Here 
is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:
New listings: 501 (621, 432, 486)
# Sales: 344 (340, 330, 300)
Ratio: 69% (55%, 76%, 62%)
# Price changes: 239 (266, 233, 276)
# Expired Listings: 102 (308, 303, 134)
# Withdrawn/terminated/etc. listings: 37 (25, 32, 71)
Net loss/gain in listings this week: 18 (-52, -233, -19)
Active listings for single family homes: 2488 (2486, 2411, 2522)
Active listings for condos: 2015 (1999, 1905, 1987)
The Realtors® Association of Edmonton reports 1002 sales so far this month, which could put us over 2000 sales for the month – well ahead of last year.
The average residential sale price is sitting at $328k (up from $312k last month). Single family homes are at $367k and condos at $$253k (both up significantly from last month).
Obviousy the market has stopped retreating, but how long will it last? Generally sales and prices peak in April, May or June each year. Prices have either hit bottom, or a false bottom – only time will tell.
Have a great long weekend!
No comments?
Maybe the negative folks have gone…
For myself, this could be part of the normal spring rally in prices. If prices do not go down in July-August, but maintain, this could obviously mean that we’ve hit bottom.
We’ll see.
My prediction of a further 5% dip in SFH prices by end year still sticks. 2010 will see no fluctuations but by mid 2011, prices will go up at inflation levels.
2011 will be when the economy is in full swing again. As long as governments have learned their lessons from the greedy financial sector and decide to regulate.
Inventory in Calgary, Vancouver, Toronto, are Montreal are all up over last year between 15 and 20%. Edmonton on the other hand is down 40%!
Anyone have any idea what makes us so special here?
Also, thought it was interesting that as of yesterday, average prices are up over last month by 6.5%.
This, however, is mostly because average house size went up about 5% and really $/sq ft is only up 1.5%. That is still however the equivalent of almost a 20% annual increase. Better run out and buy?
IMHO, there are 2 main reasons our inventory is dropping, while other cities increase.
1). Investors exited Alberta en masse in the spring/summer of 2007 for Saskatchewan. However much of the glut of investor spec as well as builder spec inventory never arrived on the market until spring of 2008……the inventory peak.
2). There is an unknown number of potential sellers who are renting out property, not because they can’t sell it, but prices they can command aren’t enough to cover what they owe on the property.
All in all though I would just say the housing cycle downturn started in Alberta first and will likely end here first.
To Edmonton Expat…I agree to a point but I’ve given up trying to figure out when the bottom has or will be. Personally I will be looking for 3 signs.
Continued strong sales especially in an individual price catagory…let’s say 300-400 grand. This will lead to a hollowing out of inventory for certain segments leading to pricing power and more optimism that people who
want to sell their house and move up, will be able to.
Large increases in new home starts. This will be a result of the above mentioned hollowing out of certain price catagories.
Third, and for me most important, is sentiment. We have to start getting some good news stories about sales, prices and starts. Ask anyone who’s been out looking for a house at let’s say 340,000, and they’ll tell you that they sense a change in the market right now. You can’t just lowball someone and wait till they cave like you could at this time last year. At higher prices let’s say over 500,000 I think you can still get away with that though.
First: Calgary is actually down slightly more than Edmonton. Calgary SFH listings are down 40% while Edmonton is down 39%.
Second: During 2005 – early 2007 Alberta had insufficient re-sale listings and new builds so this caused an under-supply/over-demand problem. The basic reasons for this was; extremely high immigration rates, people holding their old houses expecting to sell for more at a later date and some flipper/speculation activity. More or less in the short term (2005-2007) these reasons caused the exceptional run up in prices and lack of housing in the we saw in Alberta during that period. When the tide did finally change in 2007 we saw not only a flood of re-sale listings but also a flood of new builds hit the market at the same time. Everyone that was holding/renting out/building a house was now trying to cash out and all at the same time. This reversed the previous trend and caused the over-supply/under-demand problem that we saw in 2007-2008. The rest of Canada, with the exception of Sask, never went through this.
So I think the current reason for the higher listings in the rest of Canada is because of the economic conditions the world is now facing. Recession, jobloss, wealth effect, etc, etc. People either have to sell or they want out becuse they think the world is on the verge of collapse This is nothing new, it happens every recession, people are either forced out or run for the exits. We’ve seen this every previous recession and will see it during every future recession.
