Here is our update on the Edmonton real estate market. (Previous week’s numbers are in brackets). For the past 7 days:
New listings: 435 (456, 492, 455)
# Sales: 191 (198, 276, 228)
Ratio: 44% (43%, 56%, 50%)
# Price changes: 324 (341, 390, 363)
# Expired/Off Market Listings: 494 (174, 221, 226)
Net loss/gain in listings this week: -250 (84, -5, 1)
Active listings for single family homes: 3287 (3454, 3395, 3374)
Active listings for condos: 2182 (2253, 2232, 2209)
That’s the largest drop in inventory we’ve seen this year, which suggests to me that inventory has peaked for the year. For the greater Edmonton area it seems inventory peaked in June but for Edmonton proper listings kept coming on in July. Recent reports of a dropping vacancy rate may encourage home owners that didn’t sell this year to rent out their properties instead of coming back on the market.
Jamurphy from yesterday,
Here are a couple of links. Hopefully they work out. I’m sure the blog protects against unknown addresses, so maybe that has been the problem.
http://www.thestar.com/business/article/807679–canadian-households-among-the-most-indebted-of-oecd
http://www.theglobeandmail.com/report-on-business/canadas-brewing-debt-storm/article1537623/
http://ca.news.finance.yahoo.com/s/14092009/2/biz-finance-majority-canadian-employees-living-paycheque-paycheque-survey-shows.html
BTW, I totally agree with Sara’s analysis of the drop in inventory. I talked to two people today who are going to put their properties on the rental market as they cannot get their asking price in the current market. Time will tell if it was the right decision. They both actually have listing agreements that extend through August, so they are still listed with the current inventory. Inventory could definitely be on the way down for the rest of the year.
Very sorry about your comments not being published. It does require us to approve comments with links and we were away on holidays and not able to moderate efficiently. Thanks for your patience and sorry again.
Jamurphy, the links were moderated again. I’m sure the blog rejects unfamiliar internet addresses. The links on “Canada’s brewing debt storm” were from the Globe and Mail. Just google the title. The Toronto Star article discussed our world ranking as one of the most indebted countries on earth in terms of personal debt.
Here is a CBC article that deals with the fact that the majority of Canadians live paycheque to paycheque
http://www.cbc.ca/money/story/2009/09/14/payday-to-payday-problems.html
Hopefully this works
BTW,
I totally agree with Sara’s analysis of the drop in inventory. I talked to two people today who are going to put their properties on the rental market as they cannot get their asking price in the current market. Time will tell if it was the right decision. They both actually have listing agreements that extend through August, so they are still listed with the current inventory. Inventory could definitely be on the way down for the rest of the year.
Just wait to see what happens to inventory once current reluctant sellers realize they are losing money every month they wait to sell, as prices keep dropping.
Housing has been a classic “bull trap” in 2009, and the significant loss of jobs, income, and asset wealth will lead to long term housing price declines.
Once we have several months straight of price drops, we’ll see inventory climb again.
Sales are falling off a cliff…lowest in how many years?
If people are “losing money every month they wait to sell, as prices keep dropping”, just curious as to what would motivate them to keep it on market? Do you mean investors who have a lot of properties and need to sell fast to or actual homeowners who reside there? I’m just thinking as a homeowner, I would stay and just wait for a better market. But I’d like to know what others think of this?
I have been tracking Edmonton’s higher-end single family home inventory(700K+) since 2006. It is absolutely fascinating to watch, house by house, how a sale evolves
In 2006, and up to the first quarter of 2007, inventory disappeared very quickly, and then things changed drastically.
From March 2007 on, homes started sitting on the market for a longer time, and I started to see price decreases, for the first time. Eventually, many homes would drop off, at the 90-day or 180-day mark, only to reappear again, later, not once, but often multiple times.
Depending on the mood of the day, these houses would come back at the same or even a higher price, when the media talked about brisk sales and higher prices, but most of the time they would come back reduced, again, and again and again…..
It’s interesting that pretty much none of the higher-end houses that had sold prior to 2007 have come back on the market, yet. Those probably were legitimate sales, not expirations, with satisfied buyers.
By now, I have a library of binders, filled with the crushed dreams of many home owners who are trying to sell a house that probably was the cat’s meow in its day, or a newer construction that was supposed to increase in value, quickly.
I am only tracking Edmonton’s inventory, but it’s hard to ignore the fact that there are a lot of luxury houses outside of Edmonton, also waiting for buyers with deep pockets to come along and share the dream…..
We saw a similar down-turn in Torono, in the late 80s and early 90s. At the time, prices dropped fast and then stayed flat for many years. Prices only started moving up again 6 years later, and many homes did not reach their peak levels until 11 years later.
Tracking each house individually and noting each price drop provides better insight than looking at price stats, overall. What my binders seem to indicate is that the inventory above 700K is doing worse than stats may lead us to believe.
Obviously, homes in that price range do sell. The Real Estate Board’s quarterly statistics prove that. But any seller of a high-end home should seriously question how their asking price compares to the perceived value of their real estate.
This sounds all too familiar. I remember watching story after story from the US just at the point when their real estate market began to drop. They interviewed people who had recently purchased a house either as an investment or were trying to sell a house they were currently living in to move to a new house they had purchased. Almost every single one of them said they would rent their house out until the market came back. Instead of taking what would have been a small loss at the time, most have either been wiped out or have lost significantly more.
This generation of Canadians have not lived through a full blown bubble crash. I still remember as a child in the early 80′s how a few people we knew who were heavily invested in real estate got wiped out when the prices in Alberta crashed after they had inflated significantly. I can remember my parents talking about how their house was worth 150,000 at the peak and 10 years later they were lucky if they could get just over 100,000 for it.
