Here 
is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:
New listings: 483 (536, 516, 469)
# Sales: 441 (359, 377, 437)
Ratio: 91% (68%, 73%, 93%)
# Price changes: 233 (246, 207, 239)
# Expired Listings: 102 (112, 204, 85)
# Withdrawn/terminated/etc. listings: 46 (29, 21, 27)
Net loss/gain in listings this week: -60 (36, -86, -80)
Active listings for single family homes: 2264 (2320, 2326, 2400)
Active listings for condos: 1934 (1969, 1935, 2008)
Another week of high sales, perhaps there will be more sales this month than I predicted last week. So far this month there have been 1577 residential MLS® sales in the greater Edmonton area – if the pace continues we will see over 2600 sales this month but I do think the pace will slow down as the kids get out of school.
The average MLS® residential sale price is $328k, single family homes at $371k (both down slightly from last week), and condos at $249k (up from last week).
Have a great weekend!
When do you think sellers will get tired of chasing the market down and instead wait for the market to come to them.
After a month or more of strong markets, I expect that convincing a seller to lower the price is becoming a hard sell.
Depends on where interest rates go in the month or so. Don’t forget the annual seasonal peak as well.
Enough with the ‘hey this is only seasonal’ shit. If it was 50 degrees this summer would you call that ‘seasonal’ or a global warming trend??
So the last 20 odd years on record showing, by the numbers and without a doubt, that this is the seasonal up ticket few months means nothing right?
Very true. This summer compared to last there are a lot more “marginal buyers.” aka people that can now afford what they want due to government policy. This is an all at once thing so there is a rush of buyers. So we are getting upticks even in the most unlikely markets (vancouver *cough*). Similar affect was when they introducted 35-40 yr mortgages in ’06 there was again a rush of buyers. I personally think its hard to tell what direction we’ll go next. If they can get the move up buyers going in again then perhaps there will be a recovery otherwise this artifically elivated number of buyers will be exausted. However there is also all this new debt pushing up bond yeilds. They can do yet another round of quantitative easing however it costs more each time and funny enough introduces more debt.
Its all about affordability, look at any time in any country where interest rates have dropped by 2% in a month and you’ll see alot of sales. Look at what happens when then rates go up and property values go down…as you reduce your market. It’s simple economics.
Now if we were experiencing lower unemployment, higher immigration or higher wages then previously that would justify growth in prices…but we know for now none of these things are happening. If they did that would justify your comment.
Finally with about 7000 Residential MLS listings, 1000 spec homes, and another 1500 “private” listings in the greater edmonton area I certainly wouldn’t say the sellers have all the leverage.
Worth noting, beyond the interest rates is last year. In Jan 2008 the average house price was 390K, these prices went up 10K for the spring market peak (April/May/June) and by December were down to 362K. Between Jan-May ’08 many were saying the housing market had recovered, but even before the economic crash in October prices were already down to 372K. So the signifigance of time of year is not to be dismissed, 80% of the time prices drop 2-3% from spring to years end (that would be 10 grand on the average house, enough to totally cancel out the interest rate advantage).
So this year prices have gone from 363 to 376, just 3K more then the price rise last year. So if interest rates stay low we are probably in for at least the usual seasonal decrease, if they go up we can probably add additional depreciation for every 500 basis points.
Andrew
You make me laugh how everything you post you try to twist it in favor of housing values going down. You post the same rhetoric day in and day out.
Here’s a puzzle for you.
How can a country’s housing prices go up – way up – when unemployment is at an 11-year high, manufacturing’s been decimated, its major car companies are bankrupt, its national airline bailed out, retail sales are plunging and its federal government’s finances have fallen off a cliff with the greatest deficit in history?
Answer: they can’t. Unless, of course, you’re the Canadian Real Estate Association.
http://www.greaterfool.ca/
Housing prices aren’t going “up – way – up”. They are down 15-20 % from the highs and have been stable for the last couple of months. My question is when can you expect sellers to start resisting real estate agents call to race the market to the bottom. I can’t be the only person who has looked at months of declining inventory, good sales/listing ratios, and active markets and asked why should I lower my asking price. The only effect doing so in the past has been other people doing the same. Dropping my price doesn’t do the market or me any good.
There are two sides to any transaction. The focus of commentators on this blog has been buyers. Maybe its time to ask what a rational seller will do.
Yes, I totally agree with you SEll side, I own a house and do not like going it down in value either. Especially now affordability is not the big issue.
“Especially now affordability is not the big issue.”
I think affordability is still an issue for many families out there, although not in the spot light, I still hear many in my office who state that even though there are properties that have come down in price, and are within reach, many homes in the types of neighborhoods you would want to raise your children in are still way out of reach.
