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# Canceled/withdrawn/terminated listings: 71 (39, 65, 65)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.

Comments

[Gianfranco]

Good analysis, but again, if the inventory is broken down by SFH and condos, then sales should be borken down as well.

I'm not seeing an apple to apple comparisson here.

[Vern]

Bob Truman stats show that price per sq.ft having plumetted to below Feb 2007 levels.

This is a better measure than simply sales prices - still imperfect, yes.

BOTTOM LINE: Any one who bought in the past 14 months have lost money.

Those who waited and if to buy now, have won.

[RB]

Vern said "Any one who bought in the past 14 months have lost money. That's not accurate. In comparison to current prices, those who bought between March 07 and Oct 2007 may be down. This too is largely dependant on the local area. Those who have purchased since Nov 2007 have made money and I predict will continue to build equity.

[Dave]

The price per square foot will be much higher for a new or renovated property. Also, the style of home has a lot to do with the price per square foot. For example, a 1200 square foot bungalow will have a much higher price/square foot than a 1200 square foot 2 storey.
Without an in depth analysis of the sales data, it is impossible to come to the conclusion that anybody who bought in the last 14 months has lost money. I would say that buyers who picked up a decent property from Nov/Dec 2007 onwards may in fact now be ahead.

[ray]

Edmonton prices are doing fine. Sales are doing fine.
Bob's site shows steadiness in sales stats for Edmonton. EREB will soon do so.
The bubble blog is seeing no activity now, must be because they are past the denial stage of acceptance for no RE crash!!!
This site got more proof of economic and real estate prosperity: pricedoutinedmonton.blogspot.com

[Mike]

Bob Truman’s “what’s new section” is indicating that the price per square foot for pending sales in Calgary at all time high since July 2007. Also, according to some investment group private research, about a third of the people who migrated from other provinces 2-3 years ago in the peak should be starting to purchase their homes. Their point is that people migrate from other provinces or countries would rent at first. After 2 - years, some of them go back, some of them purchase and settle and the rest continue renting. Since the migration peak was 2005-2006, they expect the later part of 2008 to 2009 to be another influx of buyers in the market. It makes sense especially with lower interest rates and optimism in the oil and gas industry i.e. job stability

[Melina]

Hi,
I am looking to buy a 2006 condo apartment in Edmonton. The wall of this condo has a lot of rust stain and at some place water is falling from the ceiling in the underground parking. Should this be a ''no go'' to go on and buy the condo? I read the engineering report made on this condo and the report doesn't say mention the presence of water in the underground parking.
Thanks!,
Melina

[Vern]

Price/sq.ft indicates that anyone who bought in the past 14 months have lost money - SFH or condo.

Over long periods, we can believe in relative comparisons. A deeper analysis would be better but is unavialble. However, price/sq.ft. is a better measure than simply median/mean.

I fail to understand how sales/listing can be used to suggest "balanced market" while ignoring the ridiculous inventory.

It is sales/invetory that matters as listing number can be manipulated from both perspectives.

As for migrants waiting 2 years - sounds like a suggestion without merit. If people can wait 2 years, they can wait 4, till prices come down. Why wouldn't they?

Nobody knows the future but current stats are extremelly bad for sellers.

Sales/inventory suggests that you have only 10% chance of selling your home in a month.

[Anon]

Re Melinda's post May 03, 2008 at 11:02 AM

The engineering report. Did you commission and pay for it? Or someone else?

For many people, purchasing a home is the biggest purchase of their lives. I'm not an engineer. I think it is worth getting an independent report of some sort which targets your concerns specifically.

Someone I knew living in London, UK had two home purchases fall through because the structural report was unsatisfactory. This was in the early 1990s. Each report cost her about 1,000 pounds, at a time when the exchange was 2.4 Cdn to 1 pound. Initially she thought she'd wasted her 1,000 pounds, but really it saved her a much greater financial liability repairing the structural problems later on.

Good luck.

[Melina]

Hi Vern,
The engineering report was paid by the seller. The owner of the building is selling all the rented suite as condo, so by the law he has to provide to the potential buyer some condominium papers, at this report is one of them. They discouraged me to ask for an another engineer's opingion, since it will cost me too much.
Thanks for your answer,
Melina

[Mike]

The most probable next term US president issued "John McCain" issued a comment
"My friends, I will have an energy policy that we will be talking about, which will eliminate our dependence on oil from the Middle East that will prevent us from having ever to send our young men and women into conflict again in the Middle East". Not sure where the US is going to get its oil if not from the middle east, hmm may be from Venzuela, nope, may be from Mexico, Mexico does not have any oil to export any more real soon. Do you think of somewhere else where the US where be getting enough oil to make up for the oil they get from the middle east today?

[george]

mike your wrong again

[Pete]

I think people should take a step back and look at the numbers. Given that sales are typically highest in the spring and this spring has been slower than normal, shouldn't we start to wonder what'll happen in the summer and fall when sales typically slow down?? Let's not forget the record inventory (10k mls + 3k comfree).

