Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:
New listings: 506 (382, 446, 390)
# Sales: 185 (167, 145, 111)
Ratio: 37% (44%, 33%, 28%)
# Price changes: 252 (233, 274, 242)
# Expired Listings: 388 (106, 197, 215)
# Canceled/withdrawn/terminated listings: 29 (19, 23, 21)
Net loss/gain in listings this week: -96 (90, 81, 43)
Active listings for single family homes: 2412 (2472, 2419, 2350)
Active listings for condos: 1805 (1830,1777, 1688)
While I won't call it a huge increase in sales, the number of sales has been on the rise for the past 4 weeks, and this week we saw the most sales since mid-October. It's too soon in the month to have accumulated enough data for reliable average prices so I'll post those next week.
I would like to touch on two pieces of news relative to buying and owning a home in Canada. Many of you have probably already heard this, but for those who haven't…
As part of the federal budget, Canada's "Economic Action Plan" includes a first-time home buyers' tax credit of 15% on closing costs (to a maximum of $5,000), which would be worth $750 off a buyer's federal tax bill. They have also increased the amount that first time buyers can withdraw from an RRSP to purchase a home from $20,000 to $25,000 for individuals, and from $40,000 to $50,000 for couples.
For those who already own a home, the federal budget included some incentives for you to renovate your home – the home renovation tax credit went into affect last month and will remain through Feb. 2010. Homeowners who spend between $1000-$15000 on home renovations will be eligible for a 15% tax credit to a max of $1350 (the first $1000 is not eligible). Eligible renovations for the tax credit include kitchen, bathroom, basement, new carpet or hardwood floors, building additions (deck, fence or retaining wall), new furnace or water heater, improved insulation, painting, driveway resurface and laying new sod. This is especially encouraging if you are thinking of selling, since these improvements will improve your value and salability!
See you at Home Depot!
One last thing… Stats Can released the employment numbers for January, Chris Davies did an excellent post on the numbers.
Thanks for the mention. There was a really good conversion on myREINspace.com about the new stats. Putting it into a graph really put things in perspective for me.
Chris,
I don’t understand, what was “put in perspective”? Should I buy a house?
I’m not sure if I see the value of comparing only one month of data to only one month of data, but the graphs do look nice.
Hi Sara and Sheldon we are looking for good property professionals to blog on our site with local news on property matters. We have a decent level of traffic and this will grow in time. The site is http://www.propertynewstoday.com and its a great place to promote your self. Becoming a local reporter is free and it only takes a minute once in you have full access to the sites back end and you can communicate with other professionals.
Hi Travis, the perspective was between the ‘Canadian economic crisis’ and the strength of Alberta’s economy. I still think that we’re 12-18 months from seeing real strong growth again, but for my buying model, now is a great time to buy. If you’re looking for a house to live in for more than 2-3 years, then it might be a great time to buy. As for me, I’m investing.
I asked this question of Sheldon a few weeks ago, but I didn’t get an answer. I’ll try Chris.
A year and a half ago, my wife and I were looking for our first house. We were quite serious about buying; mostly worried that we “could never afford to get in if we didn’t buy NOW”. We had a 5% downpayment. Luckily, we did not buy as that downpayment and much more would be gone now.
Today, because house prices have come down so much and we have saved every possible dollar since then, we can now put 15% down on those same houses. Isn’t that a happy story?
Chris, to be clear, we WANT a house because it would be nifty to be homeowners. We do not NEED a house. If you were us, would you honestly buy now instead of saving up a larger downpayment, say 20-25%, while the market is so weak?
According to my calculations, even if house prices are flat (never mind coming down), we will have our mortgage paid off sooner if we keep saving and buy at a later date with more down.
Chris, with all due respect, please take off your REIN/salesman hat, and be honest now – you are not investing.
Travis,
I try to answer all questions directed to me, but questions from my clients get first priority.
It is impossible to say which would work out mathmatically better.
