Sales dropped on a year over year basis in August in Edmonton for the first time since April 2011. 1516* homes sold through the MLS® system in August, down from 1602 last August and 1731 last month. Is this the start of a trend or just a one month blip?
Real Estate Cycle
We will only know the answer for certain in a few months, but the real estate market as we all know is cyclical, and after 11 months of being in “Phase 1″ of the cycle we could be moving into Phase 2 or 3. If, in fact, that is the case, we will start to see prices coming down on a year over year basis in the near future. Of course, the length of time it will take to move through the cycle and come back around to Phase 1 is anyone’s guess – my guess is that it won’t take too long (spring market?).
Edmonton MLS® sales
The average MLS® sale price in August was $334,395, up from $324k last August and down from $336k last month. The median sale price was $320k, up from $315k last August and down from $325K in July.
The REALTORS® Association of Edmonton pointed out an interesting trend in their official release today:
Average prices are affected by the difference in price of similar properties as well as the market composition or mix of homes sold. Compared to a year ago, a typical bungalow in August sold for 2.2% more while a typical 2-story home sold for about 3.2% more. While the price of an individual home was rising, the market composition was also changing. In August 2012, 53% of SFDs sold were priced below $375,000 as compared to 59% in 2011. In addition, the number of sales of homes over $500,000 was up from 11% in 2011 to almost 15% this year.
“August sales illustrate the changes in the composition of the market,” said Association President Doug Singleton. “More consumers are purchasing homes at the higher end of the market. This is an indicator of consumer confidence and a long term view that this market is stable. ”
Edmonton real estate prices
The inventory of homes on the market dropped slightly to 7,458 properties from 7,684 in July.
Edmonton real estate inventory
Edmonton MLS® Listings
*We adjust the residential sales total for the current month to account for unreported sales. Every month 6% of sales on average are not reported to the Association in time for the monthly report. The following month the numbers are updated to reflect the total sales during the previous month. That means the current month always looks worse compared to previous month. Our adjusted numbers are far closer to the actual numbers than those reported by the Association each month (so far on average I am under reporting by 22 sales whereas the association is under reporting by 107 sales each month).
About Sara MacLennan
Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.
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Love the numbers and analysis. Thanks for you work!
“More consumers are purchasing homes at the higher end of the market. This is an indicator of consumer confidence and a long term view that this market is stable.”
How you can take a YoY sales decline and spin it into consumer confidence I don’t know.
This is what I see: Housing sales are down YoY, they are particularly down in entry level houses under $375k. This to me would be a bad indicator for long term stability.
I think the numbers and changes are very small so it probably won’t amount to much but just questioning the logic in the statement. Does a higher ratio of high end sales indicate market stability?
That statement is from the RAE president and I think is pure spin. In a growing market, an increase in sales at the higher end over those at the lower would indicate stability, but in this case it is the same number of homes at the higher end being sold, but fewer at the lower end.
A more correct analysis would be that the market for homes at the higher end is still stable, despite a YoY reduction overall.
however, this is what happens during phase 3. Sales drop off at the lower end first, which pushes up the average and median prices as measured. By phase 5 sales in all sectors have begun to drop, and this is when vendors start actually reducing asking prices, again at the lower end first.
Phase 7 is the reverse, as sales at the lower end pick up first, then at the upper end.
Throughout the cycle, the lower half leads the upper half.
Weather a blip or a trend it would be counter intuitive to think that all the new mortgage and HELOC rules would not have an effect on our market. With debt levels at all time highs these new rules impact anyone not paying cash for a home.
I have thought for a long time that debt was the skeleton in many peoples closet…even those living in million dollar homes.
My bet is that this is the start of a downward trend hopefully tempered by in migration.
The MLS sales figure alone doesn’t mean anything, without adding new home construction into the mix. As I can see, a lot of friends and co-workers sold or are trying to sell existing house to purchase larger new houses. The big picture is much brighter than dipicted here. And no, the ratio of MLS sales to new construction is not constant YoY.
I thought it was common knowledge among credible economists that entry level buyers have been priced out of the market because new regulations. Make sense to me why sales are down and avg price is up. Your thoughts?
As I see it, if entry level buyers can’t purchase, then the people who own the entry level homes and want to move up, can’t sell if there are no buyers so ultimately it will have an effect on the entire market sooner or later. The entry level buyers may earn enough to qualify for a mortgage but with all the other debt they have taken on for fancy cars, etc. they can’t.
I was at TD Bank a couple of weeks ago opening a US bank account and getting a US Visa and as they only have open pods was able to listen to the conversation going on in the next one. Young couple getting pre-approval for a mortgage. You would not believe the amount of debt they had – mostly credit cards. They both had full time jobs but they were way over the allowable debt ratio. That’s only one example, but I don’t think it is a one only.