Real Estate sales in Edmonton at the beginning of August were brisk – we’d projected over 1700 sales for three of our weekly reports this month.
***Post edited. Please see updated numbers. I have removed anything that is incorrect as of Sept 4/08.***
Prices have also come down – the average residential sale price was $329,206, down almost 1.8% from $335 in July (and $341 in June).
New listings are definitely tailing off:
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The Edmonton Real Estate Blog is written by Sheldon Johnston and Sara MacLennan of Coldwell Banker Johnston real estate; both are licensed real estate associates in the Province of Alberta.
Aside from blogging, Sheldon manages the brokerage and assists clients buying and selling real estate in the Edmonton area, while Sara focuses on marketing and business development. If you're thinking of buying or selling real estate, or if you're interested in a career with one of Edmonton's most successful teams, contact them at blog@teamjohnston.com.
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Johnston Real Estate
I am wondering whether the average residential sales price is dropping across all price ranges, or whether it is rather the result of hefty decreases in the more expensive homes as well as a drop in sales of luxury homes.
Knowing that could make a difference for people who are waiting to see prices hit bottom.
Maybe we are already there, for the lower price ranges, while the higher ones continue to compress and bring the average price down?
prices have taken quite a haircut over the past 15 months. That’s the one thing that’s most apparent in the stats. It’s unfortunate that greed ran rampant in 06/07 because I think we’d still have a healthy and balanced market today if prices had increased at a reasonable 10 percent each year instead of the insane 50% one year frenzy that happened. The economy is healthy and people have money. Time will tell whether our market recovers or the slow and ongoing price deflation continues. If it doesn’t turn around soon, I suspect we’ll see foreclosures as most banks have recently tightened the noose and sellers in a tight spot don’t have the options they once had in the past, such as allowing somebody to assume their mortgage without qualifying.
Ken,
I know everyone is going to disagree with me but we’re pretty following what happened down south. First they had sales slow down dramatically, we’ve had this since last year. Then they had listing skyrocket, we are currently sitting at close to record inventory. The only thing we haven’t seen is panic selling – if this happens watch out.
prices went to the max last summer
only the gullible bought then, prices will never see those highs again, never.
smart money stays as far away as is possible from real estate.
Peter,
We also haven’t seen significant job losses felt south of the border, you cannot compare the two. As long as unemployement stays low and oil doesnt go any lower then about $65/barrel, it will come down to only a supply and demand factor which will have a bit of effect on price. Jan/07- Peak were fabricated prices brought on by speculation, we will see another 5-10% reduction erasing all gains in that time period. My 2 cents!!
Thank goodness we don’t have a cold winter.
Aloha,
Keahi
John,
Yes we can compare to down south, history tells us what happens there ends up here 6-12 months later. And we will see job losses it’ll just take time – all part of a regular business cycle. The boom doesn’t go on forever. Once things slow down people will dump their overpriced property and go back home.
Ya O.K. Peter, people will go back home and do what? Live in their rental car? What happens in the U.S. happens here in 6 to 12 months huh? So 12 months ago they were well into the mortgage meltdown. Well, were all waiting! If the U.S. was where we are now a year ago, they would be having a nation wide party for a week! You stick with your predictions and live with the financial missed opportunities.
wow are those sales lame or what
there is no other way to say it
edmonton RE has totally collapsed
What “financial missed opportunities”??
Losing more money as prices (continue) to go down?
Is lighting dollar bills on fire a “finanical missed opportunity”?
You guys are too funny.
Too many “points” to knock down – all in all market has stabilized since the start of ’08 – avg. price is consistant, sales are in line with previous years of steady growth.
If you rent at $1500/mo vs. you own and your property market value loses say 5% of $330k in 1 year – haven’t you come out even? Both scenarios have seen you “burn away” $18k. At least if you own you have an opportunity for the market to come back (unless you NEED to sell). And yes of course if it continues until you return to the bank to remortgage – yes, that is cause for concern. But I think we are FAR from pressing the panic button. Corrections are a good thing.
Keep paying my mortgage renters – I need you to keep your “limitation mentality”.
You do realize that in addition to losing “just” the 5% – you also have to make the monthly mortgage payments. You do realize that, right?
The mortgage payments that are typically multiples of what the rent payments are.
So you really lose twice, once on the monthly payments – and once on the value of the asset.
So please – keep renting out the homes landlords! I need half priced living while I pocket away the rest into savings. Thanks!
” all in all market has stabilized since the start of ’08 – avg. price is consistant, sales are in line with previous years of steady growth.”
Average price of sold homes is not the same thing as average home value, and there is ample reason to believe that sales mix has changed over the past year. For example, a month or two ago I noted that the percentage of homes sold in more expensive areas was up (and the percentage of homes in lower priced areas was correspondingly down) – in other words, those who are buying may be paying about the same for a home, but they seem to be getting more for their money. Another data point: according to Bob Truman’s figures, monthly SFH SP/SF has dropped about 5% from $285 at the end of Dec to $270 at the end of Aug. (condos are down similarly from $261 to $246).
