Has the Edmonton Real Estate market bottomed out?

20 Responses to “Has the Edmonton Real Estate market bottomed out?”

1. edmonton expat 20. Apr, 2009 at 8:35 pm #

   Local market conditions will dictate the outcome. Have we levelled out yet?
   I think that the next few months will be crucial. Especially if oil prices go back up…
   Consumer confidence is key.
2. jamesm 21. Apr, 2009 at 2:08 pm #

   Montreal and Edmonton are the most affordable of the big cities, according to RBC

   < “>http://www.canada.com/Recession+making+housing+more+affordable/1503093/story.html>
3. Fred 21. Apr, 2009 at 7:57 pm #

   Is there anyone outside of the real estate industry or without a vested interest in saying housing has about reached the bottom, saying this as well?

   Hate to say it but the real estate industry and those associated with it will probably never have the credibility they once had. What ever comes out of that group I tend to automatically beleive the opposite.

   Sad state.
4. Jason 21. Apr, 2009 at 9:18 pm #

   Hi Fred,

   Is it possible for anyone outside the industry to really know enough about it to have a credible opinion? That being said, I am outside in what I think is the sense you’re referring to. I’m doing grad studies at U of A and one of my focuses is modeling Edmonton real estate prices. I’m also licensed as an agent, but I really don’t do much with that anymore.

   As I’ve been saying here and there on this blog, the ‘numbers’ really are pointing towards a bottom right now. The present levels of inventory and sales are indicating a price increase this year of about 0-5%. This being said, there are a few things our system doesn’t account for right now that we would like to develop in the future. My intuition tells me that there will be a bit of a lag until these results are seen due to things we don’t account for at the moment, and so I think we’ll most likely see prices bounce around for the rest of this year in the +/- 2-3% range, likely more on the plus side in the spring and minus in the fall. But, assuming no more economic shocks, ie massive job losses (big assumption I know!), I think we’re destined for moderate price increases starting within the next year or so.

   Also, the numbers (current inventory, migration, new home starts) are starting to make me think we could actually have a supply shortage within the next year or two, which of course would drive prices upward. I feel like a fool saying that given how things have been lately, but nonetheless, it’s there.

   And for all of you who want call me a prick for saying I know something… I’m just giving my honest thoughts about the matter based on fairly in depth study. I’m not a preacher here… don’t stone me as one!
5. Ula 22. Apr, 2009 at 12:08 pm #

   We can call bottom when prices reach pre-bubble levels. Have incomes doubled or tripled in Alberta in the last 10 years? House prices have. How is it that suddenly people were able to afford them?
6. Andrew 22. Apr, 2009 at 2:33 pm #

   I won’t speculate on whether prices have hit the bottom or not, though I will say if the real esate market doesn’t substantially pick up by the end of May we are likely in for another year similiar to the last two, with inventory creeping up again and sales lagging.

   However the Alberta economy has not yet hit bottom, we were cushioned from the full fury of the economic meltdown due to projects underway when oil prices were high. Once these projects wrap up the prospects of workers finding other jobs are currently fairly grim. There seems to be the fallacy that once oil prices rebound there will magically be boom times again – this will not be the case – if Oil bounced to $100+ dollars tommmorow it would take a minimum of 6 months, and more probably 1-2 years for economic activity to catch up with the prices.

   Having said that house prices were declining in the boom so who am I to say they can’t increase in a bust cycle. To the extent the economy and prices are linked though I don’t see the short term outlook as being favorable.

   I was just reading a news story about plans Newfoundland was making to deal with an influx of former ALberta oilworkers returning home, which has started but has yet to peak.
7. Julian 22. Apr, 2009 at 3:04 pm #

   Jason can I email you? I would like to know more about your studies.
   Are you studying Calgary as well?

   Here is an interesting website:
   http://www.hsdent.com/hs-dent-free-video-downloads/

   The authors of this website follow demographic trends, oil prices, stock markets etc.
   They are U.S based but touch upon Canada in this free webinar you can view by copying and pasting the link
8. Jason 22. Apr, 2009 at 5:36 pm #

   Define ‘pre-bubble’ levels! There was a time when the average price was $10,000. Where do you draw the line?
9. Never Recover 22. Apr, 2009 at 6:15 pm #

   http://www.businessinsider.com/5-reasons-why-house-prices-may-never-recover-2009-4
10. roadrunner 22. Apr, 2009 at 7:22 pm #

    Well Jason, I closely follow the economy and the dynamics of markets: they all tell me that things will not get better any time soon, particularly economically. The job losses have not ended. Those migrating to the province this late in the game may regret their decision or at best they will be no better off from whence they came. Plus just about everyone involved in the oil and gas industry and investors are all saying the same thing – ” it’s just a matter of time for prices to start rising again” (both oil prices and real estate prices, but particularly oil) What if the masses are wrong? (as they usually are) No one is thinking that oil prices may just go the other way and trade between $25-$35.00 for a lengthy period of time. When a market is a built on hope, it’s time to stay well clear. Edmonton home prices will continue to fall, particularly anything priced at $450,000+. The same is true for real estate prices in other major metropolitan areas that saw outsized gains over the past 5-7 years. The real estate bubble is over and will be for a long time. When the number of real estate agent ranks have been decimated and it’s one of the last jobs anyone wants to do because everyone thinks it’s a real tough way to make a decent living, then maybe the bottom will be in. Believe me, I saw it in Toronto when that market collapsed in 1990. Very few people considered working in real estate in 1990-1994. Markets never bottom until all confidence has been lost. That loss of confidence doesn’t exist yet today. Some of the posts in this blog reflect that.
11. Fred 22. Apr, 2009 at 8:39 pm #

    Thank you for your response Jason.

