Edmonton Real Estate Blog

Housing Starts Continue Downward Trend in April

CMCH released their monthly report today, showing that housing starts were down again in April. For the year so far, starts are down 41% from '07 in the greater Edmonton area. If you compare April '08 to April '07 starts fell 60% in the greater Edmonton area, and 44% across Alberta (the only major city that saw an increase was Lethbridge).

"For the tenth month in succession, single-detached housing starts registered another year-over-year decline in starts in April. Home builders poured foundations for only 178 units last month, representing an 80 per cent slide from April of last year. For the year-to-date, single starts have fallen by over two thirds from the first four months of 2007 to 835 units, the lowest level of activity since January through April of 1996. “High levels of unsold spec home inventories coupled with an ample supply of resale listings continue to undermine new singledetached construction this year,” observed Richard Goatcher, CMHC’s Senior Market Analyst for Edmonton. CMHC expects single-detached starts to begin improving in the second half of the year once new house inventories turn the corner in the months ahead."

Multiple starts were also down - 38.5% - "Multiple unit starts are expected to cool for the duration of 2008 due to an expected run-up in new condominium apartment inventories and a relatively well supplied existing condo market,” added Goatcher.

At least things have slowed down, and the new homes aren't contributing to the overall inventory as much - I certainly haven't heard about anyone buying a new home to flip lately.

Edmonton Monthly Real Estate Stats Update

So as I mentioned last week when I published the monthly stats, a number of sales would not yet have been reported and the final numbers would look a little different. So, inventory didn't end up over 11,000 but I'm certain it will this month (final number 10,606) and there were actually 1823 sales. As far as the charts are concerned they look pretty much the same so I'm not going to put them up again.

There was an interesting article in the Journal today, they interview three real estate "experts" on their thoughts on the market...worth a read.

The Realtor's Association of Edmonton press release mentioned that a "typical sale" is completed at 97% of list price, but many sellers have lowered their asking price. It would be interesting to see what the average sale price is compared to the original asking price, but the database won't allow me to crunch the numbers that way.

Happy Star Wars Day!

May the fourth be with you :)

I hope that you are all able to celebrate 'STAR WARS DAY'  in the traditional way as I will, and the full enjoyment of the day be yours.

Weekly Update on the Edmonton Real Estate Market

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

New listings: 671 (566, 823, 869)
# Sales: 279 (293, 336, 272)
Ratio: 42% (52%, 41%, 31%, 36%)
# Price changes: 603 (493, 679,567, 550)
# Expired Listings: 450 (115, 181, 125)
# Canceled/withdrawn/terminated listings: 71 (39, 65, 65)
Net loss/gain in listings this week: -129 (119, 241, 407)
Active listings for single family homes: 3985 (4088, 4063, 3888)
Active listings for condos: 2953 (2969, 2921, 2851)

That is the first decrease in overall inventory we've seen since January. Granted, we see a larger number of expired listings at the end of each month, which certainly contributed, but a shrinking inventory is good news for everyone right now in my opinion.

Edmonton Real Estate Market Balanced

After three consecutive months of a buyer's market in Edmonton, April saw some balance (barely). The new listings to sale ratio hit 42%, even with almost 4,500 new listings and inventory creeping over 11,000 homes.

The steep competition did affect pricing as the average sale price dropped slightly, falling just below last April's average:

As you can see, competition and inventory are closely related to the average price:

As we've seen in the weekly updates, the last two weeks of April saw the pace of new listings slowing, and we predict the inventory will peak sometime around June.

The one thing that seems normal in Edmonton are sales; they are following the normal annual pattern for our marketplace albeit slightly lower than average.

I haven't included any exact figures, since some of the data is still to come in. The Real Estate Association requires that all sales are reported within 2 business days, so we won't have the exact data until the monthly press release expected early next week. More analysis to follow tomorrow when we're not so busy with clients takeing possession of their new homes.

