“When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,” said Gordon Nixon, chief executive officer of Royal Bank of Canada “Frankly, I’d like to see the rhetoric come down a little bit.”

According to CMHC, April saw the highest number of new housing starts nationally since September 2007. Nearly two-thirds of new homes last month were multifamily units, which includes condominiums — a 27% increase year-over-year on a seasonally adjusted basis.

“Wow. This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing condo craze,” Scotia Capital economist Derek Holt said in a research note.

In Toronto, sales of new condominiums in Toronto reached 6,070 units in the first three months of the year, a record for the first quarter. As many as 40 new projects with more than 11,000 units could come on the market in the second quarter, a trend that may cause inventory of unsold units to approach a record set in 2008.

In Edmonton we've seen lower than normal sales of condos for some time, but builders are busily adding new condo inventory to the market. A report from CMHC released yesterday states:

[In Edmonton] Multi-family starts, which consist of semi-detached units, rows, and apartments, increased in April by 47 per cent year-over-year to 474 units. Gains were most notable among semi-detached units where
foundations were poured for 196 units in April, up from 124 a year earlier. Multi-family housing starts within Edmonton City totalled 256 units, up from 217 starts in April 2011. The remaining areas of the CMA saw strong growth with 218 multi-family units breaking ground, more than double the amount of activity of a year previous. “With 1,596 units to the end of April, multi-family starts across the Edmonton CMA were almost 50 per cent higher than the first four months of 2011, accounting for half of all housing starts so far this year,” added Butchart.

So why are there so many new condos going up in Edmonton? I'm not sure to be honest but I have a few ideas...

• As single family home prices increase, condos become more attractive.
• Babyboomers trade in their large single family homes to free up some cash and enjoy maintenance free condos living.
• New immigrants choose to live close to jobs and cultural centres until they get established.
• New condo inventory is actually decreasing.

According to a report released by CMHC in March, Multiple unit inventories across
Greater Edmonton stood at 868 units in February, representing a 17 per cent decrease from the second month of last year and the lowest level since November 2010. Total new multi-family supply, which includes unabsorbed inventory plus units under construction, stood at 6,444 units in February compared with 5,533 units a year prior. Multiple unit supply hit a cyclical peak of 6,860 units in October of last year and has been moving downward in the past four months.

So... are new condos selling better than resale? Are new condo prices more attractive than resale condos? An answer to those questions would be purely subjective at this point.

1. The 2012 spring market in Edmonton will be:

• Good 44%, Last year 31%
• Average 34%, Last year 31%
• Below average 15%, last year 27%
• Hot, hot, hot! 7%, Last year 11%

So last year 42% thought the market would be above average or hot, while this year that number is up to 51%. The "below average" thinkers dropped almost in half.

2. In 2012 mortgage rates will:

• Stay about the same - 69%, Last year 48%
• Rise - 30%, last year 45%
• Decrease 2%, Last year 3%
• Skyrocket 0% last year 2%

3. The total sales for 2011 in Edmonton will be:

• Higher 43%, last year 40%
• About the same 36%, Last year 29%
• Lower 21%, last year 30% 

A slight movement towards higher sales this year, but nothing major.

4. Compared to other markets in Canada, Edmonton's real estate market will:

• Perform better than average 79%, last year 64%
• Be about average 16%, last year 28%
• Be below average 5%, last year 5%

While our readership may not be able to agree on the direction of the market, we can almost all agree that Edmonton will do better than the rest of the country. 

5. At this time next year the average residential sale price in Edmonton will be:

• Higher 57%, last year 43%
• About the same 26%, last year 20%
• Lower 16%, 36%

A lot more people think prices will rise this year than last year.

