (hint, hint).
Incidentally, you certainly don’t have to say whether you’re an investor or not but if you are going to actually live in it for more than a couple of years you’ll do fine.
Cheers and good luck
The market seems pretty stagnant right now, but the herd mentality works both ways. Once greed replaces fear, prices will go up again. It’s only a matter of time. Full employment, stable interest rates, and nobody wants to rent a crappy 1100 square foot townhouse for 1200/month for years. I hear that investors are quietly selling in Vancouver and starting to buy here again.
Compare this blog’s statistics in the last 4 “weekly statistics” for both January and February and you’ll see that there are 202 more sales over the same time this month.
But that could as a result of many different factors.
aa
One way to back out is if you are unable to get financing originally you had to have the bank give you a letter that said you were approved for financing but if you told them the property was not worth what you paid and were expecting a large decrese in wages they would decline to finance. If you believe that the property has fallen substantialy run. I would figure out what to do before you give them any idea as they are prepared if the knowingly sold to investors. I think builders will be more carefull to weed out speculators in the future as speculators harm the market. Long term investing is another matter
At the present time, all new home builders do require a 5% deposit AND a letter from the bank stating that the buyer is approved with NO conditions attached. They are covering their rear ends right now. The builders know they lost TONS of revenue back in 2006 as their clients gained $100,000 in equity between contract signing and the possession date. The builder wants to make sure that if things go south, they at least have the 5% deposit. There is NO way out of a signed contact without losing the deposit and getting sued for the difference. These builders are smart, just like Realtors and any other big business, they have lawyers and other professionals to make sure that their profits are secured.
I gave 5% and a bank letter as I am not a investor, I wanted to buy because prices were going so up and wanted to secure a place for myself, but now I see a lot of deals which are much cheaper than what I bought for, but there are 2 factors which I am scared of, one is prices falling, another one is if I move to study further to different city then I cannot hold this property long time.
It sounds like it falls into buyer beware aa. I don’t think any builders; banks; or Realtors are going to let people back out of their past decision if there are better deals to be had now. Such is the market. But I’m sure your not alone.
AA does bring a good point though. Back in the panic buying frenzy 2006 and 1/2 of 2007 builders were selling you a future home at a price to be determined later. Future home at a future price and likely just factor a 5% increase in each month it takes us to build.
So, as the SFD continues to fall, I’m wondering if builders will adjust the price downward the same way they did when it was shooting up. Everybody who bought in March; April; May and June of last year for delivery this spring should be asking their builders this questions.
LOL.
And while your at it. Ask them why they negatively affected the re-sale of your SFD home by building a tone of apartment condos and townhouses in your subdivision.
Summerwood subdivision in Sherwood Park is a perfect example of this. The entrance off Clover Bar road is virtually all multi-family housing. And put in such a location at such a magnitude that it basically blocks out the sun for allot of SFDs located within the division. Let alone the traffic issue and visual nightmare it is.
3 Story walkouts which were probably sold “backing out onto a little river sanctuary for birds and walking” still do. But look a little further (like 50-100 feet) and also enjoy the new 6 story apartment condo complex. Which I suspect wasn’t part of the plane when they sold you your $350,000+ SFD home.
I suspect there are allot of unhappy subdivisionites out there.
O,
A couple of things about your comments. First of all SFD are not continuing to fall. They haven’t fallen since Nov/07 and are actually up a smidge in Feb. Second of all, a lot of builders have adjusted their prices down and not by a percent or two either…some by as much as 15% which not very coincidentally is the approximate gap between resale and build new for the comparable home. The problem was, up until mid-late 2006 it was way cheaper to build new than to get into a 5 person bidding war on the 1 nice house in a nice location on the resale market.
By the way…209 new homes started in Jan/08 compared to 700-900 in Jan 06/07. Sales in Jan/Feb this year were what, about 3-4 times the 209. New homes starts have been on the downslide for 7-8 months now. While I think we’re going nowhere fast this year because of the inventory, if the new SFD starts don’t pick up…strap yourself in boys and girls, spring of 09 looks like a tight market again!
O,
A couple of things about your comments. First of all SFD are not continuing to fall. They haven’t fallen since Nov/07 and are actually up a smidge in Feb. Second of all, a lot of builders have adjusted their prices down and not by a percent or two either…some by as much as 15% which not very coincidentally is the approximate gap between resale and build new for the comparable home. The problem was, up until mid-late 2006 it was way cheaper to build new than to get into a 5 person bidding war on the 1 nice house in a nice location on the resale market.
By the way…209 new homes started in Jan/08 compared to 700-900 in Jan 06/07. Sales in Jan/Feb this year were what, about 3-4 times the 209. New homes starts have been on the downslide for 7-8 months now. While I think we’re going nowhere fast this year because of the inventory, if the new SFD starts don’t pick up…strap yourself in boys and girls, spring of 09 looks like a tight market again!