"The Tony" Catches On

A few months ago I suggested that "The Anthony Henday" needed a nickname - much like the freeways in many other cities.... I like to call it the Tony. I'd just like to point out that the Edmonton Journal is calling it the Tony now too. Perhaps if we get Garner Andrews on this it will catch on.

http://www.canada.com/edmontonjournal/news/culture/story.html?id=523d8797-6067-4caa-abd1-d4454a20d042&k=29101

Housing Starts Down, Commercial Construction Skyrocketing

March housing starts were down 59% from March '07 and were down 31% for the first quarter according to a report released by CMHC today. Single family homes are down for the 9th month in a row, representing the lowest level of activity since 1996. Completions meanwhile are actually up 13% from last year - that means more inventory coming on the market now, but less in the future. Completed, unoccupied homes stands at 902 (a record) - although I'd have to disagree with this stat. By unoccupied I think they mean unsold, since there are clearly plenty of new, unoccupied homes listed on the MLS as resale that the builders would consider occupied.

The sale price for a new single family home is up 33% from last year, setting a new record of $501,499, but CMHC cautions that most of these prices were negotiated before construction on the home even began.

As for multi-family starts, they're down as well - 57% since last March. Units under construction are up 42% from this time last year though, and CMHC expects unoccupied inventory to increase from the current "normal" levels.

"Condo resale inventories were looking very well supplied in March and new units will face stiff competition from these existing units that are in many cases priced below the current cost of new construction."

Meanwhile there are new retail developments popping up all over the city. Retail vacany rates have been steadily decreasing while rental rates are on the rise, so developers have responded to the demand by building all kinds of new space.

Windermere in South West Edmonton will add about 1 million square feet of retail space on about 100 acres featuring Wal-Mart, Home Depot and Canadian Tire making it Edmonton's second largest outdoor shopping centre, after South Edmonton Common which continues to grow.

The Meadows in South East Edmonton has about 500,000 square feet of retail space planned with another Home Depot and a Superstore.

Existing malls are also expanding (South Gate and Kingsway) and there are also large developments in Spruce Grove, Sherwood Park and Leduc.

Makes me wonder if the commercial guys have learned anything from the residential guys about over-building?

Trying to Sell Your Home? Be Flexible

While working on an evaluation yesterday, Sheldon thought it would be interesting to compare the absorption rate of vacant properties with seller and tenant occupied properties. The absorption rate shows how long it will take for the existing listings to sell.

In general, a vacant property does not show as well as an occupied property, but in this case the vacant properties were actually selling better. In fact, in the area we looked at the vacant absorption rate was 4 months while the occupied rate was over 8 months.

At least in part this must be due to the accessibility of the homes; it is simply easier to show a vacant home than one that is occupied, especially one that is occupied with tenants, and so I assume the vacant homes on the market are getting shown more. Now there are likely other factors at play, such as pricing, but our experience of late is our vacant properties are getting more showings.

So how can you compete if you’re living in your home while trying to sell?

First, make it as easy to show as possible. If you’re not home during the day, make sure you’re Realtor knows they can go ahead and arrange showings during certain hours without appointments – we can then communicate that to other Realtors through our MLS database so they know it’s easy to show.

Second, always be prepared for showings including short notice showings.  It may seem like more work but it may make the difference in getting that buyer through who might not otherwise come back.

While you’re on the market, try to keep life simple; don’t plan big events at your home. Be prepared to eat a few meals out since many buyers will want to look after work.  Have some pre-planned family activities for those emergency showings.  A trip to the park, the river valley or some grocery shopping.  Making it as fun as possible and being prepared will make the intrusions less stressful.

Keep in mind the average time on market is currently almost two months, so you need to be prepared for a couple months worth of regular home invasions.

Weekly Update on the Edmonton Real Estate Market

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

New listings: 566 (823, 869, 780)
# Sales: 293 (336, 272, 284)
Ratio: 52% (41%, 31%, 36%, 41%)
# Price changes: 493 (679,567, 550, 450)
# Expired Listings: 115 (181, 125, 408)
# Canceled/withdrawn/terminated listings: 39 (65, 65, 60, 39)
Net loss/gain in listings this week: 119 (241, 407, 28, 217)
Active listings for single family homes: 4088 (4063, 3888, 3694)
Active listings for condos: 2969 (2921, 2851, 2692)

Sheldon had some thoughts to share this week:

Positive changes this week for sure. The average residential selling price so far for this month is $335,683 which is up slightly from last week but still down from March, as is price per square foot. Inventory is at 10,737 and sales at 1,311. Projected out that should put us just over 1500 for the month. As you can see, new listings are definitely on the decline:

Selling in a Buyer's Market

My thoughts on how to get your home sold in Edmonton today.

