Here is our update on the Edmonton real estate market. (Previous week’s numbers are in brackets). For the past 7 days:
New listings: 434 (486, 616, 542)
# Sales: 274 (243, 300, 258)
Ratio: 63% (50%, 49%, 48%)
# Price changes: 441 (434, 478, 405)
# Expired Listings: 209 (298, 225, 692)
# Canceled/withdrawn/terminated listings: 49 (52, 60, 44)
Net loss/gain in listings this week: -98 (-107, 31, -452)
Active listings for single family homes: 3651 (3683, 3738, 3730)
Active listings for condos: 2428 (2454, 2503, 2466)
63% sales to new listings ratio! Wow! 1496 sales for far this month! Lets just say….that’s not what Sheldon and I were expecting. One thing we were expecting was a price drop, and the average prices have slid to $323,206 for the month so far (down from $329 at the end of August) just like last September.
We are asked everyday: "Do you think the high sales are related to the end of 0 down 40 year mortgages in October?" There must be some affect, but my thoughts are it is minimal at best. We haven’t had a single deal (ever) with 0 down, so maybe it’s just our clients. But we’ve talked to a lot of other companies and they seem to feel the same way – the 0/40 is not the cause of the increase in sales.
Just what kind of increase in sales are we looking at? Last September there were only 1042 residential MLS sales in the Edmonton area. That was the worst September in years so it’s not really fair to compare this year to last year. We normally see about 1400-1500 sales in September, and this month we could see more than 1700 sales. Also, sales this month would be higher than August, which is very rare.
I’ll do some more digging before the monthly stats come out, so see if I can find an answer for the unusual increase in sales. Here is our inventory analysis:
1. Mortgage rates are climbing.
2. The 0/40 ban is in October.
It appears that this is going to be the last big rush into homes for a while but it is purely governmnent led.
I hope you are wrong.
The business that I am involved in has ramped up to unprecedented levels over the past two months. Over the years as our business ramps up others do as well. It is almost without fail that the local economy follows suit about 2 to 3 months after these ramp ups start. I think we’re in for another run.
It might not be the zero down crowd but it could be the 40 year life time mortgage crowd?
I know a couple that bought a $950,000 dollar home 4 months back with a 40 year mortgage. Did they buy to much house? Yup.
Did they pay to much? Yup.
Have they already lost 150 G’s on the house? Yup.
over all lets enjoy whatever going on!!!
According to report Merryl Lynch: Canada too has chance US type housing melt down.
Its just thought ;>
It isn’t a “chance” of a housing downturn, it’s a question of “when” and “how much”. Credit markets have been obliterated and banks (including the Canadian ones, which have yet to disclose their full exposure to subprime) are going to tighten lending hugely in the next twelve months. Government bailouts aside, this is going to have a huge impact on Canadian interest rates (tailing the US by a month or two as always) which is going to bring house sales to a screeching halt.
Let’s be realistic, people. The world is headed for the biggest recession since the Great Depression – it’s not a debate anymore, it’s at our doorstep – and housing prices are going to go with it. I saw this coming six months ago and thank god I got out at a good price and into a perfect lease agreement, because now is the time to rent and put your equity into inflation-protected securities.
Sara, I respect that your livelihood depends on house sales and that you’re necessarily optimistic, but for the sake of honest discussion one must consider that Alberta is not magically sheltered from economic downturns when discussing the real estate outlook.
You’re guessing, Steve. Your guess is just different from Sara’s.
Brent, you are like so right…that couple you know totally got hosed! Just like this woman I know, she was driving her car, at night when like another car flashed it’s lights and then she flashed back but it was totally a bunch of gangsters on an initiation and like if you flashed your lights back then the new guy had to kill the person in the car and they chased her and luckily the police were able to save her and they put out a warning on the internet to like save people. Well I don’t really know her, or anything, but it like probably did happen just like your couple, who bought their house, maybe you don’t really know them but like I bet it totally happened and they like thought an investment and POW, they’re like, “OMG, if only we listened to that guy, who’s on the internet and totally said for like 5 years the market was gonna crash. So thanks Brent, thanks for telling about this couple you know.
Is the 1496 a projection? It must be because when I add up the 4 weeks I get 1075?????
Or is this another OOPS GOT LOTS OF LOOSE ENDS —
***Actually no, that is the actual number of sales. If you think how weeks work, they don’t necessarily start on the same day that the month starts
Sara. ***
It’s true whether you want to believe it or not…. but I think you missed the MAJOR point.
The 40 to life mortgage isn’t limited to your zero down first time buyer. It’s also the move up crowd, it’s the only way they can afford that move up McMansion.
For the month of Sept, this is what I come up with in reverse, using your numbers:
Week 4 (just ended) Sept 20-26 (274 sales)
Week 3 Sept 13-19 (243 sales)
Week 2 Sept 6-12 (300 sales)
Week 1 August 30-Sept 5 (258 sales).
Now I know August isn’t part of September, so there are even more homes in the September data than should be counted (week 1).
