Edmonton Real Estate Blog

Edmonton Brings up the National Average

All the Canadian newspapers are aflutter because the Canadian Real Estate Association released their monthly report today, with positive news. I think people tend to get over excited about these releases whether positive or negative, but, here is the gist of it.

Resales of existing Canadian homes showed continuing improvements in in May, with both the number of transactions and the national average price on the rise. The national average sale price in May hit the highest monthly level on record, at $319,757, which was up four-tenths of a percentage point from the previous record in May 2008.

The real-estate association said the dollar value of sales through its members reached $11.4 billion in May, up 10 per cent from the previous month and more than 50 per cent above the low of $7.5 billion in January.

The association said the the rebound in activity was led in some of the most expensive local markets in Canada and that had the effect up pushing the national average price upward.

Seasonally adjusted sales were up on a monthly basis in about 70% of local markets. Monthly activity gains in Toronto (9%), Calgary (25%), Montreal (10%), Vancouver (8%), and Edmonton (12%) contributed most to the overall increase in monthly activity.

"Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses. The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets," said CREA economist Gregory Klump.

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: 418 (474, 423, 412)
# Sales: 252 (203, 271, 256)
Ratio: 60% (43%, 64%, 62%)
# Price changes: 196 (252, 253, 264)
# Expired Listings: 138 (110, 348, 89)
# Withdrawn/terminated/etc. listings: 16 (36, 40, 20)
Net loss/gain in listings this week: 16 (125, -236, 47)
Active listings for single family homes: 2503 (2486, 2446, 2587)
Active listings for condos: 1991 (1995, 1976, 2057)

As you can see, sales are chugging along at almost the same pace as last year, while new listings are much lower.

For the Edmonton Realtors Association as a whole, there have been 855 sales so far this month - if the pace continues we should have about 1600 sales this month. Average residential sale price sits at $308k (up from last week but down from last month), while single family homes are at $349k and condos are at $233k (both up from last week and the same as last month).

Things seem very stable out there. We've definitely seen an increase in relocations to Edmonton in the past few weeks at our company, which is normal for this time of year. There has been a lot of discussion on the blog about the population figures for Alberta which came out a couple of weeks ago. I've just had a chance to look at them, here are some highlights:

• Over the past year, the top three provinces with the highest interprovincial migration gain in 2008 were Alberta (20,616), British Columbia (6,450), and Saskatchewan (5,559). This is a substantial increase in interprovincial migration from last year in Alberta (9,921).
• Across all provinces, Alberta had the highest growth rate, year over year, at 2.58%. British Columbia and Saskatchewan had the next highest growth rates of 1.70% and 1.50 respectively.

In chart form:

 

 

They're still coming! Happy weekend :)

A Worthwhile Canadian Initiative

The headline for this article once won an award - for the most boring headline! The article I pulled it from was re-published on the "Invest in Edmonton Real Estate Blog" today and it is absolutely worth reading. It is an article that appeared in Newsweek last month, that talks about the global financial crisis and how Canada is fairing better than the rest of the industrialized world.

A few excerpts:

"Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn't grown in size; the others have all shrunk."

I remember many people crying during the recent real estate boom that we were being held back by the fact that mortgage interest isn't deductible here....

"...the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest onyour mortgage isn't deductible up north. In addition, home loans in the United States are "non-recourse," which basically means that if you go belly up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours. Ah, but you've heard American politicians wax eloquent on the need for these expensive programs-interest deductibility alone costs the federal government $100 billion a year-because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent."

The article also compares our health care systems and immigration policies. It's definitely worth a read.

Canadians Optimistic About Housing Market: Royal Lepage

A recent poll commissioned by Royal LePage found that almost half (49%) of Canadians surveyed agree that the economic stimulus measures anticipated as part of tomorrow's Canadian federal budget announcement will have a positive impact on Canada's real estate market.

Based on the comments on this blog, I'm not sure if they included any Albertans in their poll... just kidding...

82% of Canadians agree that the inauguration of Barack Obama will have a positive impact on
consumer confidence in Canada.

According to Royal LePage's "Home Price Survey ," in late 2008, the combination of a global economy in recession and shrinking employment figures did much to dampen consumer confidence, diminish home sales and cause house prices to drop.