Old Vs. New

Yesterday Sheldon talked about the number of new and vacant properties on the market, and it made me wonder - what's been happening with the prices of resale homes compared to new homes?

At the end of 2007, CMHC explained at the Housing Outlook conference that the gap in pricing between new homes and resale homes had grown quite large in the Edmonton area, and suggested that new home prices would need to come more in line with resale homes.

Now, my stats only include homes sold on MLS, and may in fact include a number of resale homes since I can only separate the sales values by the age of the home. Never the less, I plotted the average sale price of homes built in 2007 and newer, and those built in 2006 and older. Here are the results:

It seems the average price of new single family homes and older single family homes has dropped at approximately the same rate. When it comes to condos, the older ones have held their value better than the newer ones (and single family homes for that matter).

I also noted that the newer homes and condos were larger on average than the older ones - newer homes were 1800 square feet while older ones were 1365, newer condos were 1050 on average and older ones were 970. Now, when it comes to single family homes, some of that difference in size can be attributed to the different styles of homes; just by driving around a new subdivision you can see there are more 2-story homes being built these days than bungalows which tend to have smaller square footage.

Which leads me to price per square foot...

Before you get too far thinking about this chart, there is one fact to keep in mind and that is the larger the home, the lower the price per square foot. We know that the newer homes are larger on average, so it makes sense that their price per square foot would be lower for the newer, larger homes. 

I was surprised to see that older condos and newer single family homes are very similar in price per square foot, as were older single family homes and newer condos. I guess this is partly attributed to the fact that with a new home comes a lot of extra expenses like landscaping, fences and decks, and sometimes garages and basement development, while those costs are already built in on a resale home. One thing for certain, they've all come down over the past year, and all at approximately the same rate.

Summer's Cancelled in Edmonton

Tough sledding in Edmonton as spring and summer are officially cancelled.  Is it me or did someone turn on the air conditioning too early and jinx the weather? One day we’re sitting on the deck having a BBQ at plus 20 and then the next we’re shoveling the driveway three times in one day.

It’s nice to be back blogging again after an almost a three week hiatus. I’ve been learning all I can on the fine art of facilitation and the common law requirements of agency. Dreary but necessary stuff as the October 1st deadline looms closer for the end of dual agency in Alberta. In some respects many consumers will find there might be some quantum changes to how REALTORS interact with them in terms of concurrent representation.  Alberta will be the second province after Nova Scotia to adopt the “Transaction facilitation” model.   

In other even more dreary industry news FinTrac has handed down new reporting guidelines for the Real Estate industry to assist in the tracking of proceeds of crime. Some of these changes are far-reaching and impact every transaction we deal with.  Significant changes will occur in the areas of dealing with Canadian or Foreign owners living abroad.

I was wondering the other day just how many vacant properties are there at the moment an a quick search on MLS showed there are approximately 2200 in Edmonton. That led me to wonder how many had sold? Not that this is a telling stat by any stretch but in the last 60 days 784 vacant properties sold (vacant or never lived in) which isn’t bad as far as absorption - just about 5 months supply. The main reason I was wondering this was a comparison to how many Tenant occupied properties there are for sale and how many tenant occupied properties were sold.  In that case there are currently 967 properties that are active on MLS that are designated as tenant occupied or have tenants rights applicable and there were 132 sales in the past 60 days which converts to approximately 14 months supply.

My thoughts here are that with so many vacant and seller occupied properties for sale, very few people are going through the inconvenience of showing the tenant occupied properties unless they are exactly what their clients are looking for. This brings up an interesting dilemma - should a seller market their property vacant where accessibility is greater, or collect cash flow even though it may take longer to sell?

The answer I guess depends on the property and the cooperative nature of the tenants residing in the property.

Weekly Update on the Edmonton Real Estate Market

Here is our weekly update on the Edmonton real estate market. (Last week's numbers are in brackets, and the week before after that). For the past 7 days:

New listings: 823 (869, 780, 574)
# Sales: 336 (272, 284, 235)
Ratio: 41% (31%, 36%, 41%)
# Price changes: 679 (567, 550, 450)
# Expired Listings: 181 (125, 408, 83)
# Canceled, withdrawn and terminated listings: 65 (65, 60, 39)
Net loss/gain in listings this week: 241 (407, 28, 217)
Active listings for single family homes: 4063 (3888, 3694, 3649)
Active listings for condos: 2921 (2851, 2692, 2669)

That's the highest number of sales in a week since we've been doing the weekly update (over 6 months). That's also the highest number of price changes. Average price is holding steady at $333 and change. Current inventry is 10,597 and there have been 1052 sales so far this month. Price per square foot according to Bob Truman's site is basically unchanged.

