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.

Comments

[alberto broccoli]

There is a gap between Dec 07 and Jan 08 listing/sales ratio, no? ie from 60 to 40. Sure this is right?

[mdm]

Why do we consider the sales to new listing ratio a reliable parameter for comparison, given that a significant number of properties currently in the inventory have already been relisted more than 3 times?

***Very fair comment

Sheldon

[anne]

Sheldon,
I've been reading this blog for months and kept silent as I agreed or disagreed with the sea of oponions and ideas, many excellent and some with what appeared to be little thought, only emotion. You took a strong shot at comfree sellers the other day, musing how realtors enjoy taking their clients to them as when it comes to negotiating, they are clueless. I have sold quickly and without problems, twice on my own, twice through a realtor, and three times through comfree. it does not have to be this hate-hate relationship. There is room for all, and all deserve respect. I did negotiate on all three of my comfree deals without difficulty. I have no issues with realtors either, a definite place for them as well. Please lend a little more courtesy when talking to potential future clients. That insult was, unfortunately, a real turn-off for myself.

[Mike]

Great job Sheldon/Sara. I can almost hear some pessimists come up with some argument to interpret it as a crash and will relate it to the ripple effects of a real estate market crash 150 years ago in Turkestan.
I guess it is going to be a strong balanced market for a long time. People has to get used to the price range. Looking around with a friend, I could also see that builders has started to edge their prices up again after taking a 20-40K discount last fall. It was cheaper by about 20-30K to buy a new SFD last fall/winter than now but my buddy kept waiting thinking that builders will take down the prices more.

[Nate]

Looks like you were right all along Mike. Average price did drop $40,000 year over year.

Better start buying! With record high inventory and record low sales, new home builders are gonna be jacking up their prices!

[Mike]

Buying or not is your business and personal decision. I was stating an observation. Note that builders have are finishing off their single family homes inventory and not building new homes unless their is an unconditional contract and good deposit. I other words, they learned their lesson and only build if they have a solid buyer.

[Mike]

Nate Said
"record low sales"

Inaccurate statement, according to Bob's site and Sheldon's post, April Sales was 959 SFD's. This is quite normal for Edmonton except for the crazy spring of 2007. 2007 was the abnormal, 2008 seems to be back to normal.

[datamage]

How can anyone say that current sales levels are "back to normal"? The Monthly Sales graph clearly shows that sales are down at least to 2004 levels. Now, lets consider 2004 a "normal" market.

For some reason, nobody is talking about growth. Just like adjusting prices for inflation, why wouldn't you have to adjust sales for growth?

According to the census, Edmonton has grown approximately 10% in the past 5 years. Actually, I just used the numbers from 2001-2006, but that's probably good enough. Therefore, you can easily expect the housing market to have grown by at least the same amount. Add to that the obvious over-building in the past 2-3 years and you can assume the number of homes is even more. Therefore, if you "adjust" the sales number by 10% (or more), it appears that monthly sales have been mostly below 2003 numbers since last summer.

[Mike]

datamage,
Good point about growth. But this is back to the herd mentality. Many qualified buyers are holding back on buying thinking that prices would still go down. Like speculators waiting for the highest peak to sell, new home buyers waiting to see if the prices will ease off more. I personally know few people that can easily afford a nice house but they keep renting thinking that they may get a better deal next month. This may or may not happen. Bear in mind that the economic fundmentals are very strong in Edmonton, and this is an undeniable fact.

[Nate]

Economic fundamentals have been strong in Alberta for years. I had friends in the late 90's getting paid 70k a year and driving company vehicles before they even finished highschool, surveying in Fort Mac.

It was the immigration spike that drove prices up. It has significantly died down now.

[Bob]

How does using a Realtor to buy a Com Free house work, exactly?

There are a few houses we would like to look at on ComFree, but we are afraid that if we try to bring a Realtor into the process, the seller will be angry/upset/less likely to want to make a deal with us. Or will simply raise the price in order to cover the Realtor costs?

We've asked our Realtor about this, but she has just said "Usually we can work something out with the seller". I don't know what that means . . .

If you were buying a ComFree house, would you use your Realtor or just negotiate on your own?

***Bob, You are paying the seller the fee anyways. I suggest sitting down with your REALTOR and get specifics. In most cases I negotiate our fee with you. We arrange the viewing with the sellers and if you like the property we transfer our arrangement to the seller in the purchase contract. I've only had two sellers in 15 years say no and that was in an extreme sellers market. From a negotitating point of view there is a distinct advantage for you from a negotiating and information perspective. If there is ever a problem or something wasn't properly disclosed you then have recourse to a third party who was supposed to protect you. Or you can just assume that you know what you need to know and roll the dice.

Sheldon

p.s. Your REALTOR may make different arrangements then I do.

[Anon]

There is little chance of Alberta Real Estate crashing. There is only one big factor that could throw Alberta in the dumps again and could create havoc across this entire country. It is a Carbon Tax. Should some sort of carbon tax be brought in then we will probably see a situation very similar to the 80's. This would not only be bad for Alberta this would throw this Country into a repeat of the last bug bust. If that happens I would agree Alberta Real Estate is doomed. However everyone will be doomed as Alberta has sucked up plenty of workers from across Canada and created plenty of jobs in other Provinces as well. This will be very bad. I doubt it will ever be brought in unless everyone wants to pay more for energy? End result. We will simply have higher energy costs and less jobs across the country. Not a good combination.

I would also like to point out to all you environmentalists out there. I do agree we need to do all we can to help the Earth. BUT ethanol is clearly the dumbest thing ever thought up. The science supports the facts that ethanol is not viable and actually creates more carbon than it saves. The only reason it worked so far is massive subsidies made it feasable. The subsidies made the governments look good nothing else. What I want to know is when the environmentalists are going to admit they are responsible in a big way for creating rising food costs and causing the deaths of thousands of hungry people worldwide. A British scientist who is a Global Warming supporter recently said this is a crime against humanity. He is correct. If global warming is real or not Ethanol is killing people everyday. Wake up world. What is more important? People or the planet. Sorry but we cannot sacrifice people now to save the planet later. New ways must be found. The current ideas are greatly flawed and will lead to death and war.

[karl]

Anon says," What is more important?
People or planet?"
We are a little bit off the topic here, Anon, but I have to say, planet is very important, since people we cannot sacrifice, live on the planet.
So, when we kill the planet, we kill the people on it.

[laerog]

"...we cannot sacrifice people now to save the planet later."

Actually the fundamental problem of our time that most other problems are derived from is overpopulation. Therefore, the more people that die the better. If global warming induces conditions that wipe out half the planet all the better. She'll take care of herself one way or another, with or without us.

[Smokey]

Laerog,

Are you signing up for the half that dies? You are warm and compassionate man. Maybe if you passed grade three you might a greater understanding of the world around you. Your concern for others is unparalleled, and your human decency is unmatched. In case you don't understand what I am saying, look up sarcasm.

[laerog]

I fully understand sarcasm and recognize that the less enlightened will see my critique as cold and heartless. But I'm curious, what does this so called 'greater understanding of the world' involve in your eyes? And can you disqualify what I say with something other than emotion?

Also, by comparing our grammer, I'd suggest that of the two of us it looks like I'd more likely have passed grade three. :)

[laerog]

Spelling notwithstanding, I still maintain that my view is difficult to refute with more than an emotional reaction.