As always, the interesting results come through the comments. Here is what our readers had to say about the 2012 housing market in Edmonton:

• Nationally, affordability may be affected by any Federal changes to mortgage insurance, both for first time home buyers and investors caught with overpriced homes from 2007. However, this may also positively impact a tighter rental market in and around Edmonton. Who will still be cash flow positive.
• Like it or not, there is a "bust" coming on planet Earth. We know that Europe will be the first affected, but like a cancer, it will spread to the rest of the world. As much as we don't want to see it here, Alberta will also be deeply affected. We need to keep our eyes peeled on the Middle East, i.e. Iran and Israel, and of course, the U.S.. We might be OK for the rest of this year, but that's about it. With over 7 billion people on the earth, something needs to give. This will happen "suddenly". God bless and protect Canada.
• Oil above $100, Keystone getting approved, American economy struggling north. Labour increase will need condos/homes at the lower/mid range or will rent (most arriving will not have deep pockets).Should dry up current excess inventory unless developers go crazy.
• Basing most of my answers off of Don Campbells forecast of low unemployment, migration steady and general affordability of yeg comparatively speaking
• Prices will continue to rise and there will be more resales later in the year than normal with prices staying at spring highs. Rental market will start to get very tight by summer increasing the resale market into the fall of 2012.
• This year will look pretty much like last year.
• Everything points to a better relative performance in 2012 than other Canadian markets, except maybe Calgary, Saskatoon, and Regina. Although Sask housing prices have already skyrocketed whereas Alberta prices have not. So it all looks good here for 2012 - as long as they don't overbuild again.
• Low inventories may continue for a few months but new confidence in the trade up market will entice those who have been putting a move off due to uncertain times. The move up market will start to wake up. An influx of people will keep prices on a modest rise. Low priced product will continue to be hot, but prices in this segment will certainly rise by year's end.
• Homes will need to be priced right in order to sell. To many over priced listings flooding the market. I sell new homes for a living, And am finding many people are building due to the fact they can get a larger new home for less then what is available on the resale side.
• The Edmonton real estate market will out-perform the rest of the country due to strong employment and in-migration.

Edmonton real estate sales
 

The average residential sale price increased to $329,911 from $318K last month and $313K last year. This is the second highest average price on record for February in the Greater Edmonton Area (the highest was in 2008 when it was $336k - that's a $7k difference for those who like to comment that prices have plummeted by 10's of 1000's of dollars).

  Average real estate price

There were 5976 listings on the market at the end of the month compared to 5303 last month and 6389 last year still in the "new normal" range.

2649 new listings came on the market in February, compared to 2441 last month and 2587 last year. This is slightly above average but we will have to wait and see what happens next month to get a clearer picture for the supply side of the market.

  Edmonton real estate 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 months. So far our adjusted numbers have been far closer to the actual numbers than those reported by the Association each month (so far on average I am off by 4 sales whereas the association is under reporting by 73 sales on average each month).

Edmonton home sales 

In February there were 264 Condo Sales up from 184 last month and similar to 267 last year. Condo sales are still below average in Edmonton while single family homes are selling as expected.

Edmonton condo sales

 

In February the Average Sale Price for Single Family Homes was $373,041.00 up from $362K last month and $362K last year.  The Median Sale Price for Single Family Homes was $347,500 in February, up from $340K last month and $337,500 last year.  Even though condo sales were not strong, prices rebounded in February after a pretty big dip last month. The Average Sale Price for Condos was $227,381 in February up from $210K last month but down from $231K last year.  The Median Sale Price for Condos was $215,500 in February up from $200K last month and $213K last year.

Edmonton real estate prices 
 

The Average Price per Square Foot for Single Family Homes was $256 - up from $249 last month and $250 last year.  The Average Price per Square Foot for Condos was $223 up from $210 last month and the same as last year.

  Edmonton price per square foot

Based on our experiences this month we are not surprised to see the jump in average prices. We expect to see further gains next month, especially if inventory continues to creep slowly upwards (as opposed to jumping up suddenly). 

As always, this is our preliminary report on the real estate market in Edmonton, and our final report will follow when the final numbers are released by the REALTORS® Association.

Mortgages and RRSPs

Something to think about!