Before the big mess down south they had a similar 6-12 month "lull".

There's never just one cockroach. If you see some markets going bust, then there's another on the way.

[Mike]

Hey, the bubble heads are back under new names, welcome George and Pete. Hey George or shall I say Brent, since you think that I'm wrong, what's right smart fellow, Mr. Telecom Engineer?

[Mike]

"There's never just one cockroach. If you see some markets going bust, then there's another on the way"

This is a kind of a twisted logic. Real estate markets are based on clear facts. The bankers and the economists have expressed many times that Canada is quite different that the US. However, I do not blame you, since you are US resident, you may need to educate yourself on the Canadian financial systems which is quite sophisticated compared to the ones in the US.

[Dave]

I have to disagree with Mike.
Real estate is based a large part on emotion and inertia.
Canada is definitely different from the US in many ways except for one important one. The fact that real estate has climbed in value at an unprecedented rate. We do not have a sub-prime crisis, that is true. But the sub-prime was just the final straw, the weakest link.
What happened is that most just thought that real estate prices would increase at a phenomenal pace. Big mistake.
I believe that if you are looking at the next 10 years out you will be fine if you have to buy in now. In the short term your real estate value will probably drop. This is not a big deal unless you are trying to speculate on the market.

My two cents (which may only be worth one cent by the end of the year...)

[buff_butler]

Melina,

Some advice

-Get an inspection - This should always be done however especially if there are easily visible signs of owner neglegence. This is so you know exactly what you are getting into. Second opinions are invauable sometimes; for instance you were smart enough to ask these questions.

-Talk to other people in the building to enquire about the cause of the leaking water and rust.

-Given the high numbers of inventory if you are having any doubt at all perhaps look at another place (I'd guess 3-6% of edmonton is for sale right now :P). Chances are if the deal is to good to be true it usually is. People don't ignorantly discount 100k.

Best of luck.

[Brent]

No Mikey, I'm not George.

Dave,

Canada's subprime is the 40 year mortgage.

Melina,

Good points from bluff. During those bubble years, the craftmanship was let's say...not the best. If you could pound a nail, you had a job.

[roadrunner]

Boy, I wish there were 100 year mortgages, then real estate prices could maybe double or even triple again :-) And if that happens, maybe then they can introduce 200 year mortgages...just so we can all have affordable payments.

[MB]

Do anybody here know about Fort McMurray real estate? I got a job there and planning to move in a month. I am thinking of buying a two-bedroom apartment and wondering if I buy now or wait for some time. A decent two-bedroom two-bath apartment is in the range of 430K to 500K and the rent is in the range of 3000 to 3800 for a similar apartment. I heard prices escalated almost 100K in last year and is expected to go up this year too. After seeing Edmonton I am little scared to buy a property when prices are escalating quickly.
What should I do? Should I wait for a stable market or jump in?

[Brent]

MB,

It depends on your situation I guess. Are you single or married with a family? Is your job permanent or temporary? Ask Mikey,
he works up there and rents a closet for $1,000 a month or so he says.

[mdm]

Just spent 4 weekends looking at Open Houses and Showhomes in Toronto, Markham, and Whitby, during a business trip. Houses and townhouses look cheaper there than in Edmonton, before I left. And because most are clad in brick, I would assume that they were more expensive to build.

The biggest difference, though, was the total absence of For Sale signs in front of developments that had been completed recently, or are to be completed in 2008. It looks like pretty much everybody who took possession of a condo or townhouse is actually living in it, or at least is not trying to get rid of it quickly

In Europe, our daughter is currently looking for a rental appartment in Frankfurt, Germany. Not a small city by any comparison. She complains that landlords are asking $750 for 2 bedrooms, which is similar to the prices in Cologne, where she lives now..... Makes you wonder about rents in Edmonton.

[Brent]

mdm,

My thoughts exactly and to think any landlord having bought investment property in Alberta during the last two years is having to subsidize his rentals. Makes you wonder about the price of real estate in Alberta too.
Oh! I forgot, Alberta is different then the rest of the world, we have dirty oil. LOL

[MB]

Brent,

I am married, my job is permanent and I am thinking of living in Fort Mc for atleast 5 years.

[mdm]

MB,

unfortunately, no job comes with a guarantee of being permanent.... There is always the chance of cutbacks. Or you may find that Fort McMurray is not the right place for you, for whatever reason.

Prices, just like rents, seem to have spiralled out of control up there. Since you may only want to stay for 5 years, you might be putting yourself in a scenario where you "buy high and sell low".

My suggestion is to move up there, rent for 6 months to a year, and assess the situation. That will give you a longer window to shop for just the right property, if you find that Fort McMurray suits you. I don't think you need to worry that prices will run away on you, during that period.

It sucks to pay that much rent without building equity, but it would be worse if you got stuck with a house that you might not be able to sell, in 5 years, because you paid too much for it, in the first place.