Quotes from the Papers

There have been a whole bunch of articles about Alberta and Edmonton and the economy in the past few days. So I thougt I'd just put some of the quotes from these articles here...enjoy:

• Alberta remains an island of prosperity in a roiling sea of economic uncertainty. Geoffrey Scotton, Calgary Herald
• There almost seems to be distinct economies between Alberta and the rest of North America, really. It's a rather interesting situation -- we're pretty well insulated from the stuff happening in the U.S. Calgary Economic Development chief economist Adam Legge.
• Our proprietary housing valuation models, driven by both affordability considerations and individual market conditions, suggest that Victoria is currently the most overvalued city in Canada, with average house prices at 23% above “fair value.” Edmonton is next, at 21%. By contrast, Miami and Los Angeles both got to more than 60% overvalued at the U.S. peak.  David Wolf, Canadan Business Magazine.
• Alberta is doing even better than most people thought . . . and we expect Alberta to remain quite strong." CIBC World Markets chief economist Jeff Rubin.
• Alberta is slowly losing its advantage in terms of having the lowest business taxes, having the lowest personal taxes, having the best set of regulations and being the most attractive province to invest. Niels Veldhuis, director of fiscal studies at the Fraser Institute.
• Albertans are optimistic -- and that optimism is rising. Job creation in Alberta is running at 3.4 per cent annually compared with 1.9 per cent nationally according to a new consumer and business confidence survey from PricewaterhouseCoopers LLP.
• Statistics Canada projects a stunning $20 billion will be spent in the oilsands this year, more than in all of Canada's manufacturing sector. Wages in Alberta are surging, climbing nearly seven per cent in March from a year earlier, to the highest level of any Canadian province and 11.2 per cent above the Canadian average.
• Multi-unit housing market that started heating up in 2006 has turned into a buyer's market, multi-family homes under construction have continued to rise -- unlike single-detached homes -- and are just starting to slow down in the last two months. Canada Mortgage and Housing Corporation analyst Richard Goatcher.
• Sales in Alberta of new vehicles -- clearly, a big-ticket item -- are on track to set a record for the fourth consecutive year.
• If I were trying to capture the market today, I would say it's uncertain and confusing and we're hoping that the market starts to find some footing as the year goes on. Raymond Townsend, a senior vice-president at CB Richard Ellis.
• Alberta exports were running at a record pace in February, up a stunning 32 per cent -- or $2 billion -- from February 2007, up nearly 10 per cent from January and for the first two months of the year ahead more than 20 per cent. That follows a fifth straight annual record in 2007.

• [I predict] a short-term housing glut as projects under construction are finished, adding to an inventory of empty single-family houses that aren't moving. I think you'll see some prices drop. You're going to see some rentals take place, corporate company rentals, all sorts of things. Definitely, in the short run, there's going to be a problem. Investors who bought spec homes "are going to get their clocks cleaned. Greg Christenson, president of Christenson Developments.

Seems like the experts are all over the map!

Weekly Update on the Edmonton Real Estate Market

Here is our weekly update on the Edmonton real estate market. (Last week's numbers are in brackets, and the week before after that). For the past 7 days:

New listings: 869 (780, 574, 669)
# Sales: 272 (284, 235, 263)
Ratio: 31% (36%, 41%, 39%)
# Price changes: 567 (550, 450, 465)
# Expired Listings: 125 (408, 83, 152)
# Canceled, withdrawn and terminated listings: 65 (60, 39, 66)
Net loss/gain in listings this week: 407 (28, 217, 188)
Active listings for single family homes: 3888 (3694, 3649, 3496)
Active listings for condos: 2851 (2692, 2669, 2608)

Wow that's a lot of new listings! That's all I have to say about that ;)

The average residential sale price for April so ar is $333,030, down from March's average of $343,760. Price per square foot also took a hit for single family homes, but increased slightly for condos:

Happy weekend - enjoy Sunny Edmonton!