Edmonton Real Estate

Edmonton Home Builders on a Roll

CMHC released the January new home construction tallies in their "housing now" report today. Edmonton area home builders are rolling along for the 7th consecutive month, posting higher starts than the same month last year. Here are the highlights:

• Housing starts in the Edmonton area totalled 577 units in January compared with 413 units in January 2009.
• Edmonton area builders began construction on 397 new single family homes in January, up considerably from the 147 units reported during the first month of 2009.
• Multi-famiy starts decreased on a year over year basis, following two months of improvement. Semi-detached, row, and apartment starts totalled 180 units last month, representing a decline of 32%.
• Housing starts in Alberta’s seven largest centres were up 52% from last year. Increased activity in Calgary, Edmonton, Grande Prairie and Red Deer offset year-over-year reductions in Wood Buffalo, Lethbridge, and Medicine Hat.

“CMHC anticipates continued strength in new single- detached production in the coming months as the local economic conditions improve,” noted Richard Goatcher, CMHC’s Senior Market Analyst based in Edmonton. “Despite January’s decline, CMHC looks for gradual improvements in multiple starts this year, compared with 2009 levels, as new unit inventories head lower and rental apartment vacancies also subside,” added Goatcher.

I wonder if the builders are overly confident in the current market. We were expecting a stronger start than we've seen in terms of sales this year. That being said, inventory of new homes is down to almost nothing and builders are trying to re-stock their shelves. Traffic in new show homes is reported to be quite good so perhaps the builders are just responding to demand. Time will tell!

Edmonton Real Estate Market Weekly Update

Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:  

New listings: 454 (358, 394, 334)
# Sales: 200 (196, 180, 133)
Ratio: 44% (55%, 46%, 40%)
# Price changes: 146 (134, 114, 104)
# Expired/Off Market Listings: 57 (73, 142, 92)
Net loss/gain in listings this week: 57 (89, 72, 109)
Active listings for single family homes: 1484 (1448, 1377, 1315)
Active listings for condos: 1298 (1271, 1244, 1216)

Sales activity in Edmonton is every so slightly better than last year - it's amazing how closely the lines for sales and new listings are lining up for this year and last:

The predictions were for a strong first half of the year and a weaker second half... so far that doesn't seem to be the case. Have a great weekend!

Do you really get a deal when you buy through the listing agent?

It seems that many potential home buyers feel that by working with the listing agent directly they will get a better deal than if they get their own representation. The idea is that since the listing agent will get "both sides" of the commission they will reduce their fees. While in some occasions commission reductions do occur, it rarely means the buyer has gotten a better deal.

The first thing to realize is that the listing agent has a contract with the seller, and has contractually agreed to look after their best interests. When a buyer makes an offer through the listing agent the seller does not have to accept concurrent representation (formerly known as dual agency and now known as transaction brokerage in Alberta). In fact, in the process of completing the listing contract the homes owner is given three choices for representation - sole agency, customer status, or sole agency with the option of transaction brokerage on a case by case basis. So, if you write an offer with the seller's agent they may request that to their agent that you accept "customer status" in the transaction (customer Status is where the agent owes you no fiduciary duties). Or, they may request that you find another agent to represent you. If both parties agree to transaction brokerage the roll of the agent changes significantly (that's a topic for another day).

So keeping in mind that the listing agent has an existing relationship with the seller, it's also easy to see that the listing agent wants to sell that house, not necessarily the best house for you, at the best price. A buyer with their own representation will get more advice about comparable properties and the value of the home in question. When you walk into a home with Sheldon, he will quickly give his honest assessment - there is a home around the corner for a way better price, or this is crap, or this is a great deal. While the seller's agent can provide information on sales of comparable properties, any advice they give you has to be shared with the seller. Can you imagine a listing agent saying "I think this home is over priced" knowing they'd have to report that back to the seller?

The point is, you may save a couple thousand dollars in commissions by working with the listing agent, but that really doesn't matter if you pay 5, 10 or 20 thousand too much. How will you feel about your thousand bucks off when you discover some pertinent information was not disclosed to you because you are essentially unrepresented?

For Sale Signs Return to Front Yards Around Edmonton

The REALTORS Association of Edmonton released their monthly stats today expecting a robust market this year. 2199 new listings came on the market in the Edmonton area in January, which is pretty normal for this time of year (contrary to what you might read in the paper). 

Sales were a bit lower than average for January, and down slightly from December (typically we see an increase in sales between December and January).

Inventory is much lower than it's been for the past two year, but still above what used to be normal:

The average residential sale price is down slightly from last month, and down .7% from the same time last year (after a few months in a row of higher prices than last year).

