Edmonton Real Estate Blog

A Sellers Market in Edmonton in June

No sooner had I pushed the publish button on my "weekly update" this afternoon did I receive notification from the REALTORS® Association of Edmonton that the monthly numbers were ready! I don't think they're trying to ruin my vacation but they are certainly giving me lots to do! Just kidding.... They obviously worked hard to correct the problem and release the numbers as quickly as possible.

Anyway, here is what June 2009 actually looked like:

That is a lot of sales! The highest number of residential sales for June ever (that I am aware of) and the third highest number of sales for any month (that I am aware of). What is causing this high number of sales? First it's seasonality - there are always more sales in the spring than in the rest of the year. Second, record low mortgage rates and lower prices. Third, there have been a lot of people sitting on the fence, waiting to buy for a couple of years now and a lot of them have decided now is the right time for them since things are more affordable.

Of course, with an influx of buyers comes more competition (we've seen this on many of our listings that have received multiple offers in the past two months) and increasing prices:

And more sales means dropping inventory. But that is not the end of the story... 

We typically would see the number of new listings drop in June, but they have stayed flat (3180 new listings in May, 3179 in June). Some home owners are starting to jump in with the buyers as well... what I mean is that I'm starting to get a lot of questions from owners who were thinking of selling a couple of years ago but decided to wait when the market turned. Many of these people rented out their properties, or some decided not to move up or down or out of Edmonton. My guess is many of these people are going to try selling again this summer because they feel the market is improving and it's time to cash out. I wouldn't be surprised to see a higher than normal number of new listings in July and perhaps even more than we saw this month.

What could this mean for the market? Well, for buyers that have reserved a rate with their lender it could mean more selection and less competition as the summer progresses, which would be an ideal time for many to buy. For sellers it could mean that they should put away their rose coloured glasses until next year (or maybe the year after that). Whatever it means, the market is certainly unpredictable and we're all going to have to wait and see what happens.

June definitely turned out to be the best month so far for sellers this year, with an 80% sales to new listings ratio is was most definitely a seller's market:

 

 The absorption rate also shows sellers had the upper hand, and for the first month this year I'd say the absorption rate was normal:

 

Hope everyone has a great weekend and I do look forward to the discussion that is generated by these numbers.

The Real Property Report: What is it and why do I need one?

Guest author Stan Galbraith of Galbraith Law is back! Earlier this year, Stan did a great series of articles for the Edmonton Real Estate Blog on foreclosures. He is back with a series on Real Property Reports and Title Insurance. This is the first of three articles in the series:

What is a Real Property Report (RPR)?  And what purpose does it serve in a residential real estate transaction?

An RPR provides a graphic representation of all the improvements and features of the property.  Years ago, it was called a Building Location Certificate and all it showed was the foundation lines of the buildings on the property and the lot lines.  Now, it is called a Real Property Report and provides a much more comprehensive report on the real estate or real property.

An RPR provides information such as the location of utility right-of-ways and easements.  It also shows boundary fences, the overhangs of eaves and additional improvements such as swimming pools and hot tubs.  In other words, it is a complete report on the real property or real estate.

Typically, in most residential real estate transactions in Alberta, this report is submitted to the local municipality for a compliance stamp or certificate.  This is a confirmation from the municipality that the buildings and improvements on the property comply with local zoning and setback regulations.  They will also verify whether permits are in place for all the structures.

The standard Real Estate Purchase Contract (REPC) contains warranties.

The seller warrants the buildings and other improvements do not encroach on any neighboring land.  They also warrant the location of all buildings and improvements complies with all relevant laws.  The RPR provides the proof that these warranties are true and correct.  As such, an RPR provides valuable information to a potential buyer. 

Where the deficiencies are noted in the report, the buyer can insist the seller take action at the time of the purchase to remedy these deficiencies.  For example, when the RPR discloses encroachment onto either municipal or neighboring land, the buyer can look to the seller to obtain an Encroachment Agreement at the time of closing.

Without the report, the warranties lose much of their impact.  Discovering a deficiency many years later makes it very difficult to pursue the seller.  For example, limitation periods may have expired or the seller may simply be difficult to contact and pursue.

Make note that the warranty in the standard REPC only extends to encroachment onto neighboring lands.  There is no warranty offered regarding encroachments onto the land that is bought and sold.  In other words, if the neighbor’s deck extends into the backyard of the purchased property, there is no obligation on the seller to do anything about this.  The buyer has the option, once they obtain Title, of negotiating with the neighbor to either remove the encroaching deck, or leave it as it is and put an agreement in place to cover the issue.

Most lawyers are of the view that an RPR provides the best solution on every real estate deal.  They say that is the only way to have the certainty required by the buyer.  Certainly, in most cases, it does provide certainty.  However, in my view, it's far from the ideal solution on every deal.

In the next article we will look at Title Insurance and what it has to offer.

