As our clients and subscribers already know, there are some interesting things happening in the Edmonton real estate market right now. We sent out a special report yesterday specifying the absorption rates for condos and single family homes, broken down by price range. I did this because I was looking for evidence to prove what we already knew: affordable (under $450k) single family homes are in high demand, and low supply, and just about everything else is a tough sell right now in Edmonton.
Looking at the monthly numbers, you can see sales of single family homes in February were quite strong; there were 574 sales in February, down slightly from 581 last year and up from 470 last month. 84% of single family sales were under $500,000 in February, but 66% of the current inventory of homes on the market are asking over $500,000. So we have a bit of a disconnect between what buyers and sellers want in Edmonton right now.
Single Family Home Sales
Even considering the relative over supply of higher end homes, the inventory of single family homes is quite low compared to previous years. For those that received the special report yesterday, you already know we have less than three month’s supply of single family homes under $550k, and 2 month’s supply under $400k, making it a strong seller’s market in those price ranges. However, buyer’s have the upper hand in the higher price ranges.
Single Family Home Inventory
Condo sales are just about average for this time of year and there is plenty of inventory for buyers to check out. There were 275 condo sales in February, up from 264 last year and 259 last month. If you’re thinking about buying a condo, you will not have to move as quickly as those looking at single family homes.
Condo Sales
The average sale price of both condos and single family homes increased in February. The average sale price for single family homes was $382,620 in February, up 5% from $373k last year, and $387k last month. The median sale price for single family homes was $360k, up from $347,500 last year but down from $362k last month.
The average price of condos in February was $229,264, up from $227k last year and $217k last month. The median sale price for condos was $211k in February, down from $215,500 last year and up from $208,500 last month.
Average Price
The average price per square foot was up across the board in February – single family homes sold on average for $264/square foot compared to $256 last year and $254 last month. Condos sold on average for $225/square foot in February, up from $223 last year and $216 last month.
Price Per Square Foot
As always this is our preliminary report on the Edmonton real estate market, our final monthly report on the greater Edmonton area will be posted when the numbers are released by the REALTORS® Association of Edmonton.
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.
Client Testimonial for Nathan Mol 
Client Testimonial for Travis Dochuk
Client Testimonial for Beverley Hasinoff
Client Testimonial for Beverley Hasinoff
Client Testimonial for Richard Widynowski
Client Testimonial for Bill Bhamra
Client Testimonial for Mira Wannous
Client Testimonial for Beverley Hasinoff
Client Testimonial for Richard Widynowski
Client Testimonial for Justin Tazi
Client Testimonial for Sheldon Johnston
Client Testimonial for Bill Bhamra
Client Testimonial for Tracy Vipond
Client Testimonial for Justin Tazi
Client Testimonial for Nathan Mol 
Client Testimonial for Bill Bhamra
I’m not sure how $450k is considered “affordable”. Affordable to whom? The median family income in Edmonton is in the range of $90k/year*.
$450k over 20 years, with 7% down (a typical down-payment) @ 3.99% interest (historically awesome rate) works out to ~$2525/month (~$30k/year). Add property taxes and insurance, you’re looking at about $3000/month ($36k/year). Over the life of this loan, the family would spend $188k on interest, or 45% of the initial loan amount.
With $90k/year, the median family is looking at ~32% towards income tax and deductions, so they have ~$61200 to work with. At that rate, a median family is going to be spending 59% of their take home on principle, interest, taxes and insurance, leaving only $25k for everything else.
Some things that count for “everything else” add on an additional ~$8000/year: Water/Sewer, Communications, Gas, Hydro, CMHC (divided by 20 years of payments), Closing costs (divided by 20 years of payments). Once you factor in that extra $8k, the median family would be spending 72% of their take home pay on housing.
Now there is only $17k left for everyone for the year. From this allotment, the family needs to cover:
Transportation/Cars, groceries, consumer goods, consumer debt, student loans, any repairs or renovations, vacations, entertainment… AND somehow save for retirement. So tell me again how this is affordable?