Not to mention there are still many sellers who are still out to lunch on pricing. All you gotta do is look in and around 118 ave area towards the city core to see homes listing around 300K with no reno’s or work done at all. For example (yes I cherry picked a few):
E3182947
E3185246
E3179721
Edmonton has come along way since the peak, but there are still many properties that need to realign with reality instead of believing they hit the lottery with a 1920 home and a dugout, no fenced yard, and 20 ft away from the bissel center. Look at comfree, kijiji, or usededmonton for example, many sellers over there still think its summer 2007.
Don’t get me wrong, I’m not pleased about lost value as much as the next guy/gal, but don’t think just because the $400K house is now $350K that all of a sudden affordablity is not a big issue.
One mans rhetoric is another mans common sense. I post the data from which I draw my conclusions and people can derive from it what they may. I am certainly open to different interpretations of the market so long as they are predicated on actual data, When people (or associations) say “buy now” or “prices are skyrocketing” with no supporting data that is by definition rhetoric.
I certainly don’t think my interpretation is the only way to read the data, but instead of calling it rhetoric or incorrect why not provide alternate interpretation or additional relevant data to support a differiung conclusion. I am not a bear, if the data pointed to price escalations I’d certainly present that data, but I can’t find any that supports that. Not to say it couldn’t happen, but no data I am privy too leads to that conclusion.
Excellent post Sabb. I agree with you 100%. There are two kinds of sellers out there – the first kind are priced appropriately and seem to sell at very close to asking price without too much fuss. The other kind are, as you say, living in summer 2007. You often hear – “Well THAT guy sold his down the block for $400K so I want $400K too”. The worst people are seniors who think pink wallpaper, green carpets and bad panelling throughout the basement is “nice”. There is just no reaching these people. They are completely out of touch with what “current” means and expect to get the same money for their dated ratty stinky old boxes as homes that have been properly maintained. Also, some seniors believe that maintaining a home means keeping the kitchen floor swept. Not to pick on seniors, but I’ve seen some laughably stubborn old people completely out of touch with reality. They could at least get that chair grampa has been farting in for 50 years out of the living room!
Nothing makes me feel out of place more in a room than seeing…. THE CHAIR! Or the cat’s chair. You know the one. It’s so furry it looks like it might stand up and walk out of the house. I bet realtors just LOVE showing old people homes like that.
Cheers,
E-town
Alberta is leading the nation for growth when it comes to the number of people receiving employment insurance benefits
http://www.edmontonjournal.com/business/recipients+sharply+Alta/1723611/story.html
Mortgage defaults soar!
Province’s delinquency rate rises for 19th month in a row
http://www.edmontonjournal.com/Business/Mortgage+defaults+soar/1723557/story.html
“Don’t get me wrong, I’m not pleased about lost value as much as the next guy/gal”
Why? You like paying higher and higher property taxes that go hand in hand with unrealistic home values? You plan on cashing out today and using the cash to live on? Increase in housing wealth means nothing until you cash it in – other than paying more taxes.
What’s really wrong is there is no “new equity” to borrow against allowing Oilbertans to further leverage themselves into essentials like granite countertops and Mercedes SUVs.
The bling SUVs bought in 2007 are already showing their polishing swirls – the shine is coming off of these fast depreciating “assets”. I guess we need more hyperinflation to keep the home equity ATM game rolling along. After all, it’s the Oilberta way.
Cheers,
E-town
That is exactly right. The people in trouble are those that saw the equity in their house go up dramatically, not because they lots of repayments and got their mortgage down, but because on paper, the value of their house increased exponentially.
There are some people that use(d) the equity in their house for good such as other investments. These people have also been hit hard because the ‘other’ investment has gone down in value……just like those SUV’s.
Umm… Last time I checked, property taxes don’t work that way. At least not in Edmonton. Property values from an overall perspective have absolutely nothing to do with what you pay in property taxes. The city looks at how much money it needs in the year for its budget, compares it to what they consider current market values to be, and then sets an appropriate mill rate that will collect the right amount of taxes. In other words, if property values go up, but the city’s budget does not, you would still pay the exact same amount of property tax as before. This however assumes that a) your property goes up at the same rate as the market, because if your property went up in value faster than the overall market then you would indeed face a tax increase and b) that the city budget remains the same. It is assumption b) that is the problem and the real reason why your property taxes go up. It has very little to do with market value.
I’ve been keeping my eye on the market all over south and west Edmonton and St. Albert the last 6 months. Homes that have sold are the ones who weren’t chasing the market. In the neighbourhood we’ve been looking at in St. Albert, the only homes left are the ones that started out unjustly higher than their neighbours. Although a few have come down slightly, I doubt those homes will sell until they realign themselves with homes that have sold.