Typical spring jump in activity which is most likely accentuated this year by some buyers who have been sitting on the sidelines for the past year or two waiting for a correction. All I hear is it must be a good time to buy. The current extremely low interest rates are helping to drive that mentality. Now that these people have stepped in to buy, there will be no further future demand support. What does that mean? The downward price adjustment will continue and maybe even accelerate once the busy spring season is over. Ongoing job losses will make that a certainty. Furthermore, look out when interest rates move sharply higher as they will over the course of the next cycle – and they will be move a lot higher than people expect. If you are a super leveraged owner, then good luck.
I don’t know about the specifics for other areas of town, but I live in Lewis Estates and last year at this time there were 14 houses for sale between 300 and 360k, listed on MLS. Now, there is 1. In the entire “west of Henday” region, there is only 7, down from around 50.
Your predictions are in line with what the CREA released thursday: http://www.crea.ca/public/news_stats/pdfs/crea_forecast_feb09.pdf
8.5% decrease in prices for 2009, and a nominal decrease (1.1%) in 2010. The CREA actually represents Realtors across the nation, so are typically more bullish then organizations that don’t have a vested interest in real estate but these numbers are only slightly better then what the banks/gov’t is saying and agree with many predictions I’ve seen. Part of the seeming accuracy may be related to the fact that last October Canada’s anti-trust regulators, in draft findings, recommended that CREA and the Boards hire independent third parties to gather/generate their stats, and avoid the type of dissemination/manipulation of them we’ve seen in the past. (CREAs response to these can be found here: http://www.cb-bc.gc.ca/eic/site/cb-bc.nsf/eng/02960.html).
Anyway I see two scenarios, what’s happening now is a combination of normal seasonal patterns, as Sara notes, and extremely low interest rates. We can see that inventory has started to build again so based on the seasonal pattern we could see similar trendlines to 2007, but far less pronounced (inventory building, prices dropping). Interest rates are the WildCard, based on the 5-year benchmark for bond rates which hit the high for this year last week (at a whopping 2.14%) we should see interest rates rise which will result in a scenario close to yours or the CREAs.
However – if the BOC engages in a policy of quantitative easing, a la the US or UK, we could see mortgage rates actually drop and I think that would produce a very different scenario in which prices could go up. Reading others’ comments it seems historically low interest rates are driving a lot of activity, these being lowered would get more people in the market. I’m not sure the long term implications of this would be great, but it could change the picture.
Yeah as prices went down and some sellers couldn’t realize their pricing expectations many listings simply expire or withdraw – last year we had as many listings expire as we saw sell.
Quick post on interest rates, last week I mused on whether or not a 10 year mortgage would be a better deal then a 5 year as rates could go up. Looking at all rates since 1953 I found the following to be true:
(1) 30% of the time the buyer would benefit from taking a 10 year mortgage versus a five year if the difference is rates between them is 0.5%
(2) 15% of the time the buyer would benefit from taking a 10 year mortgage versus a five year if the difference in rates between them is 1%
(3) 7% of the time the buyer would benefit from taking a 10 yr versus a 5 at a 1.5% difference.
So most of the time it’s a bad idea. However the current rates are very low and as the economy normalizes I’d expect a larger then average increase is 5 years, so now may be in the minority of times this saves money.
I’m considering the 10 year for rental property as it gives excellent cost control (don’t need to worry about a huge increase in 5 years that would result in me being out of pocket month to month). On the rental property the potential downside (rates not going up) is mitigated by the fact the interest is tax deductible. Another option would be to have more then one mortgage on one property, a variable rate and a fixed rate, where you can make adjustments as rates are adjusted – you need equity to pull this off, but it hedges against all scenarios.
