Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:
New listings: 405 (432, 506, 382)
# Sales: 188 (197, 185, 167)
Ratio: 46% (46%, 37%, 44%)
# Price changes: 224 (216, 252, 233)
# Expired Listings: 131 (91, 388, 106)
# Canceled/withdrawn/terminated listings: 26 (30, 29, 19)
Net loss/gain in listings this week: 60 (114, -96, 90)
Active listings for single family homes: 2500 (2498, 2412, 2472)
Active listings for condos: 1915 (1851, 1805, 1830)
This week looked a lot like last week. There have been 748 sales so far this month which should put us around 1100 by the end of the month. The overall average residential sale price is sitting at $308k, up from last week but down from the end of last month ($317k). The average sale price of single family homes is $346k, also up from last week but down from the end of last month ($352k). And condos are selling for $226k on average, the same as last week but down from the end of last month ($239k).
Have a safe and happy weekend!
You hit the nail on the head, Cam. The Alberta boom is over. Might as well give up on everything and let the bank foreclose on the house.
188 sales in just one week sounds like Edmonton has good number of buyers out there. I wonder what it’d be like in Spring time.
What is wrong with a return to more affordable housing?
Call me strange but I would rather sell my condo for 200k and buy a house for 350k then sell my condo for 300k and buy a house for 500k.
But then I purchased a home and not an investment.
Well said Ryan,
If you are already in the market, it is all relative. It’s just tough if you bought in the last two years and now owe more than your house is worth. I agree with you though. Sales will go up as the prices tank and stability will return. I am troubled by all of the new condos I see that are nearing completion though. Having a spec condo was the “in” thing for the last few years. Now the condo market is going to pay for it.
My home would probably sell for around $300K now. It peaked at around $380. I don’t see it stopping until it hits around $180-200K. That’s what it was worth in ’02.
Remember people, “you are not richer than you think.” Buy to meet your needs, not to meet your ego.
You should see out in Sherwood Park on Sherwood Drive the 4 story condo complex’s that were slapped up in the last two years.
Great view of refinery row too!
Visited some showhomes today. Much busier than they’ve been over the last few months.
Sales associates were useless though. I asked about prices dropping and was told that they were basically set in stone, when I pointed out that their showhomes were $80,000 cheaper over last spring the response I received was “don’t believe the recession stuff you hear from the media, only MLS used homes are going to drop in price”. Over at Jayman they even claimed that they were going to start building more spec homes….
Hard to tell if some people are being ignorant or just naive.
So does anybody care, or look at how Edmonton relates house for house to other cities? not jsut averages… Middle class homes here are cheaper than in Sasksatoon, Regina, and getting close to Winnipeg. Seems Edmonton and calgary just added 100k to all homes over late 2005 pricing, but other cities went up more on a percentage base across all levels. Could this mean the lower end here will plummit more than the middle? Seems the lower end condos and starter homes are more here than elswhere, not much of a gap between housing level price points here as opposed to elsewhere. Sara? Any comments? Seems there used to be more of a “spread” between housing levels.
Jayman put a tender notice in the Journal today for 50 spec homes.
Single family trades are less expensive now. Jay Westman is no dummy.
It’s a great time to renovate/build/buy existing.
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
Warren Buffett
Still the Edmonton housing prices are still in a downward trend. I will be monitoring the trend till I see a reversal because I would rather miss out on the first 20% of the move back up than trying to guess the bottom. The Warren Buffett quote is true but Peter Lynch said it best: “Never try and catch a falling knife” which is what this market is. The prudent investor waits till things are in his favor.
Nate,
Just like the bank of canada prediction being much rosier than private sector economists, these profesionals make statements meant to stimulate. I am positive that even the mighty Jayman would be willing to negotiate a strong deal with a safe buyer.
Well said Michael. I would rather miss the bottom than to realise that I have lost money in the first few weeks of buying a house. It’s a hard guess. Nobody could have guessed $35 oil a few months ago. The more I wait, the more I am convinced that it is the right decision. Who says sfh avg cant return to 200K in the next couple of years…
Oh Jeff, I wouldn’t call Jayman mighty anymore. Haven’t they gone bankrupt yet?
No one will argue that Buffet is not a genius who has done fabulous by any measure. But there does not seem to be anyone or anything immune this time around or any sayings that holds true (see how his company stock has held up – below).
Just got back from a Cruise (late last night). Many many Americans and many Canadians excaping the winter.
