Here is our update on the Edmonton real estate market. (Previous week’s numbers are in brackets). For the past 7 days:
New listings: 425 (449, 444, 405)
# Sales: 214 (218, 202, 188)
Ratio: 50% (49%, 45%, 46%)
# Price changes: 266 (238, 275, 224)
# Expired Listings: 88 (351, 102, 131)
# Withdrawn/terminated/etc. listings: 33 (36, 31, 26)
Net loss/gain in listings this week: 90 (-156, 109, 60)
Active listings for single family homes: 2514 (2453, 2555, 2500)
Active listings for condos: 1968 (1930, 1987, 1915)
There have been 540 sales so far this month, which could put us close to 1400 sales this month and in the normal range for March sales. The overall average residential sale price sits at $310,838, about the same as last month. Single family homes are at $348k – the same as last month, and condos are at $236k – up from $226k last month.
Just curious about one thing.
For your weekly tallies you have sales at 214 for this week, and 218 for last week… which, since it’s the 13th should encompass the entire month up to now, and would equal 432.
But in the text you cite 540 sales this month.
I’ve noticed this before, so I’m wondering if I’m missing something, or are these different numbers.
Hi Phil,
The weekly numbers are just that – the total for the past 7 days, and they are not cummulative. Also, I only include Edmonton in the weekly numbers.
The 540 sales are what has been reported by the board so far for this month, so it includes the surrounding areas. I use the board’s numbers for all our monthly analysis since those are the numbers discussed in the media and that way we compare apples to apples.
Ahh, different numbers, I see. Thanks, I was wondering cause it just seemed odd, but now I know. Sorry if it had been asked before.
I have a suggestion for a graph, we should track real estate prices against EREBs monthly updates, here they are for last year, which as we know wasn’t a banner year:
REALTORS® Forecast Orderly and Stable Real Estate Market – January 08
Resale Housing Sales Strong – February 08
Housing Prices unwavering – March 08
First quarter results show housing prices are stable – April 08
MLS® housing sales and prices remain stable – May 08
Never been a better time to buy a home says REALTORS® Association – June 08
Single family dwelling and condo prices have been stable – July 08
strong sales numbers reflect the robust and dynamic economy – Aug 08
buyers are demonstrating their confidence in this market and are not afraid to purchase – Sept 08
Edmonton resale housing market sizzles in third quarter – Oct 08
Edmonton resale housing market maintains stability in uncertain world – Nov 08
every home that is priced appropriately will eventually find a new owner – Dec 08
The problem, in my mind, with these predictions and commentary is that there is no prerequisite to understand market trends, or general economics, in becoming a Realtor – indeed it is a marketing/sales occupation that indeed requires no degree or even a high school diploma for that matter. That’s not to begrudge the occupation as certainly it fills a function, but in my profession (engineering) if I made those kind of swags I’d definitely be fired and possibly sanctioned for breach of ethics.
So I think it’s fantastic to find a buyer a dwelling that suits their needs and advise through the purchasing process, but I think all the spin on market conditions is a misrepresentation. i.e. if I bought last summer when EREB said there was NEVER a better time to buy a home I could be out 100K. There should be better oversight on that kind of speculation as it could paint the profession in a dim light.
I agree 100% with Andrew. You pulled the words out of my mouth!
No matter what realtors say it’s the perfect time to buy. I’m still waiting to buy a house and when I’m ready , I’ll choose a realtor that understands statistics and trends. It’s not hard to see when they’re trying to play statistics in their favour. They should suck it up and face reality now because when the market picks up I sure aint going with the one that said it was perfect time to buy a year ago
Guys, do not blame Realtors, no one and I repeat, no one forecasted this global meltdown, slowdown or whatever you might call it.
That’s the only reason prices are down and not at the level they otherwise would be.
Finally the media reports about Canadian subprime morgages!