About the author: Stan Galbraith is a lawyer with over 25 years of experience.  He was admitted to the Alberta Bar in 1983 and has operated his own law office since 1988. Stan has a wealth of experience ranging from litigation and appeal work, to teaching and writing. He has now left the world of litigation behind and works with commercial and residential Realtors and their clients on closing their transactions. He also practices extensively in the areas of small business and wills and estate planning and administration. You can find his website at www.galbraith.ab.ca.

What Not to Do Before Taking Possession of Your New Home

Gord McCallum at First Foundation Mortgages sent us this list of What NOT to do before taking possession of your new home:

Don't quit your current job.

Don't do anything that will reduce your income (ie switch from full time to part time).

Don't apply for new loans or credit (including credit cards)

Don't close accounts with zero balance

Don't co-sign a loan or mortgage for someone else

Don't stop paying your bills

Don't spend the money you set aside for your down payment

Don't make large deposits into your accounts without documents supporting why the amount is being deposited.

Don't make any changes to your purchase contract without letting your lawyer and lender know.

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: 536 (516, 469, 406)
# Sales: 359 (377, 437, 316)
Ratio: 68% (73%, 93%, 78%)
# Price changes: 246 (207, 239, 216)
# Expired Listings: 112 (204, 85, 129)
# Withdrawn/terminated/etc. listings: 29 (21, 27, 19)
Net loss/gain in listings this week: 36 (-86, -80, -58)
Active listings for single family homes: 2320 (2326, 2400, 2456)
Active listings for condos: 1969 (1935, 2008, 2007)

So the big question on my mind is, has the market peaked? I'm going to go out on a slightly shaky limb and say yes, May was the peak for this year. We've seen an increasing number of new listings for the past 3 weeks, and decreasing sales for 2 weeks. We also saw the 5-year fixed mortgage rates go up this week.

 

All that being said, if you're looking to buy it's starting to be a better time for you, especially if you followed our advice and got a rate hold from your lender (now would be a good time to try and extend your rate hold so you can shop in July when it should be even slower). In May it was tough to find anything to show in a lot of price ranges, since all the good homes were selling very quickly. I expect over the next few weeks we'll start to see things lasting on the market a little longer.

Sales seem to be following a very typical pattern this year, and I don't see any reason it won't continue. Once the kiddies are out of school and Albertans head off on their summer vacations things tend to slow down.

So far this month the REALTORS® Association has reported 1000 residential sales in the greater Edmonton area - if that pace continues (I don't think it will) there could be 2700 sales this month (about 50% more than last year). My best guess at this point is we'll see around 2200 sales in June. The average sale price sits at $329k, single family homes at $373k and condos at $246k (all up from the end of May).

Have a great weekend, it's going to be a hot one!

Realtor.ca Photo Issue

There is a photo bug on Realtor.ca... many new listings from Edmonton don't have photos on Realtor.ca. In other words, if you've just listed your home there is a good chance there won't be any photos on Realtor.ca. They are working on a solution.

Just how do listings and photos get to Realtor.ca? The brokerage submits the listing by fax and the Edmonton MLS department enters it into the database OR the brokerage submits the data directly online. The brokerage then forwards the photos to the MLS department OR the brokerage submits them directly online (obviously submitting directly gets the listing and the photos into the database more quickly). Now the listing and photos are in the EDMONTON database.

All the new information that is submitted to the Edmonton database is batch uploaded to the national database daily and then appears on Realtor.ca. Sometimes there are problems getting the info and photos to the national database and that is what is happening right now.

The good news is, you can search the Edmonton database directly - it is more up to date than Realtor.ca and in some cases contains more information. There are many web sites that use the Edmonton data instead of the national one, including www.findmyedmontonhome.com.

Gazumped

I was out with a young couple from the U.K.  this weekend who are relocating to Edmonton and it reminded me of a recent dinner I had with a former Calgary city planner, who relocated from the U.K. well over 3 decades ago.  We talked about the major and minor differences  in buying a property in Alberta versus the U.K.

For example, in Alberta we use the Torrens system of land registry.  To many of you this will mean nothing but it means a world of difference in how we deal with titles and title insurance.
Another difference we discussed was the length of time it takes for the whole process to take place. Although both systems are based on English common law, transfers can occur much quicker here then there.

The discussion went on as usual until he laid “gazumped” on me.  It makes me laugh now every time I’m gazumped.

Because of the time it takes to get things finalized in Geat Britain, another buyer can come along and gazump the first offer. We might refer to this as “sandbagging” the other offer.

Since that dinner earlier this month, I too have been gazumped.  However, I have a slightly different application of the term.  There have been a number of occassions when we have looked at a property with a buyer, we have taken our time to research, prepare our offer and review their options, and by the time we submitted the offers on properties we were gazumped by another offer.

So no matter where you are, no matter how things work, no matter the language it looks like there are the gazumpers and the gazumped.

Watch Sheldon on Global TV Edmonton News Tonight

 

Sheldon was interviewed today and will be on Global TV Edmonton News tonight at 6pm.

You can watch the video here: http://www.globaltv.com/globaltv/edmonton/video/index.html?releasePID=tRWWXniPKEQv3v_2vgsoBxaumlmcINEd

Can anyone tell me the code I would need to embed that video here?