roadrunner all good points, spring boom, correction pausing, low interest rates encouraging big ticket purchase, and most especially the warning that interest rates can only go up from here. But downward pressure on home prices only holds water if migration out of Alberta begins. That would be caused by the combination of future, further job losses and better opportunities in other parts of the country. Lender and buyer sentiment seem to be against you in that purchasing a house is a long term commitment for both. Lenders are painfully aware of the delusional euphoria that led to the crazy run up in prices and the crash that followed and while forgetful, it can’t be that far from the buyers collective consciousness. Currently no further projects are slated to be canceled in Alberta and in fact Scotford is apparently hiring again as 2 of my electrician friends just turned down work in McMurray for contracts in the city to be close to their families, I haven’t looked into it but they had mentioned 1200 positions needing workers. What is on the books now are strong projects that make sense at today’s oil prices. Beyond the horizon are further rises in the price per barrel of oil. Sorry Eddie Expat guess my firm 50 per barrel was right and you were wrong short term back on the 17th but there’s still plenty of time to make an ass out of myself; time will tell. While little information is available regarding the discipline of cartel members in implementing oil cuts, the fact that prices continue to rise on little news other than supposedly rising or stable inventories and reductions in demand is peculiar, peculiar in that a rising price always suggest more buyers than available inventory. Obviously, should some trigger price be reached when cartel members break ranks and open the dump valves on stored oil we could see a glut of oil return to the market. Oil futures don’t seem to support this scenario but whatever. As well all the noise down south of the border is kind of funny in that while politically expedient to beat up on Canada’s “dirty oil” (which incidentally isn’t produced by oppressive states with a history of human rights violations, misogynistic laws, support for terrorism and a lack of respect for political, religious, property and human rights, but that dirt I guess pales in comparison to a carbon footprint), America needs to face facts. The only thing they export is war and the only way to keep their war machine running is on diesel and kerosene. China currently exports everything to everyone, everywhere, and also would like to have some oil to run their far less belligerent war machine. So America is going to have to figure out if it wants “clean oil” or to watch what is left of its empire crumble and go quietly into that good night. And that is just one facet of the geo-political oil gem that I have observed with my small little, oh what did you call it Edmonton Expat, my “small snippet of the whole picture…” maybe one day I’ll rise to the dizzying heights of whatever mountain you inhabit and have a profound view of the rabble I currently scurry about with, but until I join you I’ll avoid pronouncing such things as, sleepless nights keeping you up, job in jeopardy.
As for your suggestion to drive up to Ft.Mac to observe the destitution, desolation, broken dreams and the Alberta economy shrinking before my eyes like some grotesque wax mask in a fire.
1-Been there too many times to want to go back
2-Why would I have to go there to see what friends I have on the industrial side of Leddy have told me. And it’s not that bad.
3-Have you ever driven highway 63?
4-HAVE YOU EVER DRIVEN HIGHWAY 63? I have too much to live for.
Peculiar also is golds persistent high price, since gold is a hedge during inflation. But less ominous for the economy is the fact that gold is not rising but hovering at around 900 dollars an ounce. It did this once before in the early eighties before plunging and destroying a ton of phantom wealth much like real estate recently did. The stable gold price would indicate buyers and sellers are about balanced and that there isn’t a lot of pessimism in the market currently.
So while unlike the Sylvia Brown’s that populate the world, finances, real estate and the few on this board I’m not going to make any predictions. Unforeseeable events can drive the price of oil down, gold up, and the economy that has recovered and is now cruising along relatively well into the ground leaving behind a huge crater. But it doesn’t look like that.
But if the current oil prices continue to rise, more projects will be added in Alberta not less, so job losses will not increase…here. The same cannot be said for the Ontario rust belt, where governments at all levels seem to be bent on destroying entirely what is left through a combination of wasteful transfusions of money into the cadaver of the auto industry and higher taxes for those who still have jobs to pay for this expensive transfer of wealth. Nothing like killing healthy industries to try to resuscitate dead ones. The unemployed their will have some options, go east and fish, go to Quebec and become a second class citizen thanks to not being “pure lain” or go west with little reason to pause in Manitoba. BC is still prohibitively costly to live in and suffers from similar government misadventures to destroy job creating free enterprise as Ontario, but is somewhat disguised by the rent it collects from it’s vast natural resources. That leaves Albeta and Saskatchewan. And since economies must expand organically, the Alberta economy being much, much larger than the Saskatchewan economy will likely offer far more future opportunities to the workers of Canada and the world.
One other thing to consider. If real estate is not an investment for you. Buy what you want, when you can reasonably afford it. Timing the market is stupid, you have better things to do.
If you consider real estate an investment, then ask if you want to be a landlord first. As we have seen property turns to quickly and becomes too illiquid to safely speculate on it and you’ll end up losing it for lack of buyers, and potentially more should you have to pay back the bank and CMHC, or renting it and waiting for some distant time when you can recover your money…(are there any safe speculations asks a man who’s wife likes speculating in the stock market). But if you can make five years worth of gross rents with a quick sale, great, but that isn’t normal.
Currently low interest rates and (relatively) low prices provide an opportunity to get a home, but be aware rising interest rates will in the future consume more of you own income or any rents you may collect on a rental unit. At the same time rising interest rates will translate into fewer qualified buyers in the market which will make future disposal of the property from here on in more difficult but should the Alberta economy remain strong with many jobs and in-migration, that will also mean competition by tenants for rental units will also rise and rental incomes may also rise with it providing future stable income for the owner. (And late night phone calls to unclog toilets, and repair furnaces).