Canada was the fastest growing country in the G8, Alberta was the fastest growing province in Canada, and Edmonton and Calgary were the fastest growing major cities when their growth was measured in the 2011 census, growing at an even faster rate than in the previous five year period.

The Capital Region — including municipalities such as Beaumont, Spruce Grove and Fort Saskatchewan — grew from just over a million people in 2006 to more than 1.16 million people in 2011. That’s a 12% increase in the five-year span measured by the national population count. Most of this growth is occurring in new suburbs and bedrooms communities.

For the first time in Canada's history, the provinces west of Ontario have a higher population than the provinces east of Ontario.

Highlights from the report so far include:

• Canada’s population grew by 5.9% 2006 and 2011, slightly faster than the 5.4% increase in the five-year period before that. Statistics Canada attributed the increase in growth rate to slightly higher fertility and to an increase in the number of non-permanent residents and immigrants.
• Ontario remains by far Canada’s most populous province with 38.4% of all Canadians.
• The number of private dwellings grew by 7.1%, to 13.3 million, compared to 12.4 million five years earlier.
• The 33.5 million people counted in May, 2011 is almost twice as many as in 1961 and 10 times the 1861 census.
• Canada is the smallest G8 nation but the fastest growing. The United States is the biggest, with 311.2 million citizens, followed by Russia with 142.9 million residents.
• Canada’s population growth for the last decade has been driven mainly by migration since natural increase — the difference between births and deaths — now only account for one-third of the growth.

Additional demographic information from the census will be released by statistics Canada throughout the year.

Meanwhile, Edmonton area home builders had a busy month in January, according to a report released by CMHC today. Housing starts increased in January to 578 units compared with 363 in January 2011. The increase occurred in both
the single-detached and multi-family sectors.

Single-detached starts in January increased by 53% year-over-year to 314 units, up from 205 in January 2011, while multi-family starts increased by 67% to 264 units.

“The gain represents a strong start to the year for Edmonton’s single-detached builders,” noted Richard Goatcher, CMHC’s Senior Market Analyst for Edmonton. “However, it should be noted that last year’s starts were hampered by heavy snow and cold temperatures which delayed
production across the Capital region,” he added.

Edmonton ranked second in CIBC's measure or economic momentum, up from 11th in the 2011 Q1 report. The ranking reflects the city's strong labour market with overall employment rising by almost eight per cent year-over-year in the third quarter—the fastest pace among all of Canada's top cities. "The city also enjoyed one of the lowest unemployment rates in the nation (5.7 per cent as of the third quarter of 2011) while the quality of employment is relatively elevated (ranked 4th among all cities)," notes Deputy Chief Economist Benjamin Tal.

"As well, Edmonton's population is now rising by a year-over-year rate of 1.7 per cent—well above the national average, while the numbers of consumer and business bankruptcies are among the lowest in the nation."

CIBC Metropolitan Economic Activity Index (2011 Q3)

Rank CMA 3Q Moving Average
1. Toronto 23.0
2. Edmonton 20.0
3. Kitchener 18.0
4. Halifax 16.8
5. Vancouver 15.5
6. Ottawa 15.2
7. Montréal 14.9
8. Regina 13.8
9. Calgary 13.1
10. Trois-Rivières 11.7
11. Québec City 11.5
12. Winnipeg 11.1
13. St. John's 11.0
14. Hamilton 10.7
15. Sherbrooke 9.5
16. Kingston 7.5
17. Saint John 7.1
18. Sudbury 6.7
19. Saskatoon 6.4
20. Victoria 5.9
21. St. Catharines-Niagara 5.6
22. London 5.2
23. Windsor 0.4
24. Saguenay -1.8
25. Thunder Bay -3.4

Average of 25 CMAs 10.2

About the CIBC Metropolitan Economic Activity Index
Using 9 key macroeconomic variables, CIBC's metropolitan index of economic activity is structured in a way that approximates the change in each city's level of economic activity. With data going back in history, the index monitors not only the current performance of a given city but also tracks its cyclical behaviour against the national economy and other census metropolitan areas (CMAs). The focus is on the 25 largest CMAs in Canada.

