A number of readers have requested a chart showing the sale price per square foot of homes and condos in Edmonton that goes further back than the one I’ve been publishing.
You asked for it…. you get it:
It definitely puts things into better perspective than the previous chart which only went back to Jan ’07.
It took me a few hours to go back through the stats and put this together, and the good news is while I was at it I collected some other data we hadn’t been analyzing before. In other words… there is more to come. What would you like to see?
Thanks a lot Sara. This really helps to see where the boom started from.
Thanks Sara,
I’d like to see the price per sq ft break down per community. Might be alot of work though
Just curious what kind of premium the Garneau/University area has over the average.
Thanks for the effort to put this together, it is very informative.
What I would like to see is Starts, Inventory Levels and Sales put together over a number of years to compare both the Supply side and Demand side, over time. It may help to see how good developer start levels are as leading or lagging indicators of buyer demand and to inventory levels.
Well, you asked….
This is very interesting. We – some accountants, IT geek, and a realtor – were discussing this back to 2004. Although we didn’t specifically talk about the price per square feet we did use it in calculations, along with unenployment, oil prices, stock index values, bond and prime rates etc. Our calculations and use of numbers was very subjective!
We discussed and agreed that the current house values cannot be supported or sustained and that house prices in Calgary should drop about 100K accross the board and by about 75K in Edmonton within the next 12 – 18 months. Some in the group said we should be looking at 2003 pricing as realistic for now, and others – like myself lean more towards 2004-2005 average pricing.
Anyone looking to buy now would be better served waiting it out for the market to turn around. Even once the bottom is reached the market will not be 2006 all over again and we will see modest raises in value, and buyers will still be able to take their time and make a reasonable offer.
I stated months ago here that the bottom was going to fall out. I stand by my earlier predictions and add another 15 – 20% decrease in the average price and then a leveling / bottoming out the spring of 2010 before house values start to rise again.
Stroz,
Remax only projected a 2% decrease.
You must know more than them guys.
Or you are talking about some other town?
Edmonton is a boom town, not a bust town.
West of Winnipeg, no town is going to lose 20% of RE values.
Even places, where unemployment is upwards of 10% not experiencing 20% decrease in prices.
Edmonton is a “boom” town now a “bust” town? Wish that were true, maybe a better statement is Edmonton “was”…
Oil hit a 4 year low today, we’ve started laying off, just a matter of time…
All the best.
Sarah,
is there a chance you can analyze square foot price movement for high-end homes versus entry-level homes?
Stroz,
Remax only projected a 2% decrease.
LOL… Trusting Remax assesment should be the joke of the day.
“Edmonton is a boom town, not a bust town.”
Um – a boom town IS a bust town. They are not mutually exclusive like Karl would have everyone believe. But anyone with half the normal amount of insight can see that Karl is cherry picking stats to support “infinity and beyond” real estate prices, indicating he’s got a lot of his eggs in the realestate basket. Maybe a lot of investment properties recently acquired. Or maybe just a lot of HELOC/PLOC debt that he was hoping would be erased forever by housing price gains.
Fiscally responsible people call this sort of financial planning wishfull thinking.
Cheers,
E-town
I am a strong beleiver that Homebuilders are responsive to the re-sale market when it is a ‘buyers market’.
They cannot price a brand new home (spec or pre-sale) for more than $20,000 over what re-sale is asking, or else a propsective buyer will gladly buy that re-sale home. Ofcourse, I am assuming that this re-sale property is in the same neighbourhood (new development) similar square footage and not more than 5 years old.
I think the premium you can attach to a brand new home is up to $20,000. What are your thoughts Sheldon?
Right now, builders spec lines cannot compete with semi-new re-sale homes because these homes that are 2-5 years old were built for dirt cheap and sellers arguably have more room to come down in price without taking a ‘loss’. Builders on the other hand paid 2007 construction and lot prices on their spec homes, and are already blowing out their inventory for single digit margins.
Developers and builders had to put the breaks on construction in 2008 and I hope they do the same for 2009. Edmonton and Calgary needs to work its way through the excess inventory before we are going to see stabilization in prices. Alot of builders I have talked to have stopped building spec homes entirely and only will do pre-sales.
Lot prices will come down, so will construction prices as labour and materials will get cheaper.
How much can they come down? Thats a tough call.
I bought a pre-sale home in April that was priced $100,000 lower than what an identical spec model sold for a year before. And this is a starter home I am talking about!