The typical advice for affordability is around 27-33% of your income, so on that metric, the maximum affordability for the median family is $270k. CMHC affordability calculator is slightly more generous, indicating $300k maximum mortgage**. Either way, $450k is not affordable to over half of Edmonton’s families, and by standard affordability calculations, it is at least $150k more than what is affordable.
*Latest median family income data from 2010:
**CMHC mortgage affordability . Amounts used are the same as presented. $300 was used for monthly heating, $0 for other debts, and $0 for condo fees/maintenance. The CMHC premium would be $8250.
The $90k medium income corresponds to the $370k medium price.
A $370k house at 80% mortgage level (because you should have saved a down payment to avoid CHMC) is $296k. At 3% rate, that’s $740/month interest cost at year 1. Almost every major bank offer 3% for 5 year fixed now. Personally, I am using 2.1%. Anything above 3% since 2012 is retarded. And I agree that retarded person should not by a house.
The bank probably would ask you to put in like $700/month to pay down principal. But that’s not a cost, it’s saving, and can be withdrawn any time in the form of HLOC.
Your real monthly cost is:
$740 interest + $50 home insurance + $ 230 property tax = $1020
That’s roughly 20% of the net take home pay of $5000.
Why are you using median wage but not median house price? doesnt make any sense.
Regarding the relative weakness at higher price ranges, is it worse than last year?
Good analysis PH. I am sure some on here will disagree but I am not one of them. Our collective idea of affordability is very out of whack and based soley in cheap credit.
I personally have found a balance most of my friends laugh at…that is, , laugh at how little we spend on housing based on our family income .
Most bank calcs say we can afford a house worth way over a million. I laugh at that because we could…to the demise of well travelled and resp funded kids, plenty of savings, flexible retirement dates and very little personal financial stress.
I have seen jaws drop when I have done a breakdown like PH did for friends.
Good analysis of what exactly? Made up numbers to show a 90,000 household income isn’t enough to make a 450,000 house affordable. Great, change the income to 150,000 over 25 years at 3.09% with 25% down and see what the numbers say. I’m not sure what you were trying to prove.
He was proving much more than your comment did.
$90k is the average.
According to TD (link to tdcanadatrust.com), average down payment is 5% to 20%.
Current mortage rates seem to be closer to 4% than 3% (link to canadamortgage.com).
Average income (link to en.wikipedia.org) is closer to $100,000.
His estimate is way closer to the average than yours.
Kent, what I was trying to find out is why PH was comparing the median income in Edmonton to affordability of a 450,000 house. It just seems silly to me. First of all the median income should be compared to the median sales price of all real estate sold if you want to do an affordability check on a market. The median for all real estate in Edmonton was around 315,000 in Jan. Thanks Sheldon and Sara.
Secondly, after you apply the down payment…..let’s pick the low end of your information and say 7%. That’s around a 293,000 mortgage.
Thirdly, 3.09% is quite available for 5 year fixed and 2.99% at ATB and BMO if you have decent credit.
Fourthly, why pick 20 years as an amortization period? Why not 25? Start plugging in numbers and you find things aren’t out of whack by that much. People who have to resort to exaggeration and apples to oranges comparisons usually do so either because they don’t understand what it is they’re comparing or they have weak arguments or both.
As an aside I like haggling over the direction of the market, because it’s just our opinions, but try to follow a logical train of thought. Personally I’m more worried about the potential economic issues that we have here affecting housing than affordability.
What’s the average income of households that can afford to buy instead of renting? Silly to consider the average of the entire population, unless you buy into the western farce that everyone is entitled to ‘own’ their own home!
A few points.
- If you have student loan or car loan you probably are not in a position to buy a house.
- If you have only 7% down you probably are not in a position to buy a $450k house (start at a smaller or save a bit more). For that price range I’d say at least a 15% down.
- %45 of the initial loan in interest over a span of 20 years is not a lot; it will almost surely is smaller than most return you would expect in any investment (history will tell you your house has appreciated a lot more than that in 20 years).
- Most people are not smart enough to understand the amount of dept they can handle is not what a bank tells them. It makes no sense for a family (not just a couple) with income of $90k to borrow over $417k.
