When you look at the overall stats for the Edmonton MLS, 2008 doesn't look like such a bad year after all. The overall average sale price for residential real estate dropped 5.7% in 2008 from $329,705 on January 1 to $310,974 on December 31.
Total residential sales were down 15% in 2008 compared to 2007, and were similar to what we saw in 2004.The main difference in the last number of years (other than price) is the number of listings, demand has stayed relatively stable:
The increased competition has made it very difficult for many home owners to get their home sold. As you can see from the chart, normally around 70% of the listings will sell, whereas this year only 43% sold (keep in mind one home may be listed many times before it sells which can inflate the number of listings).
The end of month inventory dropped to 6316 homes, due largely to expired listings, which suggests the inventory will increase again quickly, as it did last year:
The number of new listings in December were fairly normal:
But the low sales still lead to a sales to new listings ratio of only 46%:
The absorption rate crept above the 10 month mark – absorption is the inventory divided by the number of sales, and it tells you how many months worth of supply is in the market if sales levels remain the same:
The average number of days on market went up to 65 days:
All in all the real story is sales, which we discussed hereon the blog the other day. The official number released by the board was 608 sales. As Mark Perras, President of the Realtors Association of Edmonton summed it up so well: "Buyers have lots of choice right now and seem willing to wait until their dream house reaches their dream price point.” Here is the full press release.
The job market wasn’t a factor in any of this until late in the fall. Now that the energy sector is hurting and demand for new workers is drying up, I can’t see how the situation could be anything but worse in 2009.
Happy New year to all.
5.7% doesn’t sound bad at all. If I recall from past updates the price per sq. foot was down significantly. So would this translate into a much greater drop in value? Doesn’t much matter I guess, add that to my RRSPs (losses) and I’m never retiring/moving up anyways
Take care.
You’re right about that Fred, and that is what makes averages dangerous. Most homes have lost more than 6% in value (a lot more in some cases), it’s that buyers are getting more for their money. So yes, the price/sq.ft. has dropped significantly also.
Geez.. Huge losses on my house, stocks… screw it, I’m moving out east and going on welfare. The war on the middle-class is getting ridiculus. Just when you think you’re ahead… I moved out here to make money, work hard, get ahead.. Instead I lost money while having to freeze, work my arse off, and be miserably. Lets all move out east and collect welfare! The gov / man won the battle against middle class, I surrender!
If demand has been relatively stable, where do all these new listing keep coming from that push the absorption rate ever higher, even as sales stay respectable? Relatively stable demand would suggest that net in-migration is helping the sales figures stay up, and suggest that people aren’t simply abandoning their homes and leaving Edmonton at a faster rate then they are arriving; new home construction is a fraction of what it was, so why hasn’t the excess inventory been eaten up faster? Instead, even with ok sales number inventory continue to be high?
Can anyone read the comments? Because I can’t.
Some quotes to consider during all this gloom and doom…
“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.” (Time, December 1, 1947)
“Houses cost too much for the mass market. Today’s average price is around $8,000-out of reach for two-thirds of all buyers.” (Science Digest, April 1948)
“If you have bought your house since the War…you have made your deal at the top of the market….The days when you couldn’t lose on a house purchase are no longer with us.” (House Beautiful, November, 1948)
“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000.” (Business Week, September 4, 1969)
“Be suspicious of the ‘common wisdom’ that tells you to ‘Buy now…because continuing inflation will force home prices and rents higher and higher.’” (NEA Journal, December 1970)
“The median price of a home today is approaching $50,000…Housing experts predict that in the future price rises won’t be that great.” (Nations Business, June 1977)
“The era of easy profits in real estate may be drawing to a close.” (Money, January 1981)
“In California…for example, it is not unusual to find families of average means buying $100,000 houses…I’m confident prices have passed their peak (John Wesley English and Gray Emerson Cardiff, The Coming Real Estate Crash, 1980)
“The golden-age of risk-free run-ups in home prices is gone.” (Money, March 1985)
“Financial Planners agree that houses will continue to be a poor investment.” (Kiplinger’s Personal Financial Magazine, November 1993).
“A home is where the bad investment is.” (San Francisco Examiner, November 17, 1996)
I think that in the long run housing prices in Alberta will pick up and increase gradually at a sustainable rate. Whoever bought a piece of real estate in 2007 thinking on selling for a profit in 2009 was mistaken…now…those who bought in 2007 or 2008 will se a good capital gain if they hold the property for 15 years and sell in 2025. Historically that’s what it has been happening over the last decades… Short-term real estate investors are usually speculators…speculators affect the market enormously.
Alberta will be okay as long as jobs are being created every year… unless of course, they figure out the way to efficiently run a car on water, or sun light, or wind and not OIL!!!