Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:
New listings: 446 (390, 380, 94)
# Sales: 145 (111, 82, 37)
Ratio: 33% (28%, 22%, 39%)
# Price changes: 274 (242, 156, 94)
# Expired Listings: 197 (215, 171,851)
# Canceled/withdrawn/terminated listings: 23 (21, 11, 13)
Net loss/gain in listings this week: 81 (43, 116, -807)
Active listings for single family homes: 2419 (2350, 2347, 2258)
Active listings for condos: 1777 (1688, 1625, 1554)
So far this month there have been 442 sales…compared to last January we may only have half as many sales by the end of the month. The overall average sale price sits at $313k (up from $310 in December), single family homes are at $346k (down from $350k) and condos are at $230k (about the same as December).
We had a question/comment this week from "Jason":
eagerly waiting your response sheldon – will housing prices take a significant hit? or has the market stabilized at this level would you say?
So Sheldon wrote up a thorough response:
What is “significant”? To some people any amount is significant and to some it's a whole other amount. It definitely depends on your perspective. Your questions made me realize I haven’t really proffered any predictions for this year yet. Over a year ago I had a conversation with Bear claw (who runs a very good blog) Alberta Market Watch and we exchanged opinions. Frankly predictions are funny because as soon as they’re made they are wrong:
- I think the average price will come down in part due to lower sales in the higher end properties of 1,000,000 plus.
- I think we’ll see price compression in the 300 – 350 range for single family homes. Due to lowering supply in that category, this will also help the builders gain some footing on starts in the second half of the year as buyers look for more options.
- Certain areas and types of product will have steeper declines, and some areas will remain relatively flat, to the point where I could even see slight improvements in pricing, in some areas and types of housing.
- Employment will be a major factor. We know there will be job losses in the economy. How many will make a significant difference in property values. If overall employment remains stable then price declines will be more or less related to supply and demand.
- Pent up demand. If there is improvement in the economy in the second and third quarters, or the economy shows signs of stability and improvement, I think you’ll see the people who are just waiting for a signal that things have stabilized or are improving, pull the trigger. This could possibly increase prices albeit, in the short term, even with higher inventory. There are a lot of buyers we are working with that are just waiting for those signals.
- Credit. It is really tough to determine how much, from a quantitative point of view, the credit restrictions have lowered demand. In other words, how many buyers that could have bought 4 months ago can’t now due to change in credit restrictions? (I don’t mean the 0 down or 40 year amortization crowd either).
- Obama factor. Although 1 person can’t really make a difference, one person can really make a difference. If he just became the captain of the titanic after hitting the ice berg and the previous captain took the life raft to Texas, then only time and market forces will fix things. The US has a hard road ahead and the past few months have shown the world how dependant on them the world economies are.
- Fundamentals. The fundamentals are better here then down south. Very interesting BMO report out recently (thanks to Tony Baumgautner with the bank of Montreal forwarding that to us).
So my prediction is that what goes up, goes down, goes back up and then to it will go down and in the end it goes on. Have a great weekend!
Regarding house price predictions see the following websites:
http://www.canadian-housing-price-charts.235.ca/
http://www.greaterfool.ca/
Edmonton is disgustingly overvalued and has long ways to drop. I would wait at least 1 more year before even considering buying a house. Fully $200-billion in planned development projects have been deferred, delayed or cancelled in the past six months. Edmonton has great employment right now due to oil sands projects being worked on from the booming period, however, have a good read at this article about what the future holds for Alberta:
http://www.theglobeandmail.com/servlet/story/RTGAM.20090122.wroilsands23/BNStory/energy/home
“Right now there are a lot of projects still on the go, but the big question is what happens after those projects are complete, and at this point there is absolutely nothing on the horizon to replace what’s currently under construction,” said Gil McGowan, president of the Alberta Federation of Labour.
“We’re currently in what I would describe as the afterglow of the boom. The boom itself is over, but the day of reckoning hasn’t arrived yet.”