Itchy,
Bring another 30,000 people in city and then we can think about a tight market in 2009. If there is no immigration what do you think that the speculators that have already 3 houses would want to buy few more.
Justone,
Like I said, I don’t think we’re going very far either up or down from where we are right now for this year, price wise. We saw a 6% drop in Nov/07 as many investors capitulated and sold for what they could get. Inventory levels have not gotten back to the highs of last fall and any forecasts I’ve seen call for a net immigration of around 56,000 for this year, compared to a high of 80,000 or so in 2006. So if you do simple math…we can expect a drop of 30% in net migration…compare that to a drop of a little over 70% in SFD starts. Now, having said that, 1 brutal month for SFD starts does not a year make, but with so many brand spanking new homes sitting empty..people are buying them up rather than waiting a year to get theirs built, and there is little or no investor activity in the SFD market right now. The torrent of investor/builder specs from spring 07 will be coming on line in the next couple of months. Then it’s a trickle.
This is only 1 segment of the market, as I think condo’s are the next overbuilt/inventory risk.
Meanwhile Alberta is forecast to lead the country in creating new jobs, wage growth and enjoyed a well deserved 13-14% pullback in avg house prices. Couple that with declining interest rates and I’m not coming up with much to be pessimistic about housing wise.
Of course when some schmo stands up and announces he can power a city on a gallon of seawater, I promise I’ll be appropriately glum, lol!
I’m glad that “aa” posted that question. It’s yet another strong example of “knee-jerking” that’s going on creating artificial problems in the market.
aa, take possession of it and live in it for a few years. Alberta’s fantastic for long-term investments. Flippers and short-term investors are just screwed.
Unfortunately, that group is also the most vocal right now… They’re like the High School Jock you run into 15 years after that havn’t moved on and still talk about their glory days.
Condo projects in Vancouver going into recievership…http://www.cbc.ca/bc/news/yourstory/features/q-080229-realestate.html
Condo projects in Vancouver going into recievership…http://www.cbc.ca/bc/news/yourstory/features/q-080229-realestate.html
I just to a builder called Hillview a week ago. They reduced the price by about 15%. If the market is going to increase by 1% to 10% (that I heard from the news), why does this guy reduce the price by 15% now?
Dave,
That’s an easy one. I had heard the same thing, see my previous post. The fact is new home prices kept going up (mostly new lot prices) when resale homes were correcting 13 or 14%. If you look at the new home starts for Jan this year it’s down by about 70-80% from Jan last year…and the price difference between a new home you wait 10-12 months for and the same house built by an investor from last year is the reason why. Not all builders have taken these steps but some certainly have. It’s good for people wanting to build their own home to their own requirements.
Dave,
I meant to answer the 1st part of your question as well….I believe the numbers that are being talked about on the news are based on mls (resale)homes. New home sales have their own catagory. Hope this helps
Because it’s marketing Dave. It’s like the sticker price on new auto’s, no one actually pays that, (well unless it’s a Toyota or Lexus, but you can add a lot of dealer options for the same price).
Builder are having to actually market homes again. They haven’t had to for the last 2 or so years. If you can remember back more than 2 years these type of marketing schemes were used all the time, and even with house price averaging $180,000 and less.
It’s called marketing, it’s been around forever, but I guess some people have just forgotten.
PS. In the late 70′s/early 80′s I use to build houses for Hillview, they built a good quality home, back then anyway.
Dave
Actually go talk to Hillview rep and see what you come up with. I’ll bet by the time you add in all the options that other builders include, you will have used up your 15% discount.
Try it and post your results, would be interesting to see.
Neil,
I had heard about Hillview dropping their prices 15% last week (see my post to O further up the page) when friends of ours that are moving from Manitoba were out looking in Megrath (not sure of spelling, but somewhere in SW Edmonton). They were quite impressed, as they are a custom builder and could get them exactly what they wanted (they have a gaggle of kids). They didn’t say anything about options and I didn’t ask….but being a custom builder I wouldn’t imagine they are a slap it up, carpet and lino outfit. Anyhow, they wanted to shop around and see if it was a great deal, so between Dave and what our friends find out it would be interesting to see if the price is actually lower.
cheers.
itchy
Just remember, what you see is not always what you get. That’s why they have show homes. Those are all upgraded models. If you want one like that it’s gonna cost you.
If you look at the base model pricing it most likely just includes lino and basic carpet, basic hardware, basic cabinets, etc, etc, just basic stuff. It’s like options or packages on a new car, the base model doesn’t come with much, so if you want air or power windows, that’s an option and you have to pay extra for it.
Builders make a lot of their money from upgrades. Even though the base model may be profitable, upgrades are even more. And they know most people will upgrade.
Neil,
Fair enough. Like I said I’m not sure what’s included, but it’ll be interesting to find out!