The macro variables used to develop the index are:

Population growth; Employment growth; Unemployment rate; Full-time share in total employment; Personal bankruptcy rate; Business bankruptcy rate; Housing starts; MLS Housing resales; and Non-Residential building permits. The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/metro_monitor.pdf

Edmonton MLS® sales

The average sale price for residential homes on the MLS® system was $316,415 compared to $308k last December (up 1.7%) and $321 last month. The median sale price was $303k compared to $300k last year and $310 last month. 

“With economic uncertainty impacting Europe and depressed housing markets in parts of the United States, it is a relief to report on the stability and health of the local real estate market,” said REALTORS® Association of Edmonton President (2011) Chris Mooney. “With prices and sales varying within a small range there is a solid base going forward into the 2012 market.”

Edmonton average real estate sale price

The inventory dropped to 5316 at the end of December which is in the "new" normal range (in the past this would have been considered quite high, but when you include the past few years it is in the normal range):

Edmonton MLS® Inventory

The number of new listings also followed a seasonal pattern, dropping to 1088 in December; the number of new listings coming on the market should increase quite a bit over the next few weeks:

Edmonton MLS® Listings

Our annual report on the Edmonton real estate market will be sent to our clients and subscribers in the very near future - don't miss out, subscribe for free today.

*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 months. For example, in October 2011 the reported sales totalled 1170 which we adjusted to 1240 for comparison purposes and the actual number fo sales were 1253. In November there were 1084 reported sales which we adjusted to 1149 and the actual number was 1133. So far our adjusted numbers have been far closer to the actual numbers than those reported by the Association each month (so far on average I am off by 1 sale whereas the association is under reporting by 77 sales on average each month).

• The Royal Bank predicts Alberta's rate of growth will outpace all provinces except Saskatchewan this year and next.
• The private sector was the source of 116,000 new jobs this year
• The oilpatch and natural resources sector is set to lead the nation with the highest project salary increases next year
• Labour shortages are expected 
• Retail sales rose more in Alberta than any other province last month

Labour shortages and inflation could be a major problem in the province. It's certainly tough to look at all this information and not think of other factors that will certainly affect our economy, like the global financial situation and rising interest rates. On the other hand, when I hear from the Edmonton Economic Development Corporation that there are $17billion worth of new projects set to start between here and Red Deer it's tough not to consider it. At the end of the article the author suggests perhaps a "mini-boom" is more likely and that seems much more feasible to me. 

Edmonton Vacancy Rates, Source: CMHC

The average monthly rent for a 2-bedroom apartment increased to $1,034 from $1,015 in October 2010. Edmonton rental rates were amongst the highest in Canada behind Vancouver, Toronto, Ottawa, Calgary ($1,084) and Victoria.

Edmonton rental rates, Source: CMHC

Bachelor suites reported the lowest vacancy rate at 2.7%. The area with the lowest vacancy rate this fall was St. Albert, at 0.5%, other relatively tight markets included the South West and Leduc, both at 1.2%. The University and Millwoods zones were also showing a low vacancy rate of 1.3%. 

Edmonton rental market by area, Source: CM
 

With vacancy rates moving lower across the Edmonton region, fewer
landlords are offering incentives to lure new tenants and reduce turnovers - 25% of landlords offered incentives last October compared to 10% this year. This represents the lowest level since October 2008. Even though rents increased in the past year, affordability increased as well, since renter income grew at a faster rate than rents.

Apartment vacancy rates across Greater Edmonton decreased in 2011 thanks to improved demand associated with the growing economy and further reductions are expected in the coming year as the economy continues to expand. Supply of new rental units will not keep pace with the expected rise in demand in 2012. Improving employment, particularly among the younger age groups, will encourage more newcomers to the region. Rental rates will continue to rise in the months ahead. A typical two-bedroom unit will rent for close to $1,060 by the fall of 2012.