Yet, I still come up with 1075, much different than 1496.
Help???
****To clarify….My weekly numbers only include Edmonton. The real estate board reports the sales for the entire area, which is what we track on the monthly reports. Sara***
LOL. 40 year mortgage shouldn’t be used in the same sentence as $950,000 home.
Someone was grandstanding… “look at this awesome house I can’t afford”. Probably has a Hummer H2 in the driveway.
Kudos to the guy who sold at $950K.
Ok, I get it – the 1496 is Edmonton AND area, whereas the 1075 is Edmonton city only.
Thanks a bunch.
Haha! It’s another batch of OMG they bought too much house, what losers, now their going to regret that for the rest of their lives and live miserably because of it and never prosper crowd. MYOB dudes. If they bought too much then at least someone is making money in this economy.
DREM and hmx5,
My thoughts exactly, but it makes you wonder how many others out there are doing 40 to life.
CALGARY, Alberta (Reuters) – The planned C$4 billion ($3.9 billion) Heartland upgrader, backed by the closely held Value Creation Group, has been mothballed, Canadian media reports said on Thursday.
The Edmonton Journal said construction on the planned 77,500 barrel per day facility, being built at a refining hub in Strathcona County, northeast of Edmonton, Alberta, has been halted.
As well, other smaller firms in the region have found it difficult to get financing for major projects.
Y I K E S !!!!!!!!!!!!
“Please God, give us another oil boom, we promise not to piss it away this time” Well, did you?
SELL, SELL, SELL !!!!!
Brent,
I am with you on this one. Anybody who bought a 950K house 4 months ago is not looking at an appreciating asset, in the short term.
I observe very closely what’s happening at 600K and above, but every so often, I track 500K-600K as well. It’s just too much work to do it frequently. Here is what I found, this week:
Most of the houses that were on the market anywhere between 500k-600k, in May 2008, are gone today. That looks like good news, unless they simply expired.
HOWEVER ! If you look at these properties by postal code, you will find that, today, almost identical houses on the same streets are listed 10-20% lower than the ones that appear to have sold.
My conclusion: The previous batch of homes sold for less than list price and set a new – lower- reference point for the batch that entered the market, since then.
There are still too many hefty price reductions to believe that we have hit the bottom, at 500K and up.
Sales pickin’ up again, because house prices hit the rock bottom and immigration is up sharply from other provinces again.
On the way to work, I can see our roads are clogged more and more every day and “sold” sign everywhere.
Considering home prices are now more expensive in Saskatoon AND Regina, it’s only a matter of time before in-migration picks up again. That’s why everyone moved to SK in the first place. Now they can capitulate in SK and buy in AB for less.
My neighbor has had their condo listed for a year and a half with no takers. The ass has definitely come out of this market.
The whole country is do for a fire sale. Dreadfully overpriced market in places that for decades were the hind end of the earth.
Let me rephrase that, “places that were the hind end of the earth since the beginning of time.”
Housing downturn may spread
Sep 27, 2008 04:30 AM
Ellen Roseman
The best days for Canadian housing markets are behind us, says a Scotiabank report released Thursday.
http://www.thestar.com/Business/article/507342
Piccaso….I mean sorry,…Brent,
That’s the sort of the attitude that the losers wants to drag down everybody now.
We are not going to go down, here in Alberta!
There is many signs out there that we are on solid footing here, unlike the U.S and some other parts of Canada.
As you hear, actually sales are going up!!!
Here is an article that housing market is not going to melt down.
http://www.reportonbusiness.com/servlet/story/RTGAM.20080925.wmortgage0925/BNStory/Business/home?cid=al_gam_mostview
It over karl, the boom is past tense. You can hope and hang on to hope but all rockets crash back down to earth, even in Alberta.
Hi Karl,
I realize that you and a handful of people are the only bulls left in Canada. You need to analyze the link you just posted to understand that those two economists may actually have self interest in the real estate market so they can’t be so realistic on the Canadian outlook. Remember that Merrill Lynch which most bulls are quick to point out are a US based company. The could care less to massage the truth about the real estate market here in Canada. There is no vested interest.
Let me point you in the right direction:
“Leverage — night and day comparisons
Canada’s ratio of household debt-to-income is much lower than the U.S. Despite its popularity, however, this is the worst way to look at leverage since it compares total debt amortized over decades to a single year’s after-tax income, which is a stock-to-flow comparison that most economists avoid. One doesn’t take out a mortgage on Jan. 1 with the expectation of having to pay it all back out of the current year’s income by Dec. 31, so why make the comparison?”
Whether the comparison is a stock-to-flow comparison it still points out that Canadians have more houselhold debt than their US counterparts. Mortgages are not supposed to be paid back in one year but it doesn’t make a difference because the debt saturation is still the same. Next year you’ll still carry much of the debt if not more (if you buy more things etc). Think balance sheet. A financial snapshot at a single point in time.