Once the unemployment creeps up and wave of foreclosures start coming in, it will only be the beginning. Edmonton will be a ghost town once again..
“Edmonton will be a ghost town once again”
Chicken Little!!! People should quit predicting that the sky is falling and that in 1 year or so, it will be possible to buy a house for cheaper than 75 years ago.
I don’t mind prices falling, but I can’t stand the shitty propaganda that comes from everywhere and from Schmoes that pretend to be experts…
I am happy to see that I now make more money with my degree than most of rig workers with no HS diplomas. They are the ones who will take the biggest hit when they have to go back to a normal lifestyle for a while!
Congratulations on your degree Carllecat. Like a degree is hard to get. I know many people who have basically slept through degrees. On the other hand, some of the smartest, hardest working people I know wear a hard hat to work and have no degrees. You think the world owes you something because you read books for a few years? Typical arrogant student. Try working in -20 degrees, and then ask yourself if construction/oil workers don’t deserve a good wage. I am in med school at the University of Alberta and I marvel at the men and women I see out there on 111th busting their buts in the freezing cold every morning. I think the challenges ahead will be just as tough on those with degrees as they will be on the “uneducated” riggers. Your sense of entitlement will only make the challenges that come your way harder to swallow. My advice is to lose it now. We are all in this together.
Sheldon and Sara,
Thanks again for this blog. I certainly see this as one of the more trustworthy sources of information on the housing situation in the Edmonton area.
This week, Suncor Voyageur related EPC companies shed around 500 hihgly paid professional jobs….may God be merciful…
Forget about Real Estate for the next year or two… buy Gold and Silver!
Do not get me wrong here, I think my statement was unclear. Things are going back to normal. I invested a lot of money in my education and this brought me security… the kind of security that will get me through rough times like now and the kind of security that hard hat workers do not necessarily have!
I did not say these people do not work hard, I have lots of friends who also wear a hard hat to work and they get my respect. I do not think the world owes me something, but I think the money I put in my education is turning out to be a good investment now (my money invested was the one owing me something)… why should I be ashamed of that now?
We are not in this all together my friend, some people are and will always be stronger than others, rig workers or well educated mind like you!
Cheers!
Also, getting a post-secondary education is a decision that everyone has to make. Some people decided to and some other decided not to.
I decided to get a university degree when my dad lost his job in a factory after 25 years of loyal service to the company… and the only other he could find @ 50 years old was a janitor in a school. My dad is a real smart guy and a great leader, but the only pieve missing to back him up is that piece of paper called a diploma.
You know what? I have respect for these folks working in -20 degrees, but I am proud of the fact that I obtained a degree with no financial help from my folks, having to work low paid jobs to cover my very basic expenses and sacrificed a lot (no Mexico, no big car, no snowboard, no trip back home for 3 years). If you call this arrogance, I am ok with it! However, I would prefer to describe my situation as someone with a vision, a vision that was awakened by my dad’s situation. I wanted a good job with security and this is what I got mainly because of my Bachelor degree.
Carllecat,
Thanks for your replies. You sound like you have taken your studies seriously and have chosen an education that has brought some security with it. I did a BA before figuring out I wanted to be a doctor. It was during my 4th year of that degree that a well meaning Harvard trained professor took me aside and told me that if I wanted a job in the future I should change my stream. What? My degree wouldn’t ensure me a job? There are a lot of students who see university as a wise place to be but, unless they pursue the right education, it won’t lead them to any more security than a HS diploma. In fact, they will be older and in more debt when they hit the factory. We have been conditioned to believe that a “higher” education in fact makes us higher. I have met so many students over the years who have never been in the real world and expect to be embraced and successful when their time with the books is over. I have owned my own business (carpenter) and built probably 50 houses for different homebuilders and private individuals over the last 5 years. Through my experiences I have met a lot of “uneducated” people whose wealth of knowledge and real world experience has made them very successful. They hire people with degrees to manage things for them so they can enjoy their life outside of work. You should read Kiyosaki’s Rich Dad Poor Dad some time. He had two fathers, one was his poor but very well educated father (PhD), and the other was his rich dad (self educated).