Of the housing types surveyed, the average price of detached bungalows dipped by 4.8 per cent to $319,640, followed by standard condominiums, which decreased by 5.2 per cent to $233,230, year-over-year. The average price of standard two-storey properties fell by 6.3 per cent to $376,140, year-over-year.

The larger cities that have seen the greatest increase in prices this decade, including Toronto, Edmonton, Calgary and Vancouver, recorded declining house prices.

Accoring to Phil Soper, president and chief executive, Royal LePage Real Estate Services: "The balance of 2009 should see gradual and continuous improvements as the effects of low mortgage rates along with efforts by governments and central banks to get the economy back on its feet again begin to take hold."

The full report is here.

*Photo Credit, Canadian Press.

Edmonton Real Estate Market Weekly Update - Sales Sluggish

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

New listings: 446 (390, 380, 94)
# Sales: 145 (111, 82, 37)
Ratio: 33% (28%, 22%, 39%)
# Price changes: 274 (242, 156, 94)
# Expired Listings: 197 (215, 171,851)
# Canceled/withdrawn/terminated listings: 23 (21, 11, 13)
Net loss/gain in listings this week: 81 (43, 116, -807)
Active listings for single family homes: 2419 (2350, 2347, 2258)
Active listings for condos: 1777 (1688, 1625, 1554)

So far this month there have been 442 sales...compared to last January we may only have half as many sales by the end of the month. The overall average sale price sits at $313k (up from $310 in December), single family homes are at $346k (down from $350k) and condos are at $230k (about the same as December).

We had a question/comment this week from "Jason":

eagerly waiting your response sheldon - will housing prices take a significant hit? or has the market stabilized at this level would you say?

So Sheldon wrote up a thorough response:

What is “significant”? To some people any amount is significant and to some it's a whole other amount. It definitely depends on your perspective. Your questions made me realize I haven’t really proffered any predictions for this year yet. Over a year ago I had a conversation with Bear claw (who runs a very good blog) Alberta Market Watch and we exchanged opinions.  Frankly predictions are funny because as soon as they’re made they are wrong:

• I think the average price will come down in part due to lower sales in the higher end properties of 1,000,000 plus.
• I think we’ll see price compression in the 300 – 350 range for single family homes.  Due to lowering supply in that category, this will also help the builders gain some footing on starts in the second half of the year as buyers look for more options.
• Certain areas and types of product will have steeper declines, and some areas will remain relatively flat, to the point where I could even see slight improvements in pricing, in some areas and types of housing.
• Employment will be a major factor. We know there will be job losses in the economy. How many will make a significant difference in property values. If overall employment remains stable then  price declines will be more or less related to supply and demand.
• Pent up demand. If there is improvement in the economy in the second and third quarters, or the economy shows signs of stability and improvement, I think you’ll see the people who are just waiting for a signal that things have stabilized or are improving, pull the trigger.  This could  possibly increase prices albeit, in the short term, even with higher inventory.  There are a lot of buyers we are working with that are just waiting for those signals.
• Credit.  It is really tough to determine how much, from a quantitative point of view, the credit restrictions have lowered demand. In other words, how many buyers that could have bought 4 months ago can’t now due to change in credit restrictions? (I don’t mean the 0 down or 40 year amortization crowd either).
• Obama factor.  Although 1 person can’t really make a difference, one person can really make a difference. If he just became the captain of the titanic after hitting the ice berg and the previous captain took the life raft to Texas, then only time and market forces will fix things. The US has a hard road ahead and the past few months have shown the world how dependant on them the world economies are.
• Fundamentals. The fundamentals are better here then down south.  Very interesting BMO report out recently (thanks to Tony Baumgautner with the bank of Montreal forwarding that to us).

So my prediction is that what goes up, goes down, goes back up and then to it will go down and in the end it goes on. Have a great weekend!

War Profiteering!

You have to love the media. A while back I was contacted by Joanne Latimer with the Ottawa Citizen with regards divorce and real estate. The title of the resulting article was title "War profiteering."  Catchy huh? The full article is found here:

http://www.ottawacitizen.com/Life/profiteering/1188577/story.html

We have talked about divorce before on our blog. The differences in perspective of the contributors is noteworthy.  I guess it comes down to the fact that there are many truths. You could even expand that to include the economy. So when Mark Carney with the Bank of Canada says the recession will be deep but Canada will rebound by next year which truth is that? I guess its the truth of only time will tell.