Its also worth noting that inventory is not a whole lot different from last year at this time – and we all know what happened to prices last fall.
“If you rent at $1500/mo vs. you own and your property market value loses say 5% of $330k in 1 year – haven’t you come out even? Both scenarios have seen you “burn away” $18k. ”
Are you serious? What about ownership costs, such property taxes, maintenance, insurance? Unless you own the home free and clear, there’s the small matter of interest expense (and if you do there’s opportunity cost to consider). Also, don’t forget that you will “burn away” another ~4%+ on realtor commission and other fees when you sell.
“Keep paying my mortgage renters – I need you to keep your “limitation mentality”.”
Are you sure you’re not subsidizing someone else’s rent? I’m not.
Although this is a little besides the point, Orson, most people will not save. Rather, they will take this found money you’re talking about, if indeed there is any (depends on what type of rental you’re talking about- and spend it.
I’m old enough to remember people making exactly your argument 20 years ago and these people are still broke. They did not save.
For most dumb schmucks, a paid-for house (“forced saving”) and a company pension (“forced saving”) are what bails them out when they’re too old to work.
Exactly my point of HAVING to sell – if you don’t there isn’t too much to worry about.
Sure there are “cost of ownership”, sure you are paying the mortgage – but you have to live somewhere don’t you? Usually that costs money – unless you still live in Mom and Dad’s basement…
Besides if you could “save yourself rich” every coupon clipping grandma out there would be a millionaire….
My point is that you chicken little’s are becoming pretty funny. I also am not stating the prices are going to continue on the 20-40% YOY climb that they did in 06-07.
What I am trying to point out is that after a nice correction from July ’07 to Jan. ’08, the market has remained somewhat stable – we still have the fall and winter months to get through granted (which will be of interest) but I don’t see how the “sky in falling”.
As for my position – I have one rental property and am looking to turn my current property into another in about a year or 2….
Rhettro,
“Sure there are “cost of ownership”, sure you are paying the mortgage – but you have to live somewhere don’t you? Usually that costs money – unless you still live in Mom and Dad’s basement…”
The $1500/mo rent in your example is paying for somewhere to live. However, you already accounted for it in your hypothetical rent vs buy by comparing it to the depreciation of the property. You completely ignored the cost of ownership – which is why I was amazed that you thought it was a valid comparison.
RJ, you are right – but this loss of equity is not permanent unless you sell. Perhaps it wasn’t the right comparison or I am having difficulties explain the POV – a renter has NO CHANCE of recouping these ‘costs’ whereas an owner can wait for the market to come back – which it always does over time – the only question is how long and can you ride it out.
Like a stock – you haven’t lost or made any money until you actually sell.
I agree that if you can time the market right – you can have a lower mortgage payment then your neighbors, however unless your name is Warren Buffet or Donald Trump – it is difficult to do so perfectly (heck they aren’t perfect either!)
In the meantime – the mortgage payments can be seen as “forced savings”….
I’m able to bank $1000 a month while paying rent and still splurging on all the useless toys of our generation.
It’s all risk and game. My risk is that prices may go up and I lose that gained opportunity value. Now, if prices continue to go down, I can toss a bigger chunk of down-payment on a lower priced property with the money earning 10% interest on my invested savings elsewhere.
The game is finding a sweet-spot to maximize potential and feel all warm and fuzzy about how well I did. It’s the same from a sellers perspective. No different than selling stocks as was previously mentioned.
I see two trends from potential buyers:
1) They cannot afford the prices even with a well paying job (nearly $100,000 more than a few years ago.)
2) The people that can afford a house already have “the fear” and are worried about a dive-bomb and economic collapse regardless of how real a threat may or may not exist. Houses can be a huge liability with property taxes, increased energy costs, transport between work and home. It’s hard to make a living! (Says the guy saving $1000 a month)
I don’t think there are a lot of people in my position. I have to forgo plenty of luxuries to be able to “Save Rich”. No car, affordable rent, no coffee, no change for crack-heads. It’s a winning formula so far, for myself. I pay rent, savings goes up. Now for some on the other side, those ownership costs are getting heavy. And I cannot imagine having a vacant property sitting…
From my end I hope it keeps tumbling down to give actual residents a chance to own some land and a home instead of greedy investors and temp hired help.
I’ve got another 30+ years to “save rich” so I’m mostly just hoping I can spend it in my home town and not have to move to some other part of Canada to spend my savings buying a cheap home and starting a new business just so I can have a place to put my feet up at the end of the day and relax.
I don’t know about you, but when I charge $1500 a month rent for a property I own, that price covers the mortgage,the fees, the utilities, taxes, etc. Thats because I put a substantial down payment on the property and the mortgage isnt through the roof.
If your not holding that property for at LEAST 5 years, and HAD to sell in this market, ya, it wouldn’t be good.
SO, someone is paying for my property and you renters are blowing money into the air. Good luck.