Every once in a while I do an analysis of the different areas of Edmonton, to see where homes are selling and where they are taking a little more time.
The absorption rate is the number of listings currently on the market, divided by the number of sales in the past 30 days; it tells you how many months it will take to sell the current inventory if the rate of sales stays the same.
Below are the results:
The overall absorption rate is currently 8.4 months, which makes it easy to see which areas are above average and which areas are below.
The absorption rate is longer than last time I did an analysis (August) in all areas except one. That’s expected since we are late in the year. The one area that improved was the South East which includes neighbourhoods such as Avonmore, Bonnie Doon, Capilano, Forest Heights, Hazeldean, Holyrood, King Edward Park, Ritchie, Terrace Heights and others. This area had the fastest absorption in the whole city at 4.4 months which seems to be due mostly to a decrease in new listings (sales remained about the same).
Sherwood Park, St. Albert and Spruce Grove all did better than Edmonton, but Stony Plain continues to have the longest absorption rate of any area.
The second longest absorption rate is in the central area, likely due to the large number of new condos coming on the market.
The biggest change in rates was in the University area – this area tends to sell very well in the summer when people are looking for student housing and cools off at other times of the year.
The absorption rate for condos slowed more than for single homes, and just like last time, the higher the list price, the longer the absorption rate.
What do you think is going to happen in the higher end market. We did a search on realtor.ca in the greater edmonton area of home priced at 950k or greater. Over 250 houses our found for sale and about 50% of them were built in 2008 or 2007 and most of them are unoccupied. What is it going to take to clear this inventory? 3 Years ago you would be lucky to get 10 houses in this price range in the edmonton area listed at any one time.
I think the definition of “buyer’s market”, “balanced market” and “seller’s market” would be better off if it was based on some form of this absorption rate. Sara, do you know why sales-to-new listings is used instead of sales-to-total listings? Even if sales-to-new listings is high, tt seems like common sense to me that you can’t call it a “seller’s market” when total inventory is high.
Doing an absorption rate analysis in historically the slowest month of the year is a bit simplistic, we will sell around 20k homes on mls this year, at that rate we have around 5 months of inventory.
August is seasonally one of the busier month, so you take the total no of sales in the busy 30 days of the year and divide the inventory by it and then you take the slowest period of the year and divide reduced inventory by that…I am not liking the validity of it. I would rather take an average 12 monthly sale and divide that by the total inventory, that would not be perfect but a better measure.
Hi Shawn,
From a post a few days ago:
“between April and July Alberta population grew by 25k people.”
Do you have an article for this? This report says otherwise (9.4k).
http://www.finance.alberta.ca/aboutalberta/population_reports/2008_2ndquarter.pdf
buff butler
According to Statistics Canada; The strongest year-over-year earnings growth among the provinces was reported in Alberta (+5.9%), New Brunswick (+4.3%), and Saskatchewan (+4.1%).
http://www.statcan.gc.ca/daily-quotidien/081128/dq081128c-eng.htm
Hi Buff,
I will try to locate the information for the quarter for you, but here is the annual info.
http://www.statcan.gc.ca/pub/91-215-x/2008000/5200828-eng.htm
Buff,
Here is the Alberta population no, the info is on page 18.
http://www.statcan.gc.ca/pub/91-002-x/91-002-x2008002-eng.pdf