So my prediction for future home prices in Alberta is, if more buyers come out than available inventory, prices will rise and if fewer buyers come out for the available inventory prices will fall. But if your smart, either recognize that either way you can make money in real estate, or find a better hobby than trying to predict short term trends in real estate. It makes more sense and might be more profitable if you put that kind of energy into shorting stocks with high volumns of traders.
Oh and interest rates are likely as low as we’ll ever see them.
Sorry if I come across as hostile Eddie Expat. I’m not really, just that I’m the equivalent of a human wire brush-abrasive. Ever since the demise of the newspaper industry and with it the pulp and paper industry, I find myself reading this and other informative sites for the stats and information. Sheldon and Sara have replaced Johnathan Chevreau in my world, and every once and a while I read the comments to get my letters to the editor fix. The nice part is rarely I’ll reply; in the age of newspapers I never could.
Sorry, my bad with the Calgary one. You are right.
My parents are in their mid 80′s and want to sell their 3 level 1,800 sq ft house and move into a condo. Being conservative they thought the house might fetch 340K, well they had an eye opener when the real estate agent came buy. He said they would they would be lucky if they could get 300K. Very clean and well kept home but it’s dated being from the 70′s. The RE said anybody looking at would probably want to gut it because of that. He also said that there’s a ton of these dated type for sale.
Sorry, mean’t 80′s era not 70′s era. Still close to 30 years old though.
Robert,
I am sure you can do some minor cosmetic changes to the house and ask for more than $300,000. As far as I am concerned, old house are quite often better built than new ones. If only cosmetic changes have to be done to make it look nice, I would not see why you should drop the price by 40k… unless you need to replace the cabinets, countertops, floowings, shingles, deck, etc, etc, etc… Why don’t you ask the opinion of a different realtor?
Robert
That would be a 4 level split. Never heard seen a 3 level split, unless they had it built with out a basement area. You can’t count the 3 level because it’s below grade, so it’s probably around 1100 to 1200 sq/ft of listable space. In this market, coming back to a normal market, not all houses are the same. An upgrade home is worth more than a never upgraded/properly maintained though exceptionally clean home. Back in 2005-2007 it didn’t matter what shape the house was in, they were all worth the same.
carllecat
I would never buy a late 70′s – early 80′s house because I used to build them. Back then builders wanted first ime home buyer houses built cheap, fast and using sub-standard materials. Windows were usually aluminum sliders or cheap wooden crank out casements with R-Values of less than 2. Vapor barriers, if they could be called that, were never sealed properly it was just a stapled plastic sheet (no chaulking used) with holes cut into it for all the electrical outlets, thus defeating the propose of the vapour barrier. Up until 1980 they were still building houses with 2×4″ walls thus only having an R-12/14 value. Subfloors were only ring nailed, not glued and screwed (started 1981). Houses during that era had lino and cheap multi-colored shag carpet. Also they started using chipboard for subfloors for a couple of years until they started to notice it was breaking down.
The majority of homes built back then were in the 900 to 1300 sq/ft range and they were all built using the above building techniques and materials. Once I had to build a house on an out of square basement foundation and to fix it they came back later and filled in the void with parging. Luckily this last building boom only lasted 2 years, not like in the 70′s-80′s era where it lasted 6-8 years. So just as I wouldn’t buy a late 70′s – early 80′s house, I sure wouldn’t buy a house built in the last 2 years. Even though houses built during the last 2 are built with far better materials than houses build in the 80′s, I think the workmanship during the last boom would be questionable at best.
DaBull,
That is good stuff to know. What do you think would be the period when considering the quality of a house? No late 70′s – early 80′s no 2000 – until now.
I assume the best would be in the 50′s – 60′s, period where building a house was an art reserved to specialists.
I’m asking, because we are going to go back in the market looking for a house soon and I want something that is built strong and built to last.
Do this first: Get a very through home inspection. Paying the money upfront it will save you a bundle down the road. If you don’t know what to look for hire someone who does, it’s always money well spent.
If your in the market to buy, buy something you like. I would just stay away from houses built in during 2005-2008 and 1975-1982. Housing built during normal times are built very well because builders can hire qualified trades during these times. Well reputable builder anyway.
If you want to buy an older property, buy something that has been maintained properly and has at least some money spent trying to keep it up to date. A house will last forever if it has been properly maintained. If the seller has spent the money to keep a house maintained properly you can see it and you know they have pride of ownership. If they just try and do some cosmetic changes after 30 years of neglect. Run… don’t walk for the exits. Unless they want to give a 75k discount.