Tell you one thing, not one American that I talked with had not seen their area beaten, did not think the stimulus was a waste and being spend wrongly, and was not scared to death about what was still to come. Kinda funny when I mentioned where I was from saying the heart of the oil sands, not one knew or heard of the oil sands…
Great to be home.
Sat one lunch with a wonderful family from Arizona, the mother was very old and had lived in the time of the first depression. She said back then when times got tough during the recession people helped each other, she said this time around she thinks people will kill each other.
Berkshire Hathaway shares hit 5-year low
The Associated PressPublished: February 20, 2009
OMAHA, Nebraska: Shares of billionaire Warren Buffett’s Berkshire Hathaway have fallen to their lowest level in more than five years.
Berkshire’s Class A shares are still the most-expensive U.S. stock, but they’ve lost more than half their value since setting a new high in December 2007.
I would love to keep waiting because I have a feeling prices could potentially drop another 10% in Alberta. It all depends on what oil is at and for how long it will be there before it starts climbing. Oil can only climb once consumption starts to go back up and reserves are used. For consumption to increase we have to pull out of this recession world wide. Most believe that we will start to pull out sometime in 2010. I believe that this is when oil consumption will start picking up and so will oil prices. Canada will lag the US by up to six months. I only say this because our economy is based more on exports and commodities.
Can you imagine what will have to the houses that were bought by the well paid professionals. I’m talking about the thousands of engineers, CETs, and others that have been laid off by Bantrell, Jacobs, SNC, and the rest (I am an engineer and have dug around to see exactly how bad the layoffs were). They were making close to 100G or more. Now if you follow the trend not many people saved because they believed we were invincible.
I am in the market for a house and my wife is putting some pressure on me to buy. We made an offer on a house this weekend for 275,000, built in 2003 for around 200,000. They originally listed at 360000 at the end of July and have dropped their price to 299,900. I have a friend who is an an agent and I regularly get him to show me prices and histories on MLX. Believe me when I say prices have come down and continue to go down.
My peeve with the real estate board is how they choose their comparisons to suit their needs. What I mean is sometimes they use month to month and other times they use year over year. When you use year over year you get the real picture. Month over month shows you the typical seasonal changes. There should be a number that shows the average price change for a SFH from original listing price. I bet you will see a fairly large number.
I need input from an honest realtor and not someone trying to pad their wallet. I wish you guys would stop propping up the market and let it crash naturally. Stop feeding the uneducated buyers information so that they will buy and prop up the market prices. The sooner you let the free market do its thing the faster we can all go out and purchase a house for a fair non inflated value. You are only prolonging the in-evitable.
Your honest input would be appreciated. please point out the flaws in my statements and lastly don’t delete my post because it goes against everything that the real estate market would like us to believe.
Ralph and Ryan,
$200 something thousend would not even cover the cost of building material, let alone the lot, you build those houses on and the labour.
So my prediction is this:
By the time we will have houses in Edmonton in the $180-200,000 range again -which will not be ever again- by than we will have:
$60/ month heating bill,
$50 water bill,
$400/ month grocery bill,
$650/year vehicle insurance,
$.49 gasoline prices,
$.89 loaf of bread and on average
$ 55,000/year family income,
if you do not believe any of these, I just listed, I do not belive your prediction of $200,000 house prices.
I mean, it can not be only one thing going down ( RE prices ) and everything else remain the same, can it be?
That’s not how it happened in the past.
Karl, although I agree with your sentiments, I need to point something out. During our last real estate bust (1982), the market value of residential real estate dropped significantly below the replacement cost. Rental properties did not recover to close to replacement cost for over twenty years. I’m not saying it will happen this time, just saying that it happened before.
I did say 10% is quite possible. Real estate prices usually appreciate at maybe 5% a year. Right now the prices as still higher than the 5% increase year over year. The market is due for a correction to where it should be.
Also materials and labor cost change with supply and demand. You need to remember due to the housing slow down world wide material prices will drop and so will the readily available labor.
I think those that over leveredged themselves should pay for their mistakes.
One more thing, I believe those that bought their houses 2005 and before can afford to drop their price and still be able to recover the interest they put into their mortgage and then some. I feel sorry for those who got caught up in it all and took out the equity in their house.
Anyways I take everything I hear with a grain of salt and find the middle point. I suggest reading the Alberta bubble blog on blog spot and a couple of other blogs. They definitely point out the flaws in this optimistic market out look.
I do not believe the real estate agents.They are trying to keep their lively hood going and protecting their industry. Inventory is going up, sales are dropping as compared to last year and it is a matter of time before foreclosure start becoming prominent. I think Alberta will go back tot he way it was just before the boom exploded. Steady growth is better than unsustainable rapid growth.