Canada’s dirty subprime secret:
http://business.theglobeandmail.com/servlet/story/RTGAM.20090313.wsubprime14/BNStory/Business/home
We are Realtors in Bellingham Washington. It’s always interesting to see what others are doing outside of our area. Your presentation with the use of video & graphs is especially well done. We’ll have to try it as well.
If you ever get to Bellingham WA, stop in & say hello.
Rich Johnson
http://www.youtube.com/watch?v=2I0QN-FYkpw
http://www.youtube.com/watch?v=vkk_OR6Dqt8
I think Jon Stewart said it best when he stated:
“An economist that said they didn’t see this coming at all is like a weather reporter standing in the middle of a hurricane asking why its so wet and why is it so windy.”
I don’t think anyone is blaming Realtors or EREB for the economic meltdown. What I take exception to is the spinning of obscure stats to sway consumers, and presenting the information as authoritative data as opposed to marketing which is what it is, and what EREB does.
I think, like securities, this kind of speculation should be accompanied by a big safe harbor notice. So I think the statements are irresponsible – I understand Realtord function is to market homes – but for those unfortunate people who take the bullish statements at face value – well it can be very costly.
Now the majority of people will immediately see that the obscurity of the stats being used to justify the statements places them well beyond what is credible (ie: “days on market are decreasing!” – look at the number of expired listings – its not the market getting busier it is houses on the market for a year not selling and being removed from the inventory bringing it down – there are hundreds of mistatements like this – better buy right now!).
So the misinformation seems very deliberate and I’d like to see these statements heavily disclaimed like forward looking statements in the financial industry are. As I think its ethically very dubious to present that kind of speculation as authoritative when the current fundamentals paint a different picture.
So I am not blaming Realtors nor am I saying you’re doomed if you buy Edmonton real estate. I am saying don’t buy based on the snake oil peddling EREB updates, look to qualified sources for economic data. Understand the statements are marketing not information.
Hi,
I have been following this blog ever since I decided to buy a house. It has been 10 months now and I’m glad I waited.
Last Friday on my way out a couple people at my work mentioned that the banks might be looking at a 1% rate hike for fixed mortgages. This really got me worried and I have found no press release or news report. Can anyone prove or disprove this for me. It could be plausible because fixed mortgage rates are tied to bond rates or so I have been told.
Thanks in advance,
Ryan
Subprime morgages? what subprime morgages are you talking about? There are no subprime morgages in Canada. We have zero down payments,no morgage payments for one full year, the builder will match your RRSP contribution and will beat any competitor’s price. So just show up, as long as you are breathing you are qualify.
Ryan,
I don’t think that interest rates are going up, in fact effective yesterday TD-CanadaTrust just dropped their mortgage rates. Both Mortgage Rates and domestic bond rates are tied to the Bank of Canada lending rate which was set to an all time low just two weeks ago, and will likely stay there until the economy starts to rebound. When rates do go up it will be by .25% or .5%; not a full %.
“Rates are going up” is a marketing tactic sometimes used. the reality is if house prices continued on their current trajectory it would actually cheaper to wait a bit and pay .5% more then it is to buy now cause rates may to up.
Ryan,
I would keep my eye on the international bond rates (such as the 30-yr T-Bond on the CBOT) if you want a sense of where the fixed mortgage rates are going. These rates have been very stable lately, so I don’t know what information your co-workers are using. Having said that, the chance of fixed rates going up is probably greater than going down (beyond the short-term). Maybe this is what they were referring to. I agree with Andrew, the Bank of Canada will not be raising their rates anytime soon.
Today’s low mortgage rates are also tempting me to buy a house right now, so I know how you feel. “What if rates go up, will I be hurting myself?”
I have to remind myself of the shortcomings of some of the mortgage calculators out there. We plug in the current rate and amount we’d like to borrow and we can see, “Wow, if mortgage rates go up 1%, my monthly mortgage payment goes up 10%.” The problem is, we forget that our mortgage rate is not locked in for the full amortization. The calculation I use assumes I will get the same rate for the next 25 years (and I will always pay 1% less if I buy today before rates go up). The truth is, if you have to renegotiate five or more times over the course of the mortgage, sometimes you’ll be ahead and sometimes you’ll be behind. Whether you borrow at 4% or 5% in the first term, this will be less and less significant over time.