Edmonton Real Estate Market Improves in April - Will it Continue?

We've noticed for some time that the daily increase in inventory has been dropping, to the point that it looks like April could be our peak for inventory this year. While inventory is still well above what would be considered normal for Edmonton, I think we may have a new, higher "normal."

The absorption rate (tells you how many months it will take to sell the remaining inventory if sales continue at the same rate) has dramatically dropped to 4 months. This agrees with the sales to new listings ratio we posted the other day and points towards a seller's market:

 

The average number of days on market also dropped below last year's level:

 

All in all this is the first month where all the stats except for average price are better than the previous month and last year.

The REALTORS® Association of Edmonton reported today:

The average* price of single family homes in the Edmonton area was up 1% from March but, at $353,386, was still 8.5% below the last April price of $386,033. Condo prices were up 2.4% from last month to $236,020 while duplex/rowhouse prices were up 5.2% at $291,068.

“Increased sales activity is evident in most real estate offices and some REALTORS® are reporting multiple offers on select properties,” said Charlie Ponde, president of the REALTORS® Association of Edmonton. “However, inventory is still relatively high and sellers should price their properties aggressively to attract offers.” 

“REALTORS® are optimistic about the Edmonton market,” said Ponde. “In-migration figures are positive, retail sales in Alberta are still higher than the rest of the country and unemployment figures are lower than other parts of Canada. First-time buyers are entering the market because of historically low interest rates and renovation incentives are encouraging move-up buyers to consider relocation.”

While the numbers do look positive, we don't think people should make too much out of this just yet. There is evidence that the market is finding its balance, and the stats are a lot more positive than we've seen for some time. We expect the average residential sale price will stop its slide and possibly increase into the fall, subject to any financial or other crises locally or globally.

Edmonton Housing Starts Still Slow

Canada Mortgage and Housing Corporation released their "Housing Now" press release today that talks about housing starts and the overall economic climate in Edmonton today. Most of the stuff in the report is stuff that we've already talked about here, but it is an interesting read - you can view it here: http://www.cmhc-schl.gc.ca/odpub/esub/64171/64171_2009_M04.pdf

A few of the highlights:

• Total starts in March were 135, down from 478 last March and over 1100 the year before

• For the first quarter there were 761 starts compared to 2315 in '08

• Single family starts dropped 49% in March from 205 in '08 to 105

• There are 1817 homes under construction which is down 63% from last year and the lowest level since June 2001

• Single detached completions dropped 64% to 196 units

• The inventory of completed, unoccupied single family homes is 925, up 2.5% from the same time last year but below the peak of 1,090 in August '08

• Multiple starts have reached 360 units so far this year compared with 1,658 last year.

• Multiple unit completions totalled 199 units in March compared with 536 units in March of last year.

• Unabsorbed inventory dropped from February levels but it was still more than double the end of March last year (unfortunately they didn't indicate the exact number).

What I really wanted to know was how many multi-family completions are expected in the coming months but it wasn't mentioned in the report.

The report also discusses resale stats, the labour market and inter-provincial migration.

Full Time or Part Time?

In the last addition of the Real Estate Marketing Magazine a circuit speaker talked about the 90/10 principle - 90% of the business is done by 10% of the Realtors.  He was trying to de-bunk the 90-10 as a myth.  If my memory serves, almost two thirds of the members of the REALTORS Association of Edmonton did 10 deals or less less year.  (Keep in mind, many belong to teams and the deals may have been reported under the team leader).

What was interesting about this article was the author's reference to his sister in law who does four deals a year, and that’s all she wants to do because her husband makes good money and all she wants is to make extra money for family trips and stuff.

The first thought in my mind is how does she stay current on the market conditions, trends, regulatory requirements and the developing world of online marketing?  In my mind she can’t.  So the people who hire her are at a distinct disadvantage over someone who is devoted full time to their career.  At least someone who is full time in the business has the opportunity for more experience (theoretically).

With business and marketing costs and regulatory requirements the way they are today it is quite common for agents to band together to form a team.  In our case it absolutely makes sense.  My wife/partner is an expert at marketing and  I have an understanding of  the industry and sales side of things.  We combine those talents to offer our clients  some of the best  marketing, knowledge, experience and results in the industry today - at least in my humble opinion. 

While part time people still exist in real estate the numbers are far lower due to higher regulatory requirements and higher costs.

About 15 years ago this exact topic was discussed by REALTORS Association of Edmonton’s Professional Standards Committee and I will concede one point I learned there and have never forgotten.  

Earl Pottage of Re/max (a long, long time REALTOR and  long term member the committee) said “I’d rather have a competent part timer looking after me than an incompetent full timer.” While that point has stuck with me I still think the odds are greater that the less time spent in the industry and improving yourself at your craft, the greater the chance that competency is not as high as someone who is spending more time towards self improvement and gaining experience.

The bottom line is if you're considering hiring a Realtor, you may want to ask if this is their full time career.  As for the author's sister in-law...I wonder if she explains to her clients that this all she is interested in doing.