One way of determining demand in an area, or for a type of property is to look at the absorption rate. The absorption rate tells you how many months it will take to sell the current inventory if the sales level remains stable. I have broken the Edmonton real estate market into a number of categories based on location and property type and analyzed the absorption rates for each category.
The shortest absorption rate of just over 5 months is in St. Albert, closely followed by Millwoods, Sherwood Park, and the University area which are all under 6 months of inventory. Bungalows, and properties under $400,000 are also under 6 months of inventory. At the other end of the spectrum are properties asking more than $700,000 and homes in Stony Plain with over 13 months worth of inventory. The longest absorption rate within the city limits is the far west with 8.26 months supply.
The overall absorption rate for Edmonton single family homes and condos is 6.58 months, making it a buyer's market. When considering the numbers below it is best to compare them to the overall average rather than one to the other. If you're considering selling your home looking at the absorption rate for your neighbourhood is an important part of pricing your home properly.
Here is how it all breaks down:
And here is how I broke the city up into different areas:
Nice post ! Good to know.
Is there a link where we can see the map with better clarity or zoom in ?
I don’t have a better version with the colours but you can check out this zone map to have a closer look: http://www.ereb.com/pdf/EdmontonAreaZoneMap.pdf
Does this indicate that bungalows are more in demand than 2 stories or does it just mean that there are more homes built that are 2 stories, resulting in higher inventory?
In the late 50′s, 60′s and into the early part of the 70′s the vast majority of properties built were bungalows. Since the late 70′s two stories have been the most common single family dwelling built in Edmonton.
To clarify a bit…. the reason the absorption time is shorter for bungalows is due to pricing… homes under $400k are moving the fastest, and most homes under $400k are older bungalows so it appears as though bungalows are more popular when it’s really anything in a lower price bracket.
The reason I suppose is the change in the mortage rule. You can no longer get an mortagage based on the variable rate ( like around 2 %) , instead one must qualify for the 5 year fixed rate… So it just wiped out nearly $70000 of the purchase price for an $50000 annual family income buyer. Maybe thats the reason houses less than $400 K are selling and it might force higher priced houses to reduce prices to cater to these buyers… if not there aren’t enough people who can qualify.
I don’t know what you’re talking about. I just bought a house and got a variable mortgage.
Yes you can get a variable mortgage , but first the max mortgage amount is based on the 5 year fixed rate and not the low variable rate.
Also the below change is in effect….
From Garth’s site…
Thank you for taking my call regarding the huge concerns and hardships in the new mortgage qualifications regarding suite income and people having to qualify.
This is the way that it used to be: you could take the suite income, say it was $1200/month and they would add it to your mortgage qualifications as a $200,000-$250,000 increase in your qualification amount, now what they do is take the amount of the rent: $1200 /month, multiply it by the 12 months in a year and add it to your income, making only an extra $ 40,000+ to your qualification amount.
This is why the market has completely softened. The market is completely dead. Brand new houses in Sooke, down to $299,900 from $399,900, no calls. The market has dried up all due to financing. I talked to 7-10 mortgage brokers and many agents while I was at the Victoria Real Estate Board golf tournament and everyone is scared. Hundreds of foreclosures coming, about 75% of the home owners could not qualify to buy their own houses (especially with suite).
So what happens when their term of mortgage is up and the banks need them to re qualify? They are doomed. Please look into it. Last month there were 300 home sales on the Lower Vancouver Island with 4700+ listings. One of the worst ratios ever. End of June is supposed to be the closing day of the year. Every Realtor has a few nightmare bank stories right now. Keith, this will put us into a huge recession.
Shayne Fedosenko
Pemberton Holmes Ltd.
Great post — I’m a RE bear, but this post is very informative and well thought out.
Hey Sara. Great report!! Creativity makes it easily understood. Thanks.
With the absorption rate so low in Sherwood park, no wonder I am having trouble finding myself a condo
Can we get a comparison table of absorption rate by year since 2005 please? It would be useful to see a graph of these too. If it is an indicator worth tracking going forward could we see it in your monthly reports?
Thanks
R