I wish the real estate agents on here would chime in and give me their argument. Have you realized that the Canadian real estate board and revise their outlook once already.
We have a buffer of ongoing construction right now but once that starts to finish off where will all the people work?
Karl, your logic seems flawed. Certainly products of all kinds drop below replacement costs when there is an excess of inventory. We have an excess of housing inventory that was built on inflated materials and labour (I framed a number of 1000 sq ft shoeboxes for over $10,000 each….that was the going rate and it was ridiculous).
Don’t expect a bread making orgy that drives the price of bread back down to $0.89, but it has happened with houses and we are going back. The commercial blood letting is going to be just as bad.
I think you could be right on with the $55,000/family though. I have an engineer friend that would be happy with that right now.
If you are confident that everything will turn around Karl, then you should definitely pick up some investment properties. Interest rates are low and there are some real opportunities out there…..LOL!
The finance channel BNN (for me its channel 504 Bell Sat.) is doing a entire week of Canadian Real Estate trends etc. starting today during “After the Bell” I beleive, it happens right after the close of the markets.
Today they had an analyst on that had his charts and trends etc. and was “predicting” the bottoms of some of the major cities in Edmonont.
His “prediction” for Edmonton was that housing would bottom out with an average home price just over $200,000 and Calgary would be around $250,000.
Sorry I don’t know his name, sure info on it could be googled. Was today at approx. 2:15 PM (had the day off, so caught it).
Of the cities to be hardest hit, Vancouver, Edmonton and Calgary were his top choices.
Take care.
If you would like Sheldon and Sara’s opinion on the market, maybe you could try reading some of the many posts on this blog that clearly explain their position and thoughts on the market.
You see, blogs generally work as a means of communicating your thoughts and feelings to a large audience all at one time, saving the need to correspond on an individual basis with each and every person that thinks they are important enough to be addressed individually. This allows people to cascade their message and continue to make a living. Neato, huh?
And while I agree that agents are generally pretty protective of the market view, you will be hard pressed to find agents that are as open and honest about the market as Sheldon and Sara. They are positive on the long term outlook, help people to define their context (this is a good market to buy in for some people and not so much for others), but they do not have the blinders on screaming “Everything is great!”. They are Realtors and one should expect a Realtor’s view when reading their blog.
And why is it that Bubble Blog readers always feel that they deserve the blogger’s undivided attention? Talk about an heir of over-inflated self importance.
“I feel sorry for those who got caught up in it all and took out the equity in their house.”
I really do not.
Cheers,
E-town
Karl is grouchy like any hyper-inflationist would be these days. The rolling of leverage on top of more leverage is yesterday’s game. Cash is not crap anymore. Karl is mad that people with McJobs can’t get a 0/40 with a $50K income and a 560 beacon score to enter into bidding wars on run down bungalows and keep him in Beamers and Harry Rosen pants anymore. Karl’s agenda is as clear as the clear blue sky and it’s obvious he misses the easy money made on the backs of yesterdays greaterfools. Of course realtors like Karl who were shooting fish in a barrel during the speculator feeding frenzy in 06 and 07 are having a hard time adjusting to today’s “NEW new” economic reality. Just rewards and humble pie taste that way for good reason. They said it was the “new economic reality” back in 2006. Remember? We’re out of land here in Alberta Island. Peak oil. Chindia oil demand theory. $250/barrel oil from now until the end of time. No more busts. It’s different this time. To infinity and beyond! Flip another flip and flip some more flips! Only fools work for a living! Live the REIN dream and just flip flippity flip yourself into endless wealth! And this madness was believed to be sustainable? Ah, how greed can blind.
Is it not interesting that it was okay for people pushing houses at the peak to predict a further $200K increase from the $400K peak, retorting with twisted faces, sneers and jeers toward any and all naysayers? Yet when the prediction is the same $200K in the other direction they’re all bent out of shape about it? Well of course they are. Deflation of speculation bubbles is the bane of every hyper-inflationist in existence, who dreams of the last great “Hyperinflation Jihad” to end the world economy as we know it, leaving them and a handful of their ilk to be kings while 99% of all people become enslaved working poor, starving at their feet. The stuff I scrape off the bottom of my shoes has more intrinsic value than people who think this way.
The fact uber-capitalist hyper-inflationists with their sick little fantasies about the return of surfdom are grumpy right now warms my heart.
Cheers,
E-town
I read all the blogs and I try to eliminate the most negative and the most positive.