With the strong finish to 2009 we were expecting a stronger start in 2010, we'll have to wait and see what happens next.
 

Edmonton Real Estate Market Hot and Cold

Apparently the market feels hotter than it actually is. In  January one of our clients missed out on 4 homes due to multiple offers (one went $30k over list price), and two of our listings went with multiple offers. It seems there are some hot spots, and some not so hot spots in Edmonton right now because the sales are lackluster at best. Considering the economic environment and the level of consumer confidence compared to last year I was expecting much higher sales this month.

Today we have our monthly report on Edmonton real estate sales, and in a few days we will post the numbers for the REALTORS® Association as a whole (we have to wait for them to be released). Although we have slightly higher sales this January compared to last year, the market has actually cooled since December. We typically see higher sales in January than in December, but this year there were actually fewer sales in January (377 single family home sales compared to 433 in December and 242 condo sales compared to 250 in December).

 

The average sale price of single family homes is down to $362k this month compared to $371k last month but is about equal with last January. Condos on the other had are about even with last month and last year at $238k:

Price per square foot tells a different story though... single family homes are selling for an average of $257/square foot (the same as last month) compared to $238 last January.  So even though average prices are about the same as a year ago, buyers are not getting as much house for their money. Condos are selling for $229/square foot which is about the same as last month and last year.

The other big difference between now and this time last year is the listing to sale price ratio - it seems buyers are paying much closer to list price than they were last January, particularly when it comes to single family homes.

 

Edmonton Real Estate Market Weekly Update

Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:  

New listings: 358 (394, 334, 248)
# Sales: 196 (180, 133, 93)
Ratio: 55% (46%, 40%, 38%)
# Price changes: 134 (114, 104, 66)
# Expired/Off Market Listings: 73 (142, 92, 402)
Net loss/gain in listings this week: 89 (72, 109, -247)
Active listings for single family homes: 1448 (1377, 1315, 1260)
Active listings for condos: 1271 (1244, 1216, 1145)

Pretty much what I was expecting this week, inventory creeping up slowly, sales are creeping up slowly - exactly what normally happens at this time of year.

The REALTORS® Association of Edmonton is reporting 833 sales so far this month, with only a couple of days left in January we should end up ahead of last year but below average overall. The average residential sale price is $314k, single family homes are $362k (both unchanged from last week) and condos are $238k (down from last week).

Have a great weekend!

Just How Old is That Building?

If you're looking for a house, one of the criteria you're considering may be the age of the structure. Often we have clients that will consider homes no older than 5, 10 or 20 years old. It's easy for a REALTOR® to set up a search that will automatically only send homes in your desired age range. You can also search for homes in your desired age range yourself on our MLS® search site.

When you search the MLS® system for homes based on age, just how accurate are the results you get?

The age of buildings posted on the Edmonton MLS® system is what is called the "effective age." This age is determined by the city property assessments. If a home has had significant renovations done to it the city may bump up the effective age.

For example, a home built in 1911 that has been significantly modified might be given an "effective age" of 1956. In the tax records the home will be considered as built in 1956 and therefore it will show in the MLS® system as being built in 1956. This is often confusing to the general public when the age shows 1956 and in the description of the home it is "a heritage home built in 1911."

A more common occurrence is when buildings are converted into condos. For example, "The Ten" and "Cambridge Lofts" are both formerly office buildings that were converted to condos and their ages show as  1998 and 2004 respectively, when they are actually much older than that. Phillips Lofts, which was built in 1913 shows 1999 as its age on REALTOR.ca. (By the way if you like Phillips Lofts check out this video I did of a listing we recently sold in there). 

So the short story is, if the age of the building you are considering purchasing is important to you, you will have to look further than just the age displayed in the MLS® system. 

The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by CREA and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.

Edmonton Real Estate Market Weekly Update

Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:  

New listings: 394 (334, 248, 71)
# Sales: 180 (133, 93, 54)
Ratio: 46% (40%, 38%, 76%)
# Price changes: 114 (104, 66, 30)
# Expired/Off Market Listings: 142 (92, 402, 453)
Net loss/gain in listings this week: 72 (109, -247, -436)
Active listings for single family homes: 1377 (1315, 1260, 1185)
Active listings for condos: 1244 (1216, 1145, 1118)

The market is getting busier (more listings and sales) just like it should at this time of year. The sales to new listings ratio is much higher than the 33% ratio we saw last year. The REALTORS® Association of Edmonton has reported 562 residential sales so far this year - I must have made a mistake in my report last week when I reported over 700 sales because we are nowhere near record setting pace. I'm very sorry about that.