This does not contradict my earlier recommendations of locking in for five years instead of ten to take advantage of the lower rate. I want to be clear that paying a lower rate makes sense – unless you expect real estate prices are going down. Waiting and paying tomorrow’s higher rate can make sense in certain situations.
The bottom-line is, as usual, do you care about your home equity after you buy a house? If you don’t care about home equity, the mortgage rates are very attractive – this may be a good time to buy. If you are like me and you do care about not paying too much for a house, low mortgage rates should not be the winning argument to the question, “Is it time to catch the falling knife?”
Here’s a question for everyone: Maybe it’s too early to tell but… if interest rates are the lowest they have ever been and rates are unlikely to go much lower, why aren’t house prices going up? Again, maybe we need more time to see the effects or maybe, just maybe, a little more air has to come out of Edmonton’s real estate bubble. If this is the condition of the market today, will the correction accelerate if rates go up? Low rates, while enticing, will not change my mind about waiting and saving a larger down payment before I buy.
You are right that fixed mortgages are tied to the 5yr bond. The government of canada is actually implementing “quantitative easing” to drop these even lower and encourage people to buy. Short term lending is already as low as it can go and now the next step is to drop long term lending.
I keep hearing/reading that the housing market is suffering so badly, but I keep losing out on houses! They sell too quickly, or someone has already put in an offer at the asking price or just a few thousand below. So I’m not quite sure what’s happening here? Anyone??
Surely there is one thing everyone can agree on. Is this a long & brutal winter or what?
I have been here twenty years and this has to be in the top 3 of worst winters.
Come back geese, come back.
“Active listings for single family homes: 2514″
“Active listings for condos: 1968″
There are a few homes still left on the market, try to get one before they all vanish!
For those investors out there, a good value investor once said “You will never catch the low. Sensible value based investors always sell too early in bubbles and buy too early in busts. But in return you may make some good coin on the round trip as well as lowering the rick exposure”. This was said about equity investing but is also relevant for real estate. For people wanting to buy a home as opposed to an investment look at the facts – mortgage rates at all time lows, houses at prices not seen for 3 years. You will live in a home for the rest of your life (or be in the real estate market for the rest of your life). Whether you miss the bottom of the market by $10-$20k is so irreleveant.
You only wish if it only $10-20K.
Try $100-200K, how long would it take for an average redneck to save $100k with 2 kids?
Good luck trying to pick the bottom. You think prices can drop $100k from where they are today? Don’t think so. I’m saying if they drop another $20k from todays prices, not the prices at the top of the peak. Average single family home is what, about $350k. At the end of the day the bears on this site will never buy a house. The bulls on this site are in trouble and very quiet. The astute investor looks at the scenario of 1. cheapest interest rates in a life time and 2.house prices as low as 3 years ago and thinks there could be a window of opportunity.
Wow, $100K to $200K drop huh. I can’t wait. I’m going to be soooooo rich. I will buy everything I can get my greedy little hands on and resell a couple of years later for about 1000% profit. Dude, do you actually think before you type? Reality check time. We are very close to the bottom if not already. Keep waiting and you will miss the bottom again. Maybe you should move some where else like Detroit where you can by an old house for $25,000.
Well said Spud. One just has to look at those who have held onto real estate for over a period of time. Through the various peaks and valleys, its value increases over time.
CMD is right. I mean, the guys who bought in 1981 didn’t get their money back until 2005 (real dollars), but real estate always goes up in the long-term.
I have a question for any of the experts out there, ’cause I don’t know the answer. If someone finds themselves in a negative-equity position because they bought in 2007, will the bank let them transfer that mortgage to another property when they have to move?