What I can tell you is your choice for homes is declining,
Interest rates at some point will go up and prices will eventually go up as well. In fact don’t be surprised if we see some prices this year.
Wow, you think we’ll see gains this year?
I would love to hear why you believe that. I’m sitting on my downpayment, watching from the sidelines with an extremely motivated buyer next to me (wife). But I sill see massive risk in losing another 10% if I buy now.
Sheldon, realy, you got to be kidding….
Prices going up this year… Maybe between December 30 and 31st if the one house sold is a dollar diffent.
Sounds like the CIBC analyst who guaranteed in October that Oil would be in the $200 range by end of 2008. Not sure if he’s currently looking for a job or not.
Depends on where you are buying and what. Crap is crap and isn’t worth anything, but there is a declining inventory of good priced single family properties. Declining spec inventory from builders, and as crazy as it sounds stronger sales activity. The average may still go down, but it will be interesting to see for sure. Condos may bring down the average but if the averages are separated SF should perform better.
I think you went a bit far on that call Sheldon.
I know it sounds strange. I’m not saying the entire market. See my response to Nate. Btw Avg price went up in Jan. I have said all along that the year will be full of ups. Activity in sales are increasing, (not to be confused with going crazy). A great deal of other factors will have their say as well. The year is starting late but none the less sales are starting to get more normalized to previous years.
Sheldon congratulations for putting your opinion out there. kind of odd (NOT!) that people hastle you for an opinion and as soon as you put one out there they beat you down and point crazy at you. Why are people so hung up on trying to time the market bottom. Prices are at 18 month lows. Sooner or later we’ll be saying they are at 3 month highs.
Tensions seem to run high on this blog from time to time. Must have something to do with buyers waking up and making sound financial decisions instead of being suckered into living beyond their means.
The good news is: the world is not going to end, Alberta will prosper again, and I promise to sponsor a starving real estate agent by purchasing a home when it makes sense for me to do so.
So I hear a rumour about pent-up supply coming onto the market this spring that will eclipse the pent-up demand, is this true?
In addition to my last comment:
I think Sheldon knows it is mathematically POSSIBLE to say whether or not I’d be better off to buy now or to buy later with more down when home prices are flat/declining. Mortgage calculators in the hands of the commoners has become a nuisance, hasn’t it?
Travis – you’re right…the world is NOT going to end, Alberta will prosper again.
Pent up supply? How would you determine this? Speculate the number of properties that will be up for sale in the spring? There is literally zero spec inventory currently under construction but not absorbed out there except for a few condos that are close to being completed in spring / summer 09. I think that it would be extremely difficult to determine pent-up supply?
Regardless, supply has usurped demand for the past 15 or so months.
As I have always said, the first two quarters of 09 will dictate how quickly we level out of the recession. I think that the overall housing market will continue to correct and level out in 09 and rebound sometimes in 2010. When I say rebound I mean ‘normalized’ growth. Canada is in a very different situation than our US counterparts. Their housing correction was caused by different factors and are NOT comparable.
Prediction:
This week (Feb 9 – 13, 2009) will be a very bad time for the stock market. There will be some major financial events. This collapse is PLANNED!
Real Estate will get hit hard over the next few years.
CMD how can you say the US correction was caused by different factors?
Sub-prime mortgages are not the root cause the US correction. The US housing correction began in 2007 because of Rampant Speculation leading to Over Construction and Unsustainable price increases that made house unaffordable.
Seems to be we have those exact same factors driving the price corrections in Edmonton, Calgary and Vancouver.
Re pent up supply: in the last two weeks, 4 houses have come back on the market in the 2 neighbourhoods I watch (where I lived before moving out of province). These 4 houses are not crap, and are in upscale areas. Since I last saw them in the fall, all of them have come down in price, with decreases ranging from 30K to 100K. So yes, it will be interesting.