The overall residential sale price currently sits at $314k (up from last week), single family homes at $361k (down from last week) and condos at $241k (up from last week).

Financial Health Information Session

Our friends at First Foundation Mortgages are holding a Financial Health Information Session on January 26 at the Royal Glenora Club. They have a few spot left (only 30 spaces are available). If you are:

• Looking for solid investment alternatives to traditional products like mutual funds?
• Interested in knowing more about the latest RRSP and TFSA strategies for 2010?
• Do you have equity in your home and wonder if it should be working for you?
• Are you sure your personal banker is giving you good advice (or just selling you an investment)?
• Looking for a simple answer to confusing questions?

You might want to find out more about it and take one of the last 3 spots available.

Edmonton Photo of the Week - Ice on Whyte

This photo was taken by "gursky" of one of the ice sculptures in the "Ice on Whyte" festival. The festival takes place in Old Strathcona until January 24.

Check out more of gursky's photos of Edmonton of Flickr.

Alberta Economic Highlights

The monthly economic review, published by the Alberta government had some interesting information this month. Here are some of the highlights:

• The unemployment rate in Alberta fell to 6.7% in December, down from 7.4% in November putting us third in the country right behind Saskatchewan and Manitoba. Nationally the unemployment rate was 8.5%. Employment gains were seen in accommodation and food services and health care while losses were felt the hardest in manufacturing, mining and oil and gas extraction.
• As of October our population was up 2.3% from the same time last year even though in Q3 Alberta saw a net loss of 2535 inter-provincial migrants (international migrants were up 10,415). 
• Retail sales in October were 8.9% lower than the same time last year - largest declines were seen in gas service stations, furniture, electronics and building and outdoor home supplies.
• MLS home sales were 62% higher in December '09 than '08 - the largest year over year increase in monthly sales since 1996.
• The consumer price index rose .8% in November in Alberta compared to 1.1% nationally.
• Manufacturing shipments decreased 24% in October '09 compared to '08.
• For all of 2009 the average number of active drilling rigs declined by 3.8% compared to '08.
• The value of international merchandise exports was 33.6% lower in November '09 than '08.
• The number of business incorporations increased by 3.4% in December '09 compared to '08 but were down 19.2% for the year as a whole.

Here are a few charts from the report that I thought were interesting:

Edmonton Real Estate Market Weekly Update

Here is our update on the Edmonton real estate market. (Previous week's numbers are in brackets). For the past 7 days:  

New listings: 334 (248, 71, 100)
# Sales: 133 (93, 54,138)
Ratio: 40% (38%, 76%, 138%)
# Price changes: 104 (66, 30, 49)
# Expired/Off Market Listings: 92 (402, 453, 102)
Net loss/gain in listings this week: 109 (-247, -436, -140)
Active listings for single family homes: 1315 (1260, 1185, 1409)
Active listings for condos: 1216 (1145, 1118, 1313)

That is the first weekly gain in listings we've seen since August. Increasing inventory is normal for this time of year and I expect it will continue for the next few months, as sales increase as well. The REALTORS® Association of Edmonton has reported 739 sales so far this month which could put us over 1600 for the month and would be a new record. The average residential sale price is $309k, single family homes are $365k and condos are $233k.

We've talked a lot about the market and forecasts and everything this week so I'm going to call it a week. Have a great weekend!

REALTORS® Association of Edmonton Market Forecast

Last up at the Market Forecast was Larry Westergard, President of the REALTORS® Association of Edmonton to talk about the market, specifically resale homes. He started by recapping 2009 which we've already covered on the blog and in our Year in Review Report. One thing that was interesting was comparing the price of homes in Edmonton with other Canadian cities. In 2005 Edmonton was the 10th most expensive city in Canada and today with are the 5th most expensive.

The predictions:

• Rental vacancies will remain high.
• Slow activity in rural commercial and farm market
• Rec property sales will be steady (discount vacation options could negatively affect these sales)
• Acreages with homes will remain strong
• Balanced but active market for single family homes
• Quality homes priced below average will sell quickly
• High end home market will be soft - increase curb appeal and marketability to sell
• Resale will have an advantage over new because buyers can get more home for the money
• Condo market is not expected to increase market share
• Total residential sales forecast for 21000 (compared to 19,139 in '08)
• They expect a 5% increase in single family home values to $385,000 and no net change in condo prices (though prices will be highest in June/July)
• Expect mortgage rates to go up in the second half of the year by 1 or 2%

Edmonton Housing Outlook from CMHC in 25 Minutes or Less

Richard Goatcher from Canada Mortgage and Housing Coporation (CMHC) was given 25 minutes to forecast the housing market in Edmonton for 2010. Here is the short of it...