It would be helpful to have the size by square foot statistics for the average sfd unit sold you used for your calculations. This would assist in evaluating the P/SF numbers. In short, are a lot of very low priced houses being sold, or are people buying the same size or larger houses at lower average prices. In short, we could envision a situation where reported average prices are constant, but houses sold are larger and real prices are falling. Alternatively, we could have a disproportionate number of plow-unders being sold and that is primarily driving the fall in the P/SQ. I ask for your numbers, since I can only assume you are using the reported MLS numbers for the narrow Edmonton market definition and you have those numbers in hand.
Builders fully understand how to lure buyers when the resale market becomes more competative. Many often utilize smart marketing techniques to draw in customers such as offering rebates, upgrades, throwing in vacations or small cars, etc. This is how they operated when the market was more balanced (pre-2004/5).
RE: PSF’s
One has to remember that the psf costs are based on a variety of factors. The primary ones include location, neighbourhood, quality of exteriors, interiors and fixtures, and housing type. The prices aren’t necessarily related to the size of certain homes.
“Edmonton is a “boom” town now a “bust” town? Wish that were true, maybe a better statement is Edmonton “was”…
Oil hit a 4 year low today, we’ve started laying off, just a matter of time…
All the best.”
Yes, things have slowed and rightfully so. Every real estate market in this country has, although not as significant in Saskatchewan (thus far). But for every boom comes a bust. It all depends on how severe of a bust. With respect to Canada, we are in a very, and I mean very, good position compared to the majority of the other industrialized nations. I am quite optimistic and am very cautious on how the media portrays the situation. Be wary of their ‘psychological’ tactics: read between the lines.
Psychological tactics CMD?
Talking about the Alberta Advantage (over the rest of Canada) the way things have continued to go as of late is like bragging about being on the highest deck in the Titanic.
Whatever makes you feel better I guess. That’s what psychology is all about.
Cheers,
E-town
Thank you for the feedback. I would like to beleive Canada is in a better possition myself. But each time we say Canada is in a better possition in regards to something it seems shortly after we get hit up side the head. A few items such as, the credit crunch will not affect Canada, Canada will not go into a recession, etc. etc. etc.
We appear to be just a little behind the curve as compared to being protected.
We’ll see.
thanks for info.
We are one of those who will relocate to Edmonton soon (and at least one of us has a secured job) and so your blog is helpful for us to see the housing picture. As for what statistics to add – it would be very interesting to look on new units prices (builder prices, not re-sale) over years, if you have it.
Thanks!
Palins Maverick: If you check out builders current pricing it is actually lower then most resale pricing. Wife and I looked at several houses in Riverside (which were all 1800-2000 sq. feet. with a double attached garage, same sized lot). The resale was anywhere from 20K-70K higher then the new house. Interestingly we looked at the same house in January when it was listed for $481,000, today’s price: $379,900. Don’t know if this is true of every neighborhood but in the south end seems to be (Can buy a new home in Summerside for 279K, cheaper then any resale property). These new homes are already built but never lived in and I’d imagine are offered at a discount to help the builders build liquidity (or cash out).
***This sounds like builder propaganda…Actually I’m pretty certain it is…However he is correct builders are doing some properties as loss leaders. As for being below every resale property that is a bit more than a mere puff. However buyers should shop carefully between both markets to find what you are looking for. Hopefully with things slower the builders quality control will improve.
Sheldon
“…However buyers should shop carefully between both markets to find what you are looking for. Hopefully with things slower the builders quality control will improve.
Sheldon”
Absolutely. The quality of the homes built during the boom 2006-07 are not that great (note: not all are bad). Back then one could sell anything with a window and door. I caution buyers to be wary of this in addition to knowing the history of the builder.
@Etown – my point about the media and their psychological tactics is simple…be cautious of the language employed and how certain ‘facts’ are represented.
|***This sounds like builder propaganda…Actually I’m pretty certain it is…However he is correct builders are doing some properties as loss leaders. As for being below every resale property that is a bit more than a mere puff.”
I don’t propogate for builders and was unaware these were possibly loss leaders. My personal theory on the pricing where we specifically looked relates to the fact the neighborhood is very new, so I’d speculate most or the “resale” homes were originally purchased by “investors” who are now trying to recoup losses, where the builders overhead is lower. Having looked at several homes backs up this theory as the resale ones had clearly never been lived in.
So where I specifically looked this home was indeed cheaper then every listed resale property…if I looked in terwilligar (a few blocks away) I would indeed find more balanced pricing between resale and new (and the resale really are resale…as in they have been lived in).
I also think there are a couple of specific buiders who have had large price adjustments as I’ll further note that there were other newly built homes selling for more then the other developers and resale.