I can’t believe it. Average real estate prices in the greater Edmonton area are up, see for yourself:
Phew! We’re out of danger, everything in Edmonton is back to normal and prices will continue their upward climb!
Lol…ok, maybe not. The news isn’t all good this month, but it is encouraging. First off, while sales are up they did not increase over January the way we typically see sales increase:
January saw the second highest number of sales on record, February was not so stellar.
It is still a steady buyer’s market (and I mean steady!); the new listings to sales ratio was identical to last month:
Is this the new normal in Edmonton? Lots of new listings every month, and fairly steady sales? I don’t think so. Inventory is still quite high, which seems to allow only the best properties to sell each month (by best I mean best value):
What’s interesting is normally when inventory increases, prices drop, but this month we saw an increase in both inventory and average price:
I am going to post an in-depth pricing analysis tomorrow to better investigate just what is going on with real estate prices in Edmonton.
On the street, we can see a definite uptick in interest from buyers. We’ve had three multiple offer situations in the past week (on very well priced properties). We’ve also gotten offers on our two listings that have been on the market the longest. Has spring fever begun again?
“Bank of Canada slices lending rate to 3.5%”
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080304/housing_study_080304/20080304?hub=Canada&s_name=
“Alberta land of opportunity for job-seekers: census”
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080304/census_brain/20080304?hub=Canada&s_name=
Lower Interest Rates + Great Jobs + Softening Prices + High Inventory = Going to get busy this spring.
Urge to buy a house waning: survey
http://www.canada.com/edmontonjournal/news/story.html?id=4904f3f8-9ea6-4a62-a32a-5b7a983eab3a&k=28995
Sara,
As always, thanks for the numbers. Bob Truman’s numbers indicate that SFH SP/SF declined for the 8th consecutive month and is lower than Feb 2007 (condo SP/SF is trending downward, but not as monotonically). An increase in average/median price combined with a decrease in SP/SF suggests a change in sales mix (ie on average, people are buying bigger, more expensive homes), but I’m not sure why. Thoughts?
I would think that home prices have declined a bit RJ. But people are still in a position to spend 400k on a home whether they’re upgrading or just make a good wage. So they’re getting more house for their dollar.
Globe has an article on how consumer purchase intentions are down across the country, including Alberta.
http://www.reportonbusiness.com/servlet/story/RTGAM.20080304.wrbcpoll0304/BNStory/Business/home?cid=al_gam_mostview
In particular, “Just 39 per cent of Alberta residents expect home prices to appreciate this year, the most bearish market in the poll.”
I agree with rj, this is a mix issues, with low sales numbers.
The interest rate cut is going to make things interesting.
We’re going to see inflation continue to sky rocket due to these low rates and there isn’t much more room for cuts. There’s a good chance that interest rates will have to be increased to combat inflation just as houses purchased at the peak last summer have most of their mortgages coming up for renewal.
Looks like there is a mistake on the Average Price / Month and the End of Month Inventory charts. Unless my eye are tricking me or you can see into the future I don’t think we have the March numbers yet.
Cheers,
Shawn
Hey Shawn, Refresh the page…I noticed that too and fixed. Thanks for pointing it out.
On your last chart the price for Feb seems to be 350K but EREB says the average went from 332K-338K.
Thanks bear…guess it wasn’t one of my best days! I’ve updated it.
From Business News Mag (Duncan Hood)-
“It’s hard to say how the boom will end, but history shows that after a big price run, homes can decline in value for a decade.”
Wait for decline in prices with this hig of an inventory.
Sam,
The boom will end the same way it always ends, with spiking interest rates and or tanking oil prices with the resultant rising layoffs and unemployment. Until then, up and down price corrections (which can be significant, down 13-14% in last 8 months) due to flucuations in inventory until the market finds a happy medium. Incidentally, I don’t think what’s happened to the housing market in the last year would be classified as a boom anyways.
Itchy… the boom will end when people are too leveraged; the speculators and investors can’t re-leverage because of flat or falling housing prices; the cost of a house outstrips affordability and people can’t afford to get into the market or buy what they want; and when the flow of people to this province is greatly reduced because it doesn’t pay for them to leave their province due to our unaffordable housing… so, that would be, uh, now…
Why you continue to think that only an economic downturn will cause a housing correction is beyond me… that’s not the way it is with bubbles… and yes I used the B word…
O,
No that’s not what’s happening now. That’s what’s happening in the U.S. with people walking away from their houses in droves, rising bankruptcies, and all time record high foreclosures. The exact opposite of what’s happening here.
Sam specifically asked about how this boom will end. You don’t have to be a history major to realize that busts happen in this province when either the price of oil has tanked or interest rates have spiked.
I also think you misread my post. I specifically said ” until then, up and down price corrections (which can be significant down 13-14% in the last 8 months) due to flucuations in inventory until the market finds a happy medium. It’s the difference between a market that went too high too fast and correcting…and a bust which is brought on by some form of economic contagion…and guess what, full employment in a low interest rate environment with 105.00 oil and 9.80 natural gas aint it!
As for affordability issues, I simply point out that houses are less affordable than in 2004/05. However people are still paying 400,000 for a house. Sales are the same as 2003/04/05…very good years. People who are cheering for the market to go down always point to low sales and then compare them to 2006/early 07. Those were abberations in a market skewed by rampant investment. Incidentally the diffence in avg price between Calgary and Edmonton is now 100,000. Talk to me some more about affordability.
By the way..where are all these people going to leave Alberta for cheap housing. Have you taken a look at what house prices have been doing in other provinces that have good job and wage growth in the past 10 months and compared them to Edmonton?
If sales keep on the 03/04/05 pace for the next 3 or 4 months, we will start drawing on lower SFD housing starts and inventory should start to come down slowly and by next spring we will be drawing on starts of 209 in Jan/ and there won’t be many more in Feb. With sales this year of what 750….do the math.