    Have a great day.
12. Fred 22. Apr, 2009 at 9:20 pm #

    You know, for Alberta in general I can’t see housing prices doing anything but continue to go down for, well for a long time. The Oil fueled economic boom is long over, the effects for us have not yet really started in my opinion. Not only is the world in a recession, but with so much focus put on alternate engergies etc. I feel our now one trick provice had its run with stardom. We are now an aging “C” list ex-star.

    The US has huge supplies of oil now (see article below), levels not seen in almost 20 years.

    And you know what, thats OK.
    Lets get back to a life where we are not monitoring housng trends and the price of oil on a daily basis. Back when the realtor was a divorced friend of your moms who did it because they were too old, or uneducated to do anything else.

    Those of you lucky enough to make a killing the last couple years, good for you, hope you saved some of it. Not going to see that again. Even if Oil goes up, companies will never let wages/demands go the way they did, they now see that none of this is sustainable, and the costs killed the boom as much as the housing, banking and other scams in the US.

    Bring back the $200,000 home, take away the stress, the fear and the speculation. Alberta/Edmonton/Calgary, was better off before the boom and we will be better off when the dust settles and people talk about the “craziness” like it happened somewhere else.

    A few less pick me up trucks screaching around wouldn’t hurt either

    Take care.

    http://ca.news.finance.yahoo.com/s/22042009/2/biz-finance-oil-prices-rise-48-85-barrel-despite-swelling.html

    Crude prices dipped earlier in the day after the Energy Information Administration reported that U.S. storage tanks are flush with the most oil since Sept. 14, 1990. Government data also showed that the country is using much less gasoline, diesel fuel, heating oil and other petroleum products
13. Ula 23. Apr, 2009 at 2:14 pm #

    Show a chart indicating house prices over the years to a 10 year old, ask him to point out where the “spike” is; behold, there is your bubble.
    Average house price increase year over year in Edmonton has generally been 5-10%. In 2006 we see a 30% jump, even more in 2007. I will therefore BOLDLY draw the line at pre 2006 levels, a $200,000 home.
14. Fred 23. Apr, 2009 at 6:20 pm #

    We can hold on to the false hope (if you are one of those hoping we will see sales and prices go up like during the boom – who does that benefit?) that housing prices are stabalizing, that prices have maybe stopped falling. But all you have to do is look at the headlines to think, how is that possible, look at the mess we are in… Its a miracle in itself that we’ve held up as well as we have.

    I feel this is mearly the calm before the storm, you just have to read the headlines to see that (see todays below). When a bubble burst it rarely ever re-inflates. I love Alberta and I love Edmonton, but we have nothing here that justifies the prices that housing is currently at, let alone a rise. We’ve had our 15 minutes of fame, its done.

    Best to you all.

    http://ca.news.finance.yahoo.com/s/23042009/2/biz-finance-canadian-economy-falls-steepest-pace-50-years.html

    Canadian economy falls at steepest pace in at least 50 years
    Thu Apr 23, 5:28 PM
    Julian Beltrame, The Canadian Press Email Story IM Story Printable View
    By Julian Beltrame, The Canadian Press

    OTTAWA – The Canadian economy took a shocking fall during the first quarter, dropping at the steepest pace in at least 50 years to what the Bank of Canada says might be the bottom.

    The central bank said Thursday it does not plan any immediate action but is watching for further trouble and considering dramatic new interventions into stressed financial markets.
15. Jason 24. Apr, 2009 at 1:15 pm #

    Well if you want to use the reasoning of a ‘ten year old’, I’m afraid that pushes me out of this conversation.
16. Jason 24. Apr, 2009 at 1:18 pm #

    I won’t post my email on here, but if you let me know yours I can email you.
17. NAV 25. Apr, 2009 at 8:37 am #

    I can’t understand people who believe home prices will rebound if oil prices rebound – and please make me understand why?? whne in July 2008 oil was at peak –
    http://www.nyse.tv/crude-oil-price-history.htm

    home prices in Edmonton were dropping and inventory was going up.
    I wouldn’t invest 2 cents on people who hve “intuitions” that prices will rebound when oil prices do.
    Edmonton is not an island, there is no shortage of land, there was no reason a lot of 60K should have been going at 150K.
    Lot of ” intuitive “investors have been buying land to develop around Edmonton but if you fo 5 km away there is more and more and more land …..
    It was a speculators market in 2006 and 2007. The prices have to come back to 2005 levels to be more affordable.
    I bought my house in early 2005 and my rent was 575 and 25 yr mortgage worked out $576 a month+ taxes and condo fee.
    So got more living space but was paying extra for condo fee + property taxes.
18. Jason 25. Apr, 2009 at 9:35 am #

    People like to oversimplify things so they feel like they understand them. I think this is where the ‘one-to-one’ correlation between oil and real estate prices comes from.

    In reality it’s almost like trying to predict the weather though… it’s virtually a chaotic system beyond a short horizon. There are a lot of variable involved and it’s very sensitive to small changes in those variables.

    To simply say oil leads real estate prices is almost like saying… hey, we’re in a global warming trend, it should be sunny tomorrow!
19. FinancialTruth 25. Apr, 2009 at 5:45 pm #

    Please read this article before you take Sheldon’s “analysis” too seriously:

    http://www.lewrockwell.com/englund/englund24.html
20. Real estate Philippines 10. May, 2009 at 7:41 pm #

    Cool vide. You make me excite to try what you’ve said..

    Deirdre