I think some people think that once they buy a house they never have to spend another cent until something breaks. The only trouble with that logic is that if you wait for something to break, it’s already to late and will most likely end up costing more. Also there are a lot of do’it yourselfer’s out there that have no idea what they are doing… Stay away… Unless, again they want to drop $75K of the price so you can have their do’it yourself jobs fixed by a professional.
Many thanks, appreciated.
Be careful while selecting a home inspector as currently no qualifications are required to be one in the Province of Alberta (Amusingly, an acquaintance of mine who was a house flipper til the market went south has just become one – no real qualification except experience buying houses, but he’s been very busy as of late).
So basically you or I could hang a shingle tomorrow and become home inspectors.
So try and find one with an affiliation with CAHPI or at least a solid background in contracting or building.
Recents Stats Can Data
Sustained demographic growth in the West
Demographic growth remained higher in Western Canada in the fourth quarter. The four provinces west of Ontario all posted growth rates higher than the national level.
Alberta continued to be the province posting the country’s highest demographic growth. At 0.60%, the pace of Alberta’s population growth is more than triple the national rate.
In the fourth quarter of 2008, Alberta’s net international migration increased and reached 9,000, a level never before seen for a fourth quarter. The number of non-permanent residents grew by 6.3%, the fastest growth in the country. In addition, the province received 5,200 immigrants during the period, a level not seen in a fourth quarter since 1981.
The growth in Alberta was also supported by an increase in net interprovincial migration. During the fourth quarter of 2008, Alberta recorded a net increase of 6,200 people through population exchanges from other parts of the country, compared with 900 the previous year.
Let’s say you buy a house on the recooendations of a home inspector and months after you find out the house you bought has a major deficiency and that could have been prevented at the time of the inspection, is there anything you can do?
I mean the purpose of an affiliation is to limit to its minimum possible to amount of Schmoes in a profession. Buying a house is the most important purchase in ones lifetime and you are telling me that anyone can become a home inspector… The government should review his policy and give more protection power to the ones that count… the citizens/customers!
How ridiculous this can be!
Here is CAHPI-Alberta
http://www.cahpi-alberta.com/
Very Important:
When the house is being inspected be there with them. If they feel you need an engineer, get one.
There are some very good home inspectors out there. Not everyone is a crook like some people seem to think. Due your due diligence before hiring, buying or signing anything.
“The number of non-permanent residents grew by 6.3%”……
aka…”temporary residents”
The most you can claim back for a faulty inspection is the price of the inspection, so if one fails to notice a $10,000 foundation crack and the inspection was $299.00, you may claim 299.00.
And this is under government review right now (see http://www.servicealberta.gov.ab.ca/pdf/Public_Paper.pdf ).
While I don’t think everyone is a crook, I am amazed that the telemarketer who phones me offering insurance on my credit card is actually subject to more government regulation then the Realtor or Home Inspectors who work with what is the biggest purchase many people ever make, doesn’t make sense.
House prices went down through record population growth, and flat for many years as ALberta led the nation in immigration. So it’s great people are moving here but chart immigration rates vs resale prices by quarter and you aren’t going to find much of a correlation.
I %100 agree! I know there are some good inspectors, but there is so much money to make in that field that anyone can become a home inspector without any serious training and proof of competency.
Thanks for the link!
A very good point and something I’ve been saying on this blog for a long time. Not all inspectors are created equal. The CAPI and ASHI designations are fine but they have no code of conduct or disciplinary procedures that I am aware of. Training is minimal. Two key things I’d look at are:
Do they have workers compensation insurance? You hire them, and you could be responsible for them if they slide off the roof. I had an inspector lose part of his finger during one inspection when the kitchen cabinets fell on his fingers.
Secondly do they have errors and ommissions insurance in case they miss something?
I actually give my clients a list of about a dozen questions to ask their inspectors.
CAHPI indeed has a Code of Conduct ( http://www.cahpi.ca/index.php?option=com_content&task=view&id=24&Itemid=46 ) and have a disciplinary committee. Having said that, I could find nothing on entrance requirements beyond passing courses offered by CAHPI and a peer evaluation, so to your point even within CAHPI one would find a range of competence.
The proposed gov’t regulation would hopefully level the field. I know the proposed model does mandate levels of insurance coverage.
Add lag and see what happens.
carllecat, choose your home by who built it not what year it was built. Newer is always better if built properly. Have your new home prospect inspected thorougly and you will not go wrong!