Edmonton Condos: Old VS New

Every now and again on our blog a debate about new vs resale pops up. One such discussion relating to condos the other day made a light bulb in my head go off.

In the recent past there have been plenty of law suits from recently completed condo projects; the new owners of projects around Edmonton are suing the devlopers who built the projects. It doesn’t take me long to think of a few such projects. These law suits take years to get sorted out...

These law suits occured in an environment where the builders should have been able to build a decent project (wages were reasonable, tradespeople were well trained and available to work, projects went up in a reasonable timeframe, materials were affordable etc). Overall it was a great environment to build a complex (I'm talking about pre-2006) but there were still problems - leaky roofs, flooded parkades, mis-representing specs, building code issues etc...

Which brings me back to the light bulb that went off... What about those projects that were put up at the heat of the market, when skilled labour was hard to find and keep? And now, what about those projects that were conceived started with different revenue projections? With the current environment such that it is, will there be more developers being sued?

Time will tell, but I fully expect to see more statements of claims listed in the condo document packages of recently built complexes in the near future.

Maybe there is something to be said for the tried and true complexes that have been around for awhile and have (hopefully) their major issues behind them.

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: 380 (94, 107, 200)
# Sales: 82 (37, 65, 107)
Ratio: 22% (39%, 61%, 54%)
# Price changes: 156 (94, 75, 159)
# Expired Listings: 171 (851, 184, 258)
# Canceled/withdrawn/terminated listings: 11 (13, 17, 31)
Net loss/gain in listings this week: 116 (-807, -159, -196)
Active listings for single family homes: 2347 (2258, 2722, 2804)
Active listings for condos: 1625 (1554, 1878, 1934)

And so the rise in inventory begins. Compared with the same week last year, we have more new listings and fewer sales which is not surprising...

The forecast by the Realtor's Association of Edmonton calls for a slow start to the year, with sales and prices picking up in the second half of the year. In fact, they expect the prices of single family homes to dip slightly in the first half of the year, and rebound in the second half for an overall net change of 0%. The picture for condos is not so Rosy, due to the high number of condos coming up for completion (especially downtown) over the coming months, increasing inventory and decreasing prices by about 5% by the end of the year. Lets hope they're not being overly optimistic.

During the housing forecast seminar yesterday there were a lot of caveats placed on the predictions, saying that net migration should remain stable and job growth should continue in Alberta for the forecasts to be correct.

Stats Canada released their month report on employment today, and for the second straight month employment declined nationally, for the year employment is up .6% (compared to 2.2% in '07). While employment edged down in most provinces in December, Alberta recorded the largest loss (-16,000). Employment growth in Alberta slowed considerably in 2008 (+1.3%), after increases of over 4% in both 2006 and 2007.

In December, the year-over-year change in average hourly wages was 4.3%, well above the most recent increase in the Consumer Price Index (+2.0%). Hourly wages remained the highest in Alberta, at $24.50, followed by Ontario, at $22.40, and British Columbia, at $22.00. (Click the chart to view a larger version, Source: Stats Canada).

Live Blogging from the 2009 Edmonton Housing Forecast Seminar

Sheldon, Nathan, Derek, Lisa and I (and over 800 other people) are at the annual 2009 Housing Forecast Seminar presented by the Realtor's Association of Edmonton this morning at the Shaw Conference Centre. This year there were a record number of attendees, probably because we're all looking for answers in the time of "economic uncertainty." Sheldon and I always attend and always come away with our brains full of useful information and this morning is no exception.