Employment growth will return in 2010, they predict job growth of slightly more than 5000. The predict a gradual improvement in unemployment, but the 12 year average will only be slightly lower than 2009. Net migration is expected to be strong by historical standards. Monthly carrying costs for a home are expected to increase slightly after a sharp drop in 2009.

Resale housing activity was close to record levels in Q4 '09 but how much more growth can we really expect? Inventory is currently pretty good, new home inventory of single family homes is currently very low (almost none). The fact that housing is currently more expensive than it was at the same time last year has affect buyer psychology as they not longer feel they will get a better deal if they wait. They expect to see improved sales in 2010 but similar to last year (without the really slow Q1). Expect an annual average price increase of about 4% in 2010 which puts us back up to the 2008 average annual price - they expect this will be mostly due to lower inventory.

New home construction - activity has ramped up significantly in Q4 and the trend is upwards. They still consider the supply to be fairly low - less than 100 spec homes were available at the end of the year, this is a historic low. They went from record high in August '08 to near record low now. They single detached starts to increase to over 5000 units (from 3900 in '09).

Multi-family starts are increasing slowly because of the high existing inventory of apartment style condos downtown and in the South West. It is difficult to get funding for new apartment style condos because of the large number of standing unsold units. They are expecting a 24% improvement in multi-family starts in 2010 mostly because financing will become easier and pre-sales will be easier to get. There are a number of projects planned and ready to go that are just waiting for pre-sales and financing. In addition the cost of construction has come down but it is still relatively high compared to earlier in the decade.

They expect the apartment vacancy rate to drop below 4% assuming the population grows and supply doesn't increase significantly. Average rents declined by 2% in 2009 but they are hopeful that rates will rebound or at least stay the same. 

As for changes in lending policies such as changes to down payment requirements there is no prediction as this comes from the finance department.

The Year of the Metal Tiger

Next up at the forecast, Angus Watt of National Bank Financial. He called 2010 the Year of the Metal Tiger because 2010 is not going to come peacefully, it's like a caged tiger that is not where it wants to be. The tiger is potentially ferocious and cruel and we should approach this year with caution. With strong references to China's astrological calendar which is symbolic as China is becoming the engine of the world economy.

He does see serious issues in the U.S. with high debt and the cost of Quantitive easing.  Definitely sees strength in the Canadian banking system calling it the "best" and "strongest" in the world. 

Some of Angus's observations for 2010:

1. You can only fight human nature for so long. In 1982 the median age was 25 (peak spending years ahead), now it is 52 (retirement focus - capital preservation).  

2. You don't ever want a crisis to go to waste; it's an opportunity to do important things that you would otherwise avoid. We've had a downturn here but we haven't really felt it. There will be changes in the banking systems around the world this year, until we know what the changes are it will be difficult for them to aggressively lend. My perspective is that government policy will distinctly affect real estate in Edmonton.  For example if the Government of Canada tells CMHC to change the minimum downpayment from 5% to 10% this will impact the number of first time buyers coming into the market.  Considering that first time buyers are the driving force behind the strength of sales that then would have a significant effect on the market.

Inflation was expected for the second half of 2009 but it didn't happen. (So maybe interest short term interest won't start to pop until late in the year or in 2011.

We have more people living in cities, than in the country as of 2009 (world's population). By 2050 70% of the world's population will be urban. When you live in the city your consumption habits change. We are guessing that his thoughts are that population growth will drive consumption growth.  Obviously employment is very important and stability in employment will only come with sustained or increased earnings.

According to Angus, by the second half of 2012 Edmonton will be rocking because of increased population and rising oil prices.  His perspective is that housing prices fell less than other places, and housing is extremely affordable  in Edmonton compared to other Canadian cities(affordability index in Edmonton is 145 vs 90 in Toronto, 58 in Vancouver, 119 in Calgary).

He Sees 7% mortgage rate creating a ceiling on housing prices in Edmonton, it only takes rates of 5% in Calgary to create this same ceiling.

We've forgotten about the "Alberta Advantage" for the last 18 months or so but it is back - our population is growing and is forecasted to grow (2.58% over 5 years) faster then the National average and well above other provinces.

43% of people buying a house in Edmonton today are renting, only 3% live with their parents. If rents continue to drop we will see less urgency from first time buyers to move from renting to buying.

We are on a sugar high right now fueled by low interest rates.  His advice is to make moves with caution

Governements need money,  so he thinks we are going to see tax and fee increases on kinds of services, fines ect.