Anyway, sorry about the long read, I just have unconventional views about education and security. As far as us all being in this together, I do fully expect to feel the pains of the economic crunch even as a doctor. With the provincial government running a health care deficit of around 1.3 billion there will have to be cutbacks. Whether it is to my future earnings or to the quality of care and support my patients receive from other health care providers, I will feel it directly. I am interested to know what line of work will insulate you from this downturn. I stand by my claim that we are all in this together. In one way or another downturns of this scale effect everyone. Do you have any family members that may need your assistance?
ps. There is no more of an “I have an education” way of closing a dialogue than to use the word “cheers.” It is particularly commonplace in the Universities in England. I picked it up from a professor who read (as they say in the old country) for her PhD at Kings College London.
pps. Sheldon, I appreciate your honest prediction for Avg prices for this year. I own an average house here in the city, and I fully expect the average to drop to at least 300K this year. Your range is certainly more realistic than the new president of the CREB.
“You should read Kiyosaki’s Rich Dad Poor Dad some time”
Spence, I am glad you mentionned about this book. This book is a reference to me. The education I got is the foundation on what I will build based of the ideology of that book. I have a good job and make good money and as part of my benefits, I can take as many classes as I want at the University of Alberta for free.
That being said, I like to take classes to learn more about everything and this is the reason why I enjoy my job so much; my foundation is always getting stronger and once it is strong enough, I will fully enjoy and achieve my goal… but you are right, a lot of people with no undergrad have a lot of experience and face the reality every day.
My father as an idol, I know how financially poor he is, but how spiritually, intelectually and emotionnaly rich he is and this is something priceless that education cannot buy.
I am sorry for the shock I caused with my first post, I fully understand your point of view. I like to hear and share my thoughts with other people and then debate.
Salud!
charged rhetoric. I thought you might have something useful to offer. My guess is you’ll never buy. Because if things are down in a year they won’t be down low enough and if they do improve we already know your perspective that prices are already too high.
Carmine, Thanks for your concern about putting up with nasty comments. Unfortunately republishing the nasty comments on our blog doesn’t make us feel much better about it so I took it down. I hope that I didn’t upset you. Thanks, Sara.
Carllecat,
Thanks a lot for the discussion. I wish you nothing but the best. It sounds like we have similar backgrounds.
I must say that I have been really impressed with the quality of the people up here in Edmonton since I moved here for school. It will be nice when home prices come back into realistic ranges for first time home buyers. I happen to know a couple hundred or so people who will be looking in the next few years. I will definitely pass along Sheldon and Sara’s names if anyone inquires. It takes some guts to post less than flattering statistics on a site such as this. I respect that and I appreciate the resource.
Hey Spence and Carlletcat, why don’t you two get a room.
^touche
This is all very interesting discussion. I bought a home in April (pre-sale) and I knew that the price of that home would be down to $315k, but I bought anyways because I hated renting the apartment I was in in Castledowns. Needless to say, when I bought, I looked like a genius as I negotiated $25k off the builders price to the public at the time (which was at that time a further $25k from the peak).
Needless to say, in November when I received my supplementary tax assessment, guess what my house was appraised at $315k!
Talk about predicting the future.
I have gone through a few stages this past month regarding the value of my home.
1)Denial – Not beleiving this market turmoil would affect the sale of my house
2)Anger – Angry at myself and the salesperson who sold me my house
3)Rationalization – Telling myself real estate prices go up in the long term and if worse comes to worse I can always rent it out and have tenants pay most of my mortgage. Also I have a very low interest rate right now, one that is unheard of my most mortgate brokers and not offered anymore so essentially I am saving money
4) Regret – Thinking I could have used my downpayment to have bought a bigger home one year for now for probably less money that what I paid for my starter home
5) Acceptance – oh well, people loose money all the time, look at the stock market, people lost up to 50% of their portfolio value in one day.