Ron Gilbertson, President and CEO of the Edmonton Economic Development Corporation just finished his talk on the Edmonton Business and Commercial Climate, here are some of the key points:

• Edmonton has the second lowest unemployment rate in Canada
• Edmonton is 5th in Canada for full time employment (a significant improvement)
• We are the lowest in Canada for business bankruptcies and fifth lowest for personal bankruptcies
• GDP growth per capita is 25% ahead of Calgary, Vancouver, Toronto, Montreal and Ottawa
• GDP growth per capita has increased almost twice as much as Calgary over the last number of years
• RBC and CIBC both projected an increase in GDP for Alberta in '09
• Conference Board of Canada projects Edmonton to lead all Canadian cities for GDP in '09
• While many projects in the Oil and Gas sector have been put on hold, there are still $172Billion underway

Patrick Adams, Chair of the Home Builders Association talked about trends in home design:

• The three hottest styles are Pre WWII (Arts & Crafts bungalows, Victorians, Tudors and Colonial), Mid-century modern (flat roofs, open floor plans, geometric shapes) and Mediterranean (stucco, tile roofs, grand entries, central stairs, wrought iron accents

• Buyers today are looking for "Ensuite spa retreats", kitchens as gathering places, modern clean lines, new colours, and spaces to eat, work, relax and entertain

• Green is hot and it varies in degree:

  • Dark greens are very eco-conscious, motivated by sense of responsibility to the planet, mid-upper income, strong sense of community pride

  • Medium greens tend to be young parents concerned about children's future, affluent and key values include hope. convenience and prevention

  • Light greens are less eco-consious, emerging middle class and 20-something city dwellers, embrace eco movement because it's cool (eco-chic)

  • Non-greens - all ages, focused on survival or material gain (depending on level of wealth)

• Current technologies in demand by home buyers include home theatre rooms, home health care installations, micro display based TVs, lighting automation, security systems, iPod products, smart sound systems

Ian Glassford, Chief Economist Servus Credit Union was "realistic, but optimistic" looking at Edmonton's economic situation:

• Before 1985 the global economiy averaged a recession every 4.5 years that lasted 15 months and impacted the economy b y-3.25%
• After 1985 recessions globally have occured every 11 years, lasted 8 months and impacted the economy -.9% on average
• Our current situation is not over yet and there is potential for more shocks but the good thing is the problem was recognized quickly with strong coordinated action and no sign of protectionism and other mistakes of the past
• In Canada we are in better shape than most so far but we will be affected, commodities are a concern
• In Alberta we are quite solid so far, with a strong long term case fo oil investment, we will see improved in migration but we will be affected
• His forecast is that we are not done yet, the recovery will be longer and less robust, more shocks are likely. We should see rate cuts in January and March, deflation is a concern for some time
• He pointed out some positives for Edmonton real estate - new purchasers are coming over time, new supply is dropping to match demand, rates are coming down and improving affordability (he did up a great chart I'll post when I can)
• He urged us all to remember that while there is pain in recession there is also opportunity. What we are going through is nothing new, we just haven't seen it in a while so manage intelligently and remember after recession comes recovery

Richard Goatcher from CMHC presented the quarterly stats that we've already discussed on this blog. Charlie Pond, the new President of the Realtor's Association of Edmonton closed out the seminar with stats about Edmonton real estate that I'll post later today. Ciao for now!

Edmonton Real Estate Market Annual Report

When you look at the overall stats for the Edmonton MLS, 2008 doesn't look like such a bad year after all. The overall average sale price for residential real estate dropped 5.7% in 2008 from $329,705 on January 1 to $310,974 on December 31.

Total residential sales were down 15% in 2008 compared to 2007, and were similar to what we saw in 2004.The main difference in the last number of years (other than price) is the number of listings, demand has stayed relatively stable:

 

The increased competition has made it very difficult for many home owners to get their home sold. As you can see from the chart, normally around 70% of the listings will sell, whereas this year only 43% sold (keep in mind one home may be listed many times before it sells which can inflate the number of listings).

The end of month inventory dropped to 6316 homes, due largely to expired listings, which suggests the inventory will increase again quickly, as it did last year:

 

The number of new listings in December were fairly normal:

  

But the low sales still lead to a sales to new listings ratio of only 46%:

 

The absorption rate crept above the 10 month mark - absorption is the inventory divided by the number of sales, and it tells you how many months worth of supply is in the market if sales levels remain the same: 

 

The average number of days on market went up to 65 days:

All in all the real story is sales, which we discussed hereon the blog the other day. The official number released by the board was 608 sales. As Mark Perras, President of the Realtors Association of Edmonton summed it up so well: "Buyers have lots of choice right now and seem willing to wait until their dream house reaches their dream price point.” Here is the full press release.