Perhaps you should recheck….so if values go up and the mill rate stays the same, your taxes don’t go up? If values go up and the mill rate goes down, but the increase in property values more than offsets the decline in the mill rate, your taxes don’t go up? Your house must be unique from those across the rest of the city and the country.
Yeah whoever said affordability is not an issue must be right, how could it be with record foreclosures and nation leading unemployment growth?
Foreclosures by the way are another “hidden” inventory. The ones you see on the MLS are generally because the court has allowed a homeownder to try and sell his/her own house to attempt to recoup more money and the homeownder engages a realtor. Many, if not most, finance companies and underwriters will not use a Realtor and those homes get sold directly to the buyer,. Thats 150 Houses a month.
Hmm, I’m trying to come up with a way to explain this that would make sense to you… Basically, it boils down to this: If the city decides from one year to the next that it will operate under the exact same budget, and your house value goes up during that time, then the mill rate should go down by the exact same rate, so you would end up paying the exact same tax as you did in the previous year.
That has not happened, because from year to year, the city’s budget keeps going up. Thus if property values increase, the mill rate is not decreasing by a corresponding amount, because the city wants more money.
I don’t think it can be explained any clearer than that. Still disagree? Now that property values have fallen year over year, and even your city property assessment says so, how much have your taxes gone DOWN? Not much, eh? Point proven.
The unemployment rate and mortgage defaults are reporting the conditions that were and are present during the current market. The market has been ticking over in spite of difficult economic conditions. With all the reasons for the market to tank, why is it stable?
Here’s a quote from your link:
McDowell of the Mortgage Alliance noted Alberta’s delinquency rates were above current levels throughout the mid-1990s, so there shouldn’t be cause for alarm.
“If anything, we’re going back to a normal marketplace.”
Here’s a quote from your linked article…you can look at this through two types of glasses. A half full one or a half empty one.
“While from October to April the rate of increase in the number of regular beneficiaries was the fastest in Alberta, British Columbia and Saskatchewan, the unemployment rates in these provinces remained among the lowest in the country,” Statistics Canada said.
“Perspective is always necessary, and the impressive jump in claims is partly a function of the recession and partly that the number of claims was at an unsustainably low level between 2005 and 2008,” ATB Financial economist Dan Sumner said.
“Still, you have to go back to March 1995 to find a month when more Albertans were on EI.”
How can pre-foreclosures (before bank takeover) be another hidden inventory when most if not all are listed on MLS? They may not be listed as a forced sale (foreclosure)at that time but they are still listed, ie part of inventory. Courts usually give the homeowner 6 months to sell the propery. During this time most pre-foreclosures are sold, that’s if the homeowner has half a brain or has any equity in them. If not they are given back to the bank and sold at force sale prices, banks are not in the business of holding properties. So I don’t know how you can say there is a hidden inventory when most properties end up on MLS prior to the banks taking them over.
I fully understand how the process works. This is exactly why a system based purely on property values doesn’t work.. Cities are always eager to have more revenue and so they are quick to collect that extra revenue when property values move higher. They will also be quick to point out that you have no defense to argue against it as they simply say that your property values have gone up. The flip side of that is that when property values move to unrealistic levels and inevitably correct, their “budgets” don’t fall and so despite lower values your taxes will remain the same or still increase because they still need the revenue. It works the same way in every city in Canada and Edmonton is no exception. Get it now? Or maybe you work for the city propety tax collection department and you are attempting to justify the way things are done.
Yeah you are right, but the stats said 1,400 or so actual foreclosures in the past years, so there were probably many more who were able to sell their houses privately but after all that a net 1,400 were actually foreclosed on. These are the ones generally sold off the MLS.
Jo, I think the real point would go to the affordability arguement. Higher unemployment means people have less money to spend. So yeah unemployment is certainly not bad relative to other provinces (we are still the 4th lowest), but it also means there is less money in the economy which means the fundimentals that sustained price growth are no longer there.
It was low unemployment, high migration and high wages that allowd house prices to increase dramatically…change those dynamics and then you should see an effect.
lol, no I certainly don’t work for the city tax department. And I’ve never seen a government that didn’t want to collect more taxes, or even one that needed an excuse like property values as cover for raising taxes either. All governments raise taxes all the time. This was happening long before the city used market value assessment.
I don’t believe that market values in this city have any bearing on the total money the city decides it will collect in taxes each year, nor do I see any evidence to support your assertion. But you are free to believe what you like.
For what it’s worth, I fought my property assessment this year and won. My taxes actually went down this year, lol.
so what did you base your argument on to justify that your taxes were too high? The City’s budget was too high or that their assessment of the value of your property was too high? I guess it couldn’t have been your property assessment as you don’t seem to believe it is a factor. That being said, good on you for fighting it and getting a reduction.