Sales for February below last year, “affordable” homes are WAY under $450K… once again, realtor babble to try and mask the downward trend this market is taking. Check out Alberta’s potential budget deficit….check out the USA spending cuts which will adversely affect Alberta, check out oil companies “taking their foot off the gas” on starting large capital projects, and lastly check out the greater Edmonton area stats, where NOTHING is selling. Sites like this that encourage people to assume massive debt in seeking “affordable” housing in the $450K range are partly responsible for the trouble that Canada is about to get itself into. Has this country learned nothing from its southern neighbors???
Why is Calgary so hot, and Edmonton so NOT?
Anyone?
Calgarys incomes are higher, more permanent as opposed to transitory/temp jobs, people generally feel more stable in their careers in Calgary, plus more people keeping up with the joneses. Edmonton population is and will always be more transient.
Not really true. The incomes between Edmonton and Calgary are very close. And while Edmonton may have a more transient work force, its not by as much as you’d think. At the end of the day both cities are balanced when it comes to statistics.
Get some Gold Bond Powder Itchy you are having trouble focusing.
Meaning?
I think as long as valuations stay where they are the lower end of the housing market will always be in demand because young people need to buy houses and for most people its only a small subset of the market that is in reach.
Someones got to buy the boomers 500k+ houses one day so it will be interesting to see how the demographic shift progresses.
I agree that the lower wage earner is not a buyer at all. Of couse this is anecdotal but through conversations with brokers I get the impression that lots of folks take near to the max mortgage they can get approved for.
Lots of people making $100 000 or less spending $450 000 on housing in Edmonton.
Hey Itchy, Harper could use a good propaganda writer like you. Quit wasting your time here and go get yourself some of that ” economic action plan” money. No ones bying your story here.
PH is on the money, your the spin doctor. There is absolutely nothing affordable about Edmonton. I take comfort knowing that Pride always comes before the fall. Karma is just.
Steph. I bow to your obvious intellect. Obviously well researched rebuttal and way better than the liar liar pants on fire retort.
Steph, you can make your point about real estate, whether is a good analysis or a bad one. But when you say nothing about real estate, only focus on attacking a post writer, that’s called personal attack and it’s very low.
Itchy’s post is just another smart analysis Steph, but with his spin, which in this case, added more realistic variables. Variables such as a 25 year mortgage over a 20 year mortgage. Moreover, Itchy is filling these blogs with useful calculations, just as are many other bloggers here with wise and informative opinions and forecasts.
When I read your post I did feel sorry for you as you added nothing….pure MOOT.
This blog keeps me coming back for the blogging that is smart, people like – “Gadget, Itchy, WSN, etc”. Your post did not even make sense. Do you know what “Propaganda” is. Itchy was using numbers for his calculations based on Real amortization and Principal mortgage amounts from his opinions……hardly Propaganda.
It is my opinion that the houses are extremely overpriced and the economic growth data and available employment opportunities don’t support the increase in asking prices by sellers. The prices of houses for sale in january and february 2013 were very close to the prices between 2006 and 2007. For some reason, which could be the less inventory, Sellers are convinced that their properties worth much more now and therefore they are isting their properties at unrealistic prices and if u are not in this market for long time u can get easily fooled and burnt in a huse debt for no reason. It is my expectation to see a much cooler slow market in the spring.
I wonder if resale condos will ever gain back the 50 percent they lost way back in 2007 to 2009? Most are still down around 50 percent from their peak 2007 values and cost much, much less to buy than rent. Maybe we’ll see the 50/50 rule where these resale condos take the next 50 years to regain the 50 percent haircut they took way back in 2007 to 2009.
Hi Tony, do you have any data to support your comment that condos cost much much less to buy than rent? I recently moved back to Edmonton and everyone has been telling me the opposite…
Ya… how about some evidence about the 50% loss as well.
You guys and gals are funny. I love the peanut gallery.
Seriously Sheldon? You can do better then that.
Better buy Farm Land close to city ,farm land price is increasing 10% annually in Alberta, because good crops and high food prices , Edmonton and Calgery housing market linked with Oil Sand projects, it could fall any time like 2009 , SUNCOR Energy again stopped big projects, because of slow US growth and International recession .