The Realtors Association of Edmonton noted in its monthly press release that real estate sales and prices are on the rise in Edmonton. While this is true, it is difficult to say how long this will continue. Our thoughts are that the increases are due to seasonality (prices and sales almost always rise in the spring) and historically low interest rates. So when things slow down later this summer, how much slower will it get? Fixed rate mortgage rates have already started to increase – if rates continue to increase, and demand seasonally slows there is potential for an even slower market this fall than last fall. On the other hand, new listings and inventory are not close to what they were last year:
As we like to remind everyone, there is a close relationship between inventory and prices:
Looking at absorption, the Realtors Association indicated that 3.4 months is typical for the current sales volumes. While I'm not sure what typical is, it is cetain that absorption is much lower than it has been in a long time:
If you are thinking of buying, make sure you ask for a rate hold from your lender or broker and get it for as long as you can. You never know – there could be some good deals this fall, especially if you have a great rate reserved!
Hmmm… the flavour of the day now is to have a rate reserved for, say, 90 days.rates are going up by the banks because they say it’s getting more expensive to get funding on the markets right now…
Who’s doing this? The huge financials who just got bailed out for their criminal mismanagement?
huge speculation are ongoing on the markets now… JP Morgan is buying oil, speculating on their futures AND stocking huge oil reserves on tankers off the coast of Africa! JP Morgan received a huge bailout. They turn around and screw the taxpayer. How is this tied in with Edmonton mortgages rates? They’re all tied in together, on the markets…
Back to RE in edmonton: expect a slowdown in July along with price reductions. All appreciation of the past two months will be wiped out.
Could this be the “new” for Edmonton?
Seems the numbers are not as “low” as the pre-2006 years but not as “high” as the BOOM! peak numbers … seems we are stuck in the middle. Maybe stuck isn’t such a good word to use but, we seem to be leveling off the burning plane we all have been praying doesn’t hit the ground in an epic fireball.
my $0.02
It’s really hard to say what’s going to happen at this point, the first two weeks of June will likely be strong as people will do some last minute buying before interest rates take their first step up. As interest rates normalize demand will drop and we’ll also be out of peak season, both noted by Sara and Sheldon.
So if in the short term interest rates stay low we may see volume/price trends on par with last year or slightly above which means pricing falls 3%-5% from the spring peak. The flipside to this is that we likely see decreased demand for real estate over the longer term as many people won’t be anxious to give up a 4% interest rate to go buy something else in 2-4 years time (when rates are 1.5%-2.5% higher). So over the mid term we see prices keep up with, or slightly trail inflation for several years.
If interest rates normalize then we look to the macro trends and local economy to predict what will happen. The local economy, while okay comparatively speaking, is seeing it’s highest unemployment in a number of years, wages are trending slightly down, consumer spending is dropping the fastest of anywhere in Canada. Globally property markets have yet to stabalize (though the stock market may have). So with higher interest rates I think the scenario in which we see accelerated depreciation of homes is likely, perhaps as high as 10% (remember that price drops started while the economy was robust, so I’d forecast a somewhat higher pace of depreciation at normal interest rates – as these would shut some buyers out of the market). In this scenario we recover more quickly when the economy turns around because buyers aren’t locked into homes by favourable mortgage terms and are more mobile
Either way in 10 years time we probably end in the same spot regardless of the scenario, with inflation probably pretty flat appreciation, if not slightly down or up. The long term outlook will be determined by how our provincial gov’t addresses it’s present budgetary problems…right now the “Alberta advantage” is not sustainable so if policy makers don’t address this we will no longer attract immigration as we have in the past, nor will we create the jobs that have been a consequence of full gov’t coffers. In short we may need regime change to maintain our advantage.
I am trying to understand numbers for new MLS listings. Is it per month? You have on your figure about 3100-3200 new listings, but average weekly new listings are about 500. Did not see when it was anywhere close to 800/week. Thanks.