If Edmonton did hit bottom, condo sales would be shooting up with SFH sales as well. This was the trend during the boom times but this is not happening. Even though condos in Edmonton are around 200k now. That is almost affordable to the average wage earner. Much better than years past yet sales remain flat.
I’m a morgage broker who have been in the industry for 10 years now. For Brent’s comment about the 960K house, you cannot get a 40 year amortization nor even a 25% down. The banks and fianance companies do not use the same forumlas for houses over a certain price range. For a 950K house, you would need to put 25% on the first 700K then 35% on the remainder. The banks would also want you to go for a 35 year amortization.
Not sure where Brent’s couple are, but to put it politely, I think that the example provided is hypothetical. I advise readers to do their own due deligence and not believe every word they read from overly pessimist posters. Brent, if you think that I’m wrong, please provide the civic address for your friends, and I’ll be happy to pull all their mortgage details.
I don’t know why i’m getting so much flak on this 40 to life.
This couple sold a house for $500,000ish and upgraded to a $950,000ish house. They have a 40 year mortgage on this $950,000ish house. Believe it or don’t believe it, I don’t care.
It looks to me like Edmonton SFH prices are still tanking up to Sept. 27th.
http://www.bobtruman.com/Edmonton_SFH_stats/page_1918017.html
I guess sales are up in September compared to last September because sellers are starting to accept low ball offers from buyers. There sure isn’t any reversal showing in the downward price trend.
“Lowball offer” is defined as “an offer that is substantially below market value”.
Is that really what we are dealing with? Or are vendors and buyers settling closer to the new “fair market value” for single family homes?
Condos seem to see an upswing in both average and median price, in September, according to Bob Truman’s stats.
I think you can be assured buyers aren’t suddenly making higher offers or we would see prices going up, not falling.
I’m guessing that Fred is just a troll?
Hello Fred,
What’s your MLS number and let’s pull it up and look at it,
Dan
Brent,
Why are you losing your temper?
I was just explaining how mortgages for expensive home work. Once your cross a certain threshold (depending on your location) you are in a different ball game. If you are willing to logically and rationally discuss it then I’m all for it as your previous postings did not make sense so may be something is missing.
I never lost my temper. Just wonder why nobody believes it?
I can’t offer any more info to you. I don’t know how much equity they had in their previous home. All I know is they have a 40 year mortgage on their $900,000+ home now.
Hey Brent Piccaso, how’s that property in Florida that you said was such a great deal. How much did you lose so far? I guess a property in Edmonton would have been a better choice after all. I love how the negative folks continually preach gloom. Prices go up and they scream ” prices will come down!”. Prices roll back and they wail ” prices are going to keep dropping!”. Blah, blah, blah. You guys said ” oil will never go to $100 and now when it drops back to $100 you cry it’s over!, oil has dropped to only $100. If you want someone to actually listen to your view, then atleast try to sound credible.
We all have the right to doubt and question the postings. If someone is willing to discuss an issue or certain circumatances, then please be prepared to back-up your claims.
Wow. Does this debate ever seem polarized and personal/emotional. Any humility forthcoming from either side?
There are factors in favour of both the optimistic and pessimistic sides… who knows which way this one is going to go?
On the pessimistic side: inventory is high; home prices seem to be sliding; the world economy is in trouble; home affordability is lower than we’re used to in Etown; oil prices seem to be fluctuating wildly (I’m sure I’m missing a few, but I don’t want to mix in conjecture such as, “this current increase in buyers MUST be due to the end of the 0/40…” Evidence?)
On the optimistic side: sales levels are very healthy; inventory is decreasing; oil is still around $100/barrel; Alberta’s economy is currently healthy; interest rates are low; etc.
I’m interested to see how this all plays out, but do find the “I know what’s going to happen!” crowd (usually doomsayers) annoying.
One thing is sure so far, that Brent does not owe a piece of RE in Edmonton!!
He-he-he-ha-ha-he-he
I’m sorry, OWN
that’s what I meant OWN
CALGARY, Alberta (Reuters) – The planned C$4 billion ($3.9 billion) Heartland upgrader, backed by the closely held Value Creation Group, has been mothballed, Canadian media reports said on Thursday.
The Edmonton Journal said construction on the planned 77,500 barrel per day facility, being built at a refining hub in Strathcona County, northeast of Edmonton, Alberta, has been halted.
As well, other smaller firms in the region have found it difficult to get financing for major projects.
Stalled, delayed, cancelled Edmonton Area Bitumen Upgraders are a fact the is of concern. They won’t be pumping money and jobs into the local economy and therefore won’t be attracting new in-migration, (lower demand#.
On top of high supply from speculators and those wanting to capitalize on their home equity means #over supply#. At least the builders #as speculators)have stop building on spec and adding to supply.
So, then the question is, what are the predictions for WHEN the over supply is going to be sucked up? And then normal demand starts to move prices upward marginally?
I reccomend these links
http://www.myvirtualdisplay.com/2007/12/28/home-values-in-historical-perspective/
http://www.subprimeinsight.com/?p=28