It was a beautiful sunny 11 degrees in Ontario Sunday and yes… I saw geese coming back!!!
It’s all about supply and demand….
If the demand is there, prices stay where they are… but you knew that.
Is there an over supply in Edmonton to warrant a further $100K drop? I doubt that.
I’ve said it before:
1. further prices drop of 5% for 2009.
2. Prices unchanged for 2010.
Resale prices to go up at inflation rates for 2011-2012.
3. Construction of new homes for 2009-2011 at low levels.
4. Oil prices will go back up by 2010.
Foreclosures in Alberta skyrocket
http://www.theglobeandmail.com/servlet/story/RTGAM.20090316.wmortgage0316/BNStory/National/home
Obviously that’s a sarcastic comment…however, believe me when i say there is not a lot of good inventory in the 300-400 k range suitable for a family. these properties, if reasonably priced go within days….sure there are a ton of condos and high end properties, but very little in between. so i’m wondering what’s going to happen, are higher priced properties going to need to drop to closer to $400 k to get sold? that’s just a hot segment of the market right believe it or not.
That’s the segment of the market that I’m looking at and I’m seeing a ton of homes for sale. Most new home builders are in that range too (1200-1600sq/ft).
I’m looking at the new developments along the edge of town though, if you’re looking for a place close to the downtown core, I’m sure there is a little more competition.
My parents bought in Calgary in 1981 for 79k. A year later in 82 the price dropped to about 40k. They stayed in the home for another 10+ years and sold in the 90′s for about 125k.
They bought at the absolute peak and it didn’t hurt them at all because they weren’t flipping.
Travis,
You make a great point here I hadn’t considered. The liklihood is that in 5 years from now rates will be higher, my guess would be 6-7% so not dramatically higher but higher nonetheless.
The irony is that cheap money is one of the factors that put our economy in this mess. So suppose I use one of the online calculators and use current rates to figure out what’s affordable, when it comes time to renew my mortgage at a rate that will almost certainly be higher in 5 years affordable could turn into inaffordable. The consequence, another mess.
So probably best not to max out the affordability or throw in a higher rate to compensate for it.
The good thing is that inflation is ones friend in these circumstances cause presumably one is making more in 5 years. Though I think in the next 1-2 years we’ll see little inflation compared to the last few years.
I do not know the number of foreclosures in Edmonton, but it must be similar to Calgary’s, where there are 101 active foreclosures to date.
Assuming we have about 100 here, that means 200 foreclosures for two cities with a population of a million each, that has several hundred thousand households, so I think foreclosures will not rock this RE market.
I’ll go half way and say house prices have 40K to decline this year and maybe a slight decrease or increase in 2010. It’s funny that when house prices go down 1% in a month it is painted as a “slight” decrease when that means 12% annualized (or 40K on the average SFH).
So last year we had a price correction, the economy was strong but the perception of value by consumers was pushing home prices down. I thought the correction had another 5% to go (in line with spuds 20K).
However we are no longer in a price correction but a recession, unemployment is up nearly 20% month over month (4.3%=>5.6%) and billions of dollars in investment capital (and many more billions in equity) have vanished. Bottom line there is less capital out there, and less consumers out there with money – not to mention capital is available to fewer people as regulation has become more stringent on lending since last October.
Add to that reduced immigration to the province and in the short term the money is simply not out there to sustain current pricing.
Now I don’t want to spread gloom, cause the economy – and commodity prices – are cyclical so we’ll see prices rise again. But in the short term the fundamentals to justify pricing just aren’t there.
Look to 82-84 where there were many of the same factors at play (though much higher interest rates) the market saw 4 consecutive years of decline and then slowly picked up.
Karl,
Hot off the press:
http://www.theglobeandmail.com/servlet/story/RTGAM.20090316.wmortgage0316/BNStory/National/home
I think you are making the mistake of confusing the number of court ordered listings with the number of foreclosures.