I wish that Sarah or Sheldon, would quote some of the negative prediction of the market from established authors or economists and say why they dispute it.
I just wish there was no smoke and mirrors from both sides. The sooner the people know what is going on, the faster we can get back to normalcy.
Don’t use the boards stats we all know that the analysis is biased. Find something more neutral to prove a point.
How can one not be negative when you hear about all the layoffs and how many organizations might collapse or file for bankruptcy. How can a consumer feel safe to spend on such a big item like a house? Do you know for certain that you wont be one of the 50 people that are to be laid off every month.
Your arguments are interesting E-town, but also somewhat flawed. I agree that the run up in housing prices was too much in too short of time, however, if you think that oil prices will stay at $40/bbl and that China & India won’t be driving the world economy for the next 100+ years – you’re grossly misinformed.
The emerging middle class in China who have spent generations saving their wealth have such a thirst for luxury items, consumables & a higher standard of living that ALL commodities are in the midst of a bull market – including oil. China surpasses the U.S. in auto sales and the $1 Trillion U.S. dollars the Chinese are holding are slowly & quietly being used to purchase companies that can sate their thirst for raw materials.
What you’re seeing is a hard pullback in that commodities market, however, it is still alive and well. It isn’t a matter of “if”, but rather when oil starts heading North and once it does, the projects that are currently shelved will be back into play at a lower price. Housing prices have come back to more reasonable levels and may fall more, but will eventually stablilize & probably start to gain once oil prices recover to $60/bbl or more.
I do agree with your observation that people think there are “new economics”. They thought so during the dot com bubble, during the protracted housing bubble in the U.S. and the 60 year credit bubble worldwide. The laws of economics are completely inflexible and will never change.
What has changed though is what you’re currently witnessing, but most people are compeltely unaware of – the end of the U.S. as a financial superpower. China & India are the new emerging financial superpowers and their thirst for raw materials will make Western Canada boom. Alberta is one of the best places in the world to be during such uncertain times and while the truth is clouded by mass media, the self serving interests of politicians, bureaucrats and bankers the truth of the matter is you will NEVER see the U.S. the way it once was.
While you might be concerned that 85% of our exports are to the U.S., know that there are other buyers out there and we will weather this storm rather well. How that equates to real estate depends on your timeline, personal circumstances & motives. If you’re buying a home and plan on staying there for ten years or more the current market weakness will present buying opportunities for those who are well informed. Those who aren’t well informed, are looking for a property “to flip for profit” and make $8.50 an hour are going to get bent over a barrel and well…you know.
Are you drinking? Surely there is some middle ground here. There is a price level where buyers can enter the market and sellers are happy to sell. I don’t know what that price is but i doubt it is $200k south of where we are today. The people who are working are still earning more than they were 5 years ago. I know the arguement about unemployment but the economy will pick up at some point and employment will return to normal levels.
Guys, relax!!
I listen to this Don Campbell guy.
“Edmonton still No. 1 for real-estate investing, author says”
Economic slump seen as temporary setback
So is Edmonton still the best place to invest in residential real estate?
“Absolutely, it is,” he said Monday during a visit to Edmonton from Vancouver. “There’s no way the world can continue to afford $30 and $40 oil. … Eventually, within 18 or 24 months, we’re going to see the market come back to something that’s more normal.”
He said that Edmonton will top the list for the next five to 10 years, and with mortgage rates “ridiculously low” and likely to drop further, savvy investors could look like geniuses several years from now.
You heard it here from Karl and the brilliant Don Campbell. Don’t buy for 18-24 months. I totally agree. It will hopefully have finished its descent to normal levels by then. Thanks for the honesty Karl.
Well, I have no reason to question Don Campbell investment strategies.
Considering how much this city has to offer and all the wealth; oil, gas, coal, forests etc. surrounds us, it only makes sense for advices, like his.
I agree Mike and one more thing to remember, Germany and Japan has a lots of money in the bank too.
Angus Watt said in the radio 630 CHED news, that the Japanese consumer have 11+ trillion in the bank as savings, I know, it’s probably not much to do with our RE prices, but anyway, not everybody is broke, for sure.
Don Campbell said…
So what?
For everyone saying the boom will be back, Edmonton is the place to be, there is another “expert” saying the exact opposite.
The world has changed. We are not going to see $200 oil… China is laying off people by the thousands/daily. India the aveage yearly wage is what we make in a month. They are not going to be buying $5 a gallon gas.
I love Edmonton, been hear all my life. The boom brought most of us nothing but traffic, crime, stress and a cost of living that was getting impossible to maintain.