It’s been a tough road I tell yah, but I have learned some valuable lessons out of this whole ‘real estate bubble / market fiasco’.
Be patient, be thorough in what you want, have an exit strategy for your house before you buy (what you want to sell it at, and how much equity do you want to have in the house at the time of the sale).
And most importantly study the market!
Asset Column – well said. I often laugh at some of the ‘way out’ comments made on this and other forums.
when we are talking about prices of homes decreasing – how much are we talking?? in percent?
Another good site…
Edmonton Housing Bust
Just for comparison another bubble city …
SFH\’s in Phoenix for $130,000 and less
@Brent
You should see how cheap houses are in Indonesia!
Yes I know, we should be so priviledged to only have to pay triple the amount to live in such a highly desirable place as Edmonton.
Average family income is about 20% higher than Phoenix.
Compare Edmonton to Denver, Portland, Salt Lake City or Austin and it doesn’t seem like there is quite as much of a price difference. It will take one hell of a depression to knock prices down to a $100k average.
Looks like the rate of listings in increasing as well as sales. However, if that ratio stays at 1/3 or lower, inventory will likely balloon again this spring.
I think we have the potential to set new inventory records again this year.
However, I do wonder where the buyers will come from now that those upgraders and other projects are delyaed…
I remember those Redwater listings on edmonton kijiji for “live right near upgrader alley!” … those specs are probably changing underwear these days.
Another year of observation from afar, and another falling piano dodged.
Can anyone tell me which builders one can get a good deal with these days? i.e., negotiate a good price with? also, are any builders building in more central areas e.g., not as far out as rutherford, ambleside, etc??
thanks in advance!
Hey Brent
Here is a mansion right on the outskirts of Flint MI. Cheap only $499,000.
http://www.cyberhomes.com/homes-flint-mi-48503/3340parksidedr/47841744.aspx
Yours Truly
Micheal Moore
Home of GMC
car 27 Thanks for contributing. Feel free to go back to bullying teenagers on facebook now.
Brent good to see you here again. Why do you hate Edmonton so much?
Michael Moore, thanks for the pictures of the flint house. I think my home could fit in the entrance. Looking forward to your next film.
Brent,
Those houses in Phoenix are in very bad neighbourhoods ( only 5 shootings so far this morning ) and repossessed by the banks.
Not your typical homes, ahh?
please remove my email address on my last comment, i entered it in error.
thanks
Hi Laura,
Thanks for continuing to read. Unfortunately this commenting software leaves a bit to be desired and we can no longer edit comments, only delete them. So…here is what Laura said earlier without her email address:
Laura said…
Well it’s been awhile since I blogged but I still check in monthlyish.
I only read Sheldons and Saras post now, not the comments anymore. It all got so silly.
I am stuck with a property I can’t sell. Oh stop smiling! We can wait it out, so for that i guess I am fortunate.
I enjoyed your post today (Sheldon), I have to agree with you on all points. Bet that shocks you……
Although we do not often agree, your weekly/monthly stats are the best available. Thanks for still sharing this info after all this time.
PS…..do regular readers get a commission discount?
Laura,
First off, we don’t take pleasure in anyone’s misfortune. Second, our fees are negotiable, but here is something for you to think about – how much money have you lost by focusing on what the commission will cost you, instead of focusing on what will actually get your property sold? Had you hired us way back when you started trying to sell that property, your sale price would have been far greater compared to today than what you would’ve paid in commission, and you could have been among the 90% of our listings that sold last year. We do wish you the best of luck.
Nate:
Yes! And even the most stubborn of all perma-bears should not cheerlead such a thing! Despite being a bit of a perma-bear myself, I would never hope for the kind of collapse bad enough to cause prices to go down to those levels. Those prices are from the mid-nineties BEFORE Edmonton went through what MOST sane people considered to be a needed correction to about the $160K mark for a SFH by the end of the nineties. But it didn’t stop there – we broke $200K and in 2005 – 2007 there was the crazy increase from $225K to over $425K at the peak. We’re down what? $75K to $350K?