You won’t see most foreclosures listed on the MLS as most are sold directly to the purchasers via a judicial sale. Typically if there is equity the court will let the debtor attempt to sell, in most cases this doesn’t happen (as there is no equity in most properties subject to foreclosure)
We have not hit bottom yet. If we did hit bottom we would not be getting news of more disasters happening across Canada and worldwide.
We will hit bottom months after the US hits bottom. So one should keep an eye at the US market to know when we will hit bottom. Unemployment across has been forecast to hit 10%. I think Alberta will most likely hit 7%.
We depend on oil and natural gas. Oil prices will not go up as long as we remain in this economic downturn. If oil prices go up it will just cause more havoc across the world.
All in all we will know one way or another what remains of Alberta’s housing market.
I am ready to buy and from what I have seen smart sellers move houses quickly by pricing the houses right.
Karl,
Many foreclosures are not listed. Owners usually will sell before the court takes over the house. This is one sort of distressed sale.
Usually they key to finding a distressed home is a motivated seller. Usually a seller can also be motivated because they are carrying two mortgages, lost their job, or are moving for other reasons.
Point is the foreclosure counts are not to be trusted.
Karl,
Sharp as a spoon once again my friend
Ok, you all have to check this out. This is a funny spin on housing bubbles.
http://www.youtube.com/watch?v=bNmcf4Y3lGM
I for one hope prices stabilize as I am a homeowner in the city. That being said, I still see another 60-100K off of average. This just got too stupid.
FACTS:
USA consumes 20% of everything produced in the world which amounts $13Trillion.
S&P500 best represent the Economy of the Country that consumes $13Trillion of the money in the world (USA).
Baltic Dry Index measures the global trade volume and price of shipments of Oil, Food and Construction Materials .
Both, the S&P and Baltic Dry Index have fallen close 60% since September 2007.
In February for the first time in 18 months the Baltic Dry Index rose more than 80% (in just one month).
PERSONAL OPINION:
In February, Baltic Dry Index has rebounded from what in mi opinion was the bottom of the global economy crash; since also the S&P500 had a great rally last week. This does not mean Markets in Main Economies will recover back to the same level they were in 2007, but Markets have refused to fall any lower, regardless what speculators have to say. An increase of global shipments shows that the Demand for Food, Energy and Materials has stopped falling and it is “slowly” starting to rise (this time at a more sustainable growth rate we must hope).
FACTS:
Increases in Food Demand are directly related to an increase on the Demand for Fertilizer and guess where the World’s Largest Fertilizer Producer is? The answer is: in Saskatchewan – Potash Corporation.
Increases in Energy Demand are directly related to an increase on the Demand for Oil and Gas, now, guess where the world’s largest Reserves of Heavy Oil are? The answer for that is: in Alberta (and Venezuela). Canada is the 7th largest Oil Producer Country with more than 3 Million barrel of Oil per day times $50 (which has been the Average Price of the Barrel of Oil for the last 5 years) that equals $150Million coming to the country (mostly to Alberta) every day in revenues (that’s over $50Billion in revenues for a whole year)
Increases in Construction Material Demand are directly related to an increase on the Demand Minerals; more than 30% of the Companies Listed in the Standard and Poor Toronto Stock Exchange are Mining companies from BC, Quebec and Ontario.
PERSONAL OPNION:
More efficient than a Government Bailout Package to save the Economy is the Consumer Confidence.
Consumer Confidence is returning to normal levels in some countries faster than in others, but it is returning.
The Global Demand for Food, Energy and Materials is picking up, the Demand for Canada’s best resources is picking up.
There are still lots of dark clouds in the near future (unemployment might go up a bit more) but if we (Canada…specially Alberta) stand strong, we will find the sunny days lying ahead for our Economy.
We (Canadians…specially Albertans) will be fine
Good for you, we need guy like to buy buy buy right now. I hope you are buying with real money and not with you mouth.
Garth Turner seems to be the head of a new “Economic Meltdown” religion for his blog. (greaterfool.ca).