Re: Travis
I am in a similar case as you are in. From my perspective I don’t see the real estate market exploding like the previous years. Economically:
-The world markets are in a downward cycle and likely wont correct this year. Infact theres still more fun that hasn’t hit the mainstream media yet
-Our economy is at odds with the US economy in that high oil helps us but hurts the US.. I honestly have no clue what oil should be… all logic has gone out the window recently.
-The securities/money markets will improve before real estate does
My recomendation is if you need to own look for places that rent for the same price or more to own on a 25 year mortgage + utilities + condo fees + tax ect. If you can do this then you’ve struck gold. The logic behind this is basically that rents typically are less cycilic and won’t fall as much as house prices. Most importantly though is to buy within your means and make sure you have enough room for interest rates to *rise* by 5% because the rates we have right now definily arn’t sustainable long term and there is risk of inflation (infact its strategically benifical for the govn’t to do this). Don’t rely on wage growth to correct this.
“Canada is in a very different situation than our US counterparts. Their housing correction was caused by different factors and are NOT comparable”
You are right in that the root cause of our downturn is different however the economic results are definilty comparable. The actions by our goverment and large organizations have been the same as our US friends. For instance our banks have had bailout money 3 times and have been raising capital constantly. I don’t think we’ll see any failures however they are definilty weak from a financial perspective.
Article today:
National home sales to drop 17 per cent in ’09; prices predicted to fall 8 per cent
Mon Feb 9, 11:32 AM
The Canadian Press Email Story IM Story Printable View
By The Canadian Press
OTTAWA – House prices are expected to fall eight per cent across Canada this year and sales are predicted to slip nearly 17 per cent, according to a new report from The Canadian Real Estate Association.
The association, known as CREA, said sales on the benchmark Multiple Listings Service fell 17.1 per cent in 2008. It said sales are expected to fall another 16.9 per cent to 360,900 units in 2009 – which would be the lowest level for national sales activity since 2000.
Sales are expected to fall in every province, led by declines in British Columbia, Alberta and Ontario.
CREA predicts sales to rebound by 9.9 per cent to 396,600 units in 2010, with the biggest recovery forecast for B.C. and Alberta.
Prices are expected to drop eight per cent this year, with figures falling most in Western Canada and Ontario.
Meantime, the average home price in Newfoundland & Labrador is forecast to rise 4.8 per cent in 2009.
CREA said it expects prices to stabilize in 2010, with annual price increases of one per cent or less in five provinces.
The report comes the same day Canada Mortgage and Housing Corp. said housing starts slipped by 10.9 per cent to 153,500 units in January, compared to the month before.
Economist say that is the largest per cent monthly drop since March 1995
1) Types of mortgages – Appox 25% of all mortgages in the US were subprime whereas only 5% were classified as subprime in Canada. Big difference.
2) Lending requirements – The US banking system is less regulated than the Canadian system. The majority of banks approved mortgages to folks who had terrible credit or insufficient income to pay back the mortgages taken out. Furthermore, the US banks offered other types of mortgage instruments such as ARM’s (Adjustable rate mortgages) or interest-only mortgages. We do not have that in Canada.
This led to massive speculation and inflation of housing prices, alot more substantive than what occured in Canada.
“buff_butler said…You are right in that the root cause of our downturn is different however the economic results are definilty comparable. The actions by our goverment and large organizations have been the same as our US friends. For instance our banks have had bailout money 3 times and have been raising capital constantly. I don’t think we’ll see any failures however they are definilty weak from a financial perspective.”
Be careful with your comparisons. As I have said before, thanks to our regulated banking system, our banks were not permitted to expose themselves to the types of risks that many of the US and UK banks did. EVERY banking system was affected by the credit crisis. Liquidity is still dry, however, it is improving. LIBOR rates are dropping (although they have increased over the past few weeks). Our government purchasing higher risk investments from our banks had more to do with maintaining liquidity in our domestic market versus a ‘bail out’.
Travis:
During a quiet moment look into your wifes eyes and ask her “Do you want to start looking for a house for us?”