Fear and greed drive asset bubbles, fear and panic causes them to come crashing back to the mean average from where the bubble began its ascent. I cannot relate one incident in history where a bubble has not eventually burst. I can however bring up a thousand examples of where they have.
Sara,
No problem. It is probably very wise of you to preview links before they are submitted. I assumed you were probably just tied up. Hope your holidays went well.
The last time real estate ‘popped’ in Canada was in the early 1990′s, particularly in Ontario. The most recent drop in real estate prices in 2008 / 2009 wasn’t that significant compared to what other countries (UK, Ireland, US, etc) have experienced.
One also has to be very cautious when trying to compare what has happened in the US and what could happen in Canada. In the US it was the combination of greater speculation wrapped up with the use of ‘exotic’ mortgages and securities that lead to the spectacular crash in residential real estate. It’s not an apples to apples comparison.
It’s a better comparison for Alberta than you realize. Remember 40 year/zero down mortgages? All of those mortgages reset at some point (usually at around the five year mark). Thats the equivalent of an “exotic” resetting ARM in the US. How about qualifying people for huge mortgages based on the current variable rate when those variable rates are at their historical lows? These people are the equivalent of the “subprime” part of the US market. Granted, the rules have changed and this kind of lending is no longer an option. However, first time home buyers with low down payments that bought after 2005 may be in for some seriously difficult times.
Also, don’t buy into the overgeneralization that Americans could just “walk away.” The mortgage rules in many of the hardest hit states (e.g., Florida) are actually much stricter in some ways than they are in Alberta.
No, I don’t think we are in for as much of realestate problem as the US. However, I do beleive that there are a lot of folks in their 20s and early 30s that are going to underwater in their mortgages for a long time.
It is funny that many people are scared to buy a house because they think the market will go down or even worse… crash! However, in the past two years, during a recession, period in which people should normally save money and limit their discretionary spending, the use of credit kept growing to record levels!
As a matter of fact, a lot of people do not want to buy a house, but go to Mexico instead, or buy a big ass plasma TV, or a brand new expensive car that they cannot really afford.
I believe that many of us are financially dumb and do not understand the important of cash flow management, savings and investment. It is not normal that the majority of the Canadian population does not have enough money saved in order to survive 1 week in case their paycheque is late!
Again, just my $0.02!
I am wondering about the people who commit to pay martgage for 25-35 years when they are not sure whether their jobs are secure for next 5-years and they do not have enough savings to pay the bills without having a job.
I bought a house in sherwood park in oct 2007, a few months after prices peaked.It has been rented ever since and my tennant has payed my mortgage down by approx .23,000 dollars . When the subprime mortgage crash hit in 2008 I bought a condo in Castle Downs , the same tennant has been there ever since and has payed that mortgage down by approx $ 16000.I can only imagine how much more better of I would be if prices start to go up. I am certainally no savy investor,but I think that I am better off than not doing anything.
Hey Jerry,
So…. I gotta ask. Is all your additional equity you’ve earned include the cost of property taxes and what not? Are you running a variable rate or a fixed rate? For your house in Sherwood park – does the amount you’d payed off on your mortgage cover the loss in value of your house?
LOOKING FOR A HOUSE STILL, the condo takes care of itself totally with $50 cash flow per mo,,no extra expense has been needed there ,so far.The house in sherwood park ,I purchased that with a line of credit (not exactly a mortgage) and on $3oo,ooo the intrest has been under $900 per mo and as low as $700. It is up to me if i wanted to pay off more because the 4 bed ,2 story house rents for $1900 . My only extra cost at the house been $470 to get the sewer snaked, the tenant pays all utilities.
LOOKING FOR A HOUSE, I forgot to add that it does not include the amount that the house might have lost , but the two bath two bed condo was purchased at a time when everyon was panicking and I know that in that bldg the same condo will sell for around $220 I paid $203.
I have to make a correction , there has only been approx $10500 payed on the condo mortgage not $16000 as i stated earlier .
@Imran – there will always be those who make poor financial decisions and end up losing their home, car or anything else that is not fully paid for. This is just the way it is.
Sometimes it is not the bad financial decisions that get you, but life itself. Divorce, job loss, and addictions are a few of the more common reasons most people lose their homes.
Bob Truman linked me up to the greater fool site where some poor Edmonton realtor is taking it on the chin. There will probably be some interesting commentary on the Edmonton market. There will probably be some crazy comments too (just a warning).
http://www.greaterfool.ca/2010/08/08/the-gospel-of-james/
Just a muse and sorry for no ‘stats’ to back this opinion up BUT if inventory is dropping then basic supply demand modeling states that will help prices from falling through the floor as predicted by many on this site. Correct?
Also it seems people are able to take their house off market and have it rented out as the vacancy levels are very low meaning their is strong demand for rentals. This seems like a good outcome and indicates that peopole aren’t having to sell at all costs.
As I have stated before, supply and demand sought themselves out. So long as there isn’t an economic disaster and people can continue to service their mortgage then prices should remain steady. I haven’t seen anything pointing to an economic disaster…..unless some of the bloggers on this site work for treasury. Then I am running to the border with my hard earned.
Garth Turner has made some bizarre assessments before. He will still make some. He even changed his tune about interest rates:
“Interest rate increases will obviously moderate or stall for a while…”
http://www.greaterfool.ca/2010/08/08/deflated/
Worst still is that folks actually e-mail him to inform him that they followed his advice (such as selling their home or cashing out their GIC’s), making life altering financial decisions…
Crazy!
I believe he was the guy who recommended buying Nortel when they started thier decent.
Garth Turner is a great read, its always great to hear the other extreme side of an argument, and not just a realtors.