Four times now, I post some past predictions where he wrote in an older book (2020…) that most of his predictions proved wrong and ask for his comments. He never allows my posts to be seen.
That moron actually wrote in his first book that the TSX would stand at 50,000pts in 2009…
He’s only human, he makes mistakes but he won’t admit to any.
I guess tha Garth the book pimp is just happy to spread misinformation on his blog…
Any thoughts?
Ford and GM are also telling me that now is a good time to buy a vehicle from them, even as they walk the line of collapse and may not be around to honor my warranty. Should their marketing also be regulated?
I honestly believe that we need to drop this victim mentality and complete our own research before spending large amounts of capital on anything. The car dealer is going to help you into a sale as that is how they make a living. A realtor will also help you into a sale as that is how they make their living. If you’re not buying, then you likely aren’t listening to the message. If you’re complaining about the message, you are likely placing blame on the marketing for not knowing when to “catch the falling knife” (though I can agree that EREB is WAY too bullish).
If you are looking to buy a home (or a long term investment property) and not a short term flip, now may very well be a good time to buy. The market may drop further but if you’re holding the property for many years and it gives you a place to live, you will likely not be selling at a loss in the future (at the very least, it may not be the best “investment” but you have received value for your money over time).
Interest rates are low, prices have moved much closer to reasonable, and there is good selection. Do your research, know what you want and find a Realtor that you like working with.
Bottom line: Realtors are not taking people hostage and making them buy homes (nor GM making people buy cars). Marketers put the message out and hope that people buy. If you’re not doing your own homework and analyzing your own personal context for what makes sense for you and your family, then buying a house is certainly the least of your worries.
Hi Andrew,
I think we are in somewhat in agreement, though re-reading my post, it seems a little adversarial.
At least the EREB’s extremely positive spin is farcical and overstated to most.
As always, consumers need to do their research and take all advertising, marketing and press releases with a grain of salt.
The difference in my mind between a car salesman and EREB is that it’s very clear the car salesman is trying to sell you a car.
What prompted my message is that I guess EREB put an update in a press release that was carried in the journal or the sun…anyway, my wife (who has two university degrees) came home telling me how the real estate market is entering recovery.
It seems there is a mistaken perception that EREB is like consumer reports, giving an unbiased view. Anyway I showed her the last 15 months of updates on their site and that was that – we wondered how the value of our house had actually gone down in such a “sizzling” market. I don’t know why the press would carry an EREB update, it should be paid advertising.
So yeah, I don’t disagree with you – the buyer should do their research, caveat emptor and all that. It just surprises me that the board that somewhat regulates standards for Realtors in the city can so transparently mislead consumers…kind of makes one wonder just what standards are being enforced.
If they worked for GM I’m sure they’d be touting a flying Chevette (forgetting to mention that yours may not due to the earth having gravity)
I’m with Luc on this one. Pretty difficult to find a place under 400 k unless you’re willing to live on the other side of the Henday. Something’s gotta give here, otherwise we are going to have to keep building on the outskirts and the core is going to be deserted. So I’m waiting, hoping that houses will start coming down to 400 k or less in more central areas….
Hello, we were planning on selling our home this spring to move out of Edmonton, however with the current market we are thinking of waiting until next year. Do you think prices will increase by next year, or should we sell now before they drop even more?
Based on what happened in the last- say 1 year – I don’t think anybody knows really, what’s going on.
I, myself go with the mainstream view that prices will be around the same as they are now, give or take $4-5,000.
There is really no reason for any large movement of prices as it becomes obvious that this recession will not destroy Alberta as much as many people think, oil is already in the $50s and unemployment probably will never reach even the 5% mark.
On the other hand, there is really not much out there, that would force RE prices too much higher either, like low inventories or very high in-migration etc.
Very low interest rates will stay here for a while ( in the US, you can have a 30 year mortgage at 7% rate )and as a result finacially very few people will be bankrupt in comparison to previous recessions.