Even with lag there is no correlation. Mind you we see migration quarterly but population annually so I used annual numbers.
I think we make the mistake of ignoring macro trends in favour of looking at oil prices, population changes ect. At the macro level we know US house prices had a big run up and have been declining since Q1 2007, UK house prices had a run up and started declining in Q4 2007. So while Oil Prices and migration are factors, the global economy is also one. Some of that’s driven by the media, I personally reduced my exposure when the US market started going down, remembering Trudeaus “Sleeping beside an elephant” analogy.
A lot of local positive factors are offset by the fact the market has shrunk, while house prices were increasing between 10%-40% a year wages were increasing 6% a year…so basically home ownership is an option for fewer Edmontonians, you’d need to import alot of well paid population to increase the market (lowering interest rates also increases the market).
All signs point to a modest recovery by 2011 in my mind, but I think citing population forecasts (btw only 22% of AB immigrants come to Edmonton anyway) and oil prices are red herrings.
Quick question – when you are looking a CREA report – such as the one above (http://www.crea.ca/public/news_stats/pdfs/crea_forecast_feb09.pdf), when it gives a predicted price for 2009, is that the forecasted average price for 2009 or the forecasted price at end of year, or?
Thats the average of all months and for all of Alberta, so the actual year end price would be lower.
The CMHC today said that final price for an edmonton resale property would be $310,000 at the end of this year.
http://www.edmontonjournal.com/Business/Edmonton+housing+starts+continue+falling+this+year+CMHC/1609177/story.html
Price recovery in 2010?
CMHC is mostly off track with its predictions…
I keep to my guns, a further 5% decrease by end 2009, prices stalled in 2010, prices go with inflation in 2011… until the next crazy boom and bust of 2022!
So what you’re really saying is we will have to drop another 11% from where we are now to meet your ‘further 5%’ prediction? I say this because May’s prices are up about 6% over April’s right now.
“I say this because May’s prices are up about 6% over April’s right now.”
Show me a May or June that did worse pricewise than April for ANY given year.
The bull herd around here refuses to accept even the possibility this price gain is not a trough, bottom or bounce point but just normal spring phenomenon.
One cannot know what this *really* is until fall if you ask me.
Cheers,
E-town
Thanks Andrew.
Expat, you are forgetting the price decline in 5 years when all the 3.75% mortgages come up for renewal at 6.5%. I’m half joking of course, but if it did come to pass we’d have a “made in Canada” mortgage meltdown.
I fully agree that there are seasonal effects at present, but, even you E-town, can’t deny that 6% in a month is significant.
April-May during the boom years of 2006 and 2007 were 6.2 and 5.1% respectively.
The April-May average of the 4 years previous to that was 1.2%.
April-May in a ‘down’ year, 2008, was 0.5%, and was also surrounded by two negative months.
The fall will be telling, this is true, and I am by no means saying we’re on the verge of a boom again, but it’s hard to say we’re as bad off as last year anymore. Prove me wrong…
Jason, I don’t think even this month will close out 6% higher, the price per square foot is up one percent (as of May 11) which suggests the limited data we have this month may be weighted towards larger, more expensive homes.
Right now we are better off then this time last year, thanks to cheap money – which is the upside. The downside is that inventory has increased by 187 units in the past three weeks, in order to see improvements from last year inventory needs to stop building. Increasing inventory will not sustain increasing, or even stable, prices.
As of today $/sf is up 1.9% over last month which, compounded, is a yearly equivalent of over 25%.
But, you’re right, the average increase of 6% is primarily due to larger homes selling. Average sq.ft size is up 4% over last month. Props for catching that; I wondered if anyone would.
Yes inventory is increasing, but this is largely seasonal. Inventory is down from last year by 40%! This is huge, and not many people realize it yet.
Oh, by the way, inventory is down 50 units in the past FOUR weeks. I can pick and choose too
Okay I’ll pick these stats
Jan-May 2007 SFH Prices Increased 18%, from June thru Dec they declined 15%
Jan-May 2008 SFH Prices Increased 3%, from June thru Dec they declined 10%
Jan-May 2009 SFH Prices May increase 3-4%, what will make June thru Dec any different?
The local economy is certainly worse then last year, the Global economy is going to see some pretty big shockwaves from the big bankruptcies.
As the owner of several Edmonton properties I’d like to see prices go up to (FYI I am not a “flipper”, everything was bought pre 2004). However as a realist there is nothing to compel me to believe they will.