For those that benefited from that Oil boom I congratulate you, hope you saved some money, hope you do well.
But… if there is any chance our wonderful city can get back to a better pace, where every weekend the high lights are not how many have been stabbed.
I say don’t let the door hit you on the way out. $40 Oil, $200,000 houses, sounds good to me.
Other buyers you say! Which one exactly????
Canada will start shipping stuff to where??? Europe, China, India may be…..
Don’t forget that what Canada has Russia has in times more and in times cheaper, and they don’t have to cross The Big Pond like Canada has to !
So don’t fool yourself into thinking that Canada can find other buyers for its natural recourses and products.
You could not find them in good economic times so I don’t think you will find any now!
Mike:
Well thought out post. I am not denying the significance of the sheer magnitude of China and how their evolving economy will impact commodities markets, especially oil. I was more referring to this specific go-around, where oil prices may have been compromised of a smaller portion of speculation at $75/barrel (pre run up) but the run up to $147 was clearly a bubble. When this article was written in May 2008 (http://infowars.net/articles/may2008/050508oil.htm) the author believed that 60% of the (then) $120 price of oil was pure speculation. I’m sure the “$250 oil bulls” ridiculed him endlessly. Oil is battling in and around the $40 mark today. This guy nailed it.
If everyone believes in $250 oil, people will buy hedge funds all the way up to the panic point. Last panic point was $147 on the way to $200, which was the psychological target then. What is it today? $250? When oil prices start climbing radically when it is NOT explainable by fundamentals – specifically actual demand – then what is it? This last run up proved that rising prices (alone) are not proof that demand has outpaced supply and we’re in peak-oil territory. So I agree. Oil will shoot up again. How much it will be pumped beyond it’s actual demand-based value will remain to be seen. I think speculation is alive and well, and if the game rules don’t change, neither will the outcome. Thus, I predict more boom-bust cycles with more volatility than ever before and not “slow and steady sustainable growth with oil climbing to $250 and beyond and staying there forever”.
Speculation has proven to be a far bigger factor in the price of oil even compared to the demand of super-consumer China. Their demand was also greatly over-estimated to begin with.
We’ll see if we start selling our tar-oil to China. Right now, it all goes right under our feet to the US for refinement there. They get the cleaned-up tar oil at and refine it at a lower cost, and sell it back to us as over-priced gasoline while we’re stuck with the environmental disaster formerly known as the Boreal Forest. Nice.
Cheers,
E-town
Spud:
I didn’t say *I* thought prices were going $200K lower than *todays* price. Nobody, in fact, is predicting that. I was referring to the backlash against those who are calling for a $200K drop from the PEAK prices of $420K. This translates to a $125K further drop on top of the $75K drop to date. Personally, I don’t think it’s going to get that bad (2001 prices) but being at 2006 prices now, 2005 prices in and around the $250K mark are not completely out of the question.
Cheers,
E-town
You’re right Fred. Those who cry “Screw the US – we’ll sell our oil directly to China!” are missing out on certain economic and geographical realities that make this easier to say real fast than actually implement.
Cheers,
E-town
Fred,
-Oil prices are back to $40 already and we have more stabbing than before;
-at $40 a barrel your beloved province will go broke;
-at $ 200,000 RE prices even more crime will happen here;
-In India and China the wages are much lower, but you can buy a car for $3500 brand new (Tata Motors)
Sorry, but I take boom anytime over bust!
Maybe, just needs some time to sort out. Already articles about ciminals moving out of Alberta because the pickings are drying up.
We were doing just fine with $40 a barrel, will survive just fine again.
$40 a barrel, we can afford to drive, $200,000 houses we can afford to live. As well as have a future.
Happy to take my chances, a few less trucks on the street isn’t going put my beloved province in the tank.
So a few road repair and maybe one or two less art galeries. Doesn’t mean we are going to go broke, just our leaders may have to stop spending like drunken sailors.
Another benefit is our children might actually finish high-school now and think of their future, instead of the quick payoff and next new vehicle.
Good ridance to the boom.
“Sorry, but I take boom anytime over bust!”
Too bad they are not mutually exclusive…
Realistically, we have a ( non renewable )resource here that is absolutely crucial in the everyday life of the earth population and the supply of this resource is stated in about 50 years.
I’m not saying the boom will and should last forever, but for the next 50 years….
Is it too much to ask for?
Karl replacement costs arnt static eather… for instance lumber has fallen similar to oil by 66%. Labour has fallen a bit too…