Sure buyers want 2005 prices again. And sure sellers don’t want to see prices go down another cent. But down they will come if current job loss trends (and trickle down from scrapped upgrader construction) continue. How *far* down is a function of the amount of job loss here, the price of oil, and the depth and length of this recession (some say depression now).
Will we hit 2005 prices? $225K for an average SFH in E-town? It’s possible I guess. After seeing $425K come down to $350K BEFORE the REAL tarstruction layoffs even started, this trend could actually accelerate.
But as always, we have bulls cheerleading hyperinflation and trying to stir up fear of “even worse peak oil now” and bears praying for financial armageddon. Somewhere in the middle are working class families who just want to get by and maybe take the odd vacation. My prayers are with them frankly. The neo-con perma bulls and “chicken little sky is falling” bears will, of course, continue to fight it out!!
Interesting times, as they say.
Cheers,
E-town
It will take unemployment rates of 7% and above to knock prices down further, but I don’t think it will get that bad yet. I think there is a lot of people waiting for prices to fall so they can buy (I’m one of them) and when that happens, we will finally see prices moderate. For me, it’s just a waiting game with the outcome of this economy.
Jeremy:
I have been told (by other posters) that if someone does not stay here and file for unemployment, they are not counted in our unemployment rate figures. If this is true, if 200,000 left the province tomorrow and went to collect EI in BC, Ontario and the Maritimes, the unemployment numbers in THOSE provinces would get worse and ours would stay the same. You need to look at migration numbers and other factors as the unemployment rate alone is not a “tell all” metric with such a large percentage of the construction workforce being from somwhere else.
i’ve been reading E-town’s comments and i think he really hate Edmonton and is a prophet of doom!i wonder what does he do for a living aside from bashing Edmonton if you hate Edmonton and have nothing positive to say pack your things and get out of here
Smyth:
You got it all wrong man. I love Edmonton, or at least, Edmonton 6 years ago. And I’m not alone either. 70% of Albertans polled think they were better off before this boom, which only served to increase their cost of living. I know that oil-toilers want to believe that everyone else is a bitter socialist that should leave Alberta. Fact is, you need a diverse economy just to SUPPORT all of the oil-toilers and their needs. (Oil toilers don’t need food or roads or schools or hospitals – that’s just a bunch of sissy socialist stuff!) Fact is, our government has failied miserably at diversification and keeping up with infrastructure. You can thank old Klein for starting the infrastructure deficit that poor old Steady Eddy has no hope of ever catching up with – especially now that all that free royalty money from $147/barrel oil is gonzo.
What I do for a living? Engineering. So yes, I’m edumacated. Not directly tied to oil though – gotta be DIVERSE if you want to stay in Alberta ALL the time. Won’t sell my soul and move to Fort McMoney for the extra money – it’s not worth it. Many others have turned down the same deal I have Smyth. There are “costs” in life that go beyond dollars – just ask anyone who has moved back from the Fort Mac “life”.
Here are some keywords that describe why Edmonton is not as nice after this boom.
- Housing bubble and living cost explosion
- Accident rate double Canadian average
- Drunk driving at record levels
- A bustling drug trade and more drug abuse
- More murders
- More liquor stores, and more drinking
- More gas guzzling vehicles on the roads
- Environmental Holocaust: Boreal Forest
- People speeding and driving on 2 wheels
I could go on…
So no, I will not “move out of the way” and leave to make room for another out-of-province oil-toiler that just wants to come here for a quick buck and leave a big mess. I’m angry because I CARE. The happy ones are whistling dixie because they know they have a nice clean home province to go back to. I don’t. This *IS* my home. And I will stay here, and be mad here, and help clean up the mess when “y’all” leave here!
Sorry Smyth. You’re stuck with me buddy! Lot’s of people are soon to be leaving but I assure you I won’t be one of them. But thanks for coming out and speaking your mind. Always a pleasure.