Changing things up...

Hi everyone. Instead of the stats, I'm going to be posting some things you normally don't see here. I'm out of town for a couple weeks, taking some time to recharge with the family. We are down in San Diego, much warmer than what we left in Edmonton (-23 degrees C). Although the weather here has been wet and cold for San Diego standards, not really sitting by the pool weather. We ended up getting soaked yesterday going shopping at the mall. The open air mall layout in Southern California doesn't work too well in a downpour. Anybody have any ideas on what to check out while we are down here? Any good restaurants or must see places?

November Market update

Well December is here already. It has been a wild year for Edmonton real estate. We have seen a peak of listing inventory never seen before. Our sales have been strong for much of the year. Although November has cooled off. We are now at 8015 homes for sale, and we had 891 sales in November. To give you some perspective, normally we see 1200 homes selling in November, so the sales are off by roughly 25%. Inventory has continued to fall, this is good. I heard a rumour that Calgary's inventory was rising this fall. So, the drop in listings pattern has continued. We should see an inventory level in the 7000 range by the end of the year. The one difference I think we will see in 2009 is not as much of a run up in inventory in the first 5 months of the year. The reason I'm saying this, is that many people last fall (2007), were taking their homes off the market in order to relist in the spring of 2008. They thought the market would be stronger in the spring of 2008. It turned out that the sales were strong, but there were too many other sellers thinking along the same lines and we were flooded with new listings this spring. Happy holidays!

October 2008 Edmonton Real Estate update

Hope you all had a nice Halloween, it is nice to see warmer temperatures and no snow for the little ones.

As for the market, October has continued the inventory decline. The sales in October did dip (1203 sales), although that is consistent with previous Octobers. If you look at the stats from the month of October back to 2004, then you will see most months result in 1200-1300 sales (the only exception being the overheated market of 2006). So, overall we are seeing very consistent results with continued strong stable demand.

The one change has been the inventory decline, as you can see from the graph it is not nearly as steep as previous months. We may not see the 5000-6000 inventory level at the end of the year if this pattern continues. 7000 may be a more realistic prediction.

September 2008 Edmonton Real Estate Update

The market continues to strengthen on both the supply and demand side. The supply of homes is now sitting at 8630 homes for sale in the Edmonton area. Down from 9612 last month. On the demand side, the number of sales have bounced up to 1719 from 1541 in August. We are now in a market with a 5 month supply of inventory. Technically we are now in a balanced market.
Predictions? As I mentioned in August's wrapup, I think we will drop into the 6000 or less inventory range by the end of December. That should set us up for a strong spring market in 2009 where we could start to see price increases.

August 2008 Edmonton Real Estate update

The pattern continues. Our listing inventory has dropped to 9612 from 10,335 in July. That is a big drop. If we continue at this rate, then our inventory could easily drop under 7000 homes for sale. Last year (2007) we saw a drop to the 7000 level, but the inventory didn't start falling until October. Therefore, we may even see 5000-6000 numbers for inventory. If we do see this level and our sales remain strong, then price increases could be expected in 2009. Those are mighty big "ifs", but the pattern and graphs are pointing in that direction. A 5000 level of inventory with 1500-2000 sales per month would definitely create a seller's market. Before everyone gets too excited, we won't be returning to the 50% annual increases in price soon. We should come back to the 5-7% annual price increase that we had in the early 2000's and late 90's IF the patterns continue.

As for sales, we were a little softer than July. In July we saw 1752 sales and in August we have seen 1541 sales. Softer than July yes, but this is much stronger than last year, August 2008 only saw 1229 sales.

Days on market has crept up, we are now at 63 days in August. We were at 55 days on the market in July. Two things can be the causing this. This could be a signal that the market is slowing. Or, is this a signal that sellers are starting to dig in their heels and are willing to wait for higher offers? September should answer a few more questions.

How much should I build into my price when I list my home?

This is a common question that sellers have. As you can see from the graph the list price to sales price ratio has bounced between 96% and 97% for 2008. So, what this means is, if you have a home listed for $300,000, the average sale price of that home will be in the $288,000 (96%) to $291,000 (97%) range. The reality is that you as a seller will determine whether you will take an offer or not. If a buyer offers you 90% of list price, then don't have to take it. If you have priced your home well, then your list to sale price ratio could be closer to 100%. I've seen homes that are well priced go for 100% of the list price or higher in this market. I've also seen the opposite occur. I've seen where a home has been on the market for awhile and/or needs quite a bit of work and a motivated seller lets the home go for 90% of list price. So, you always have to be careful when looking at averages because every home and situation is different. As a professional REALTOR®, I go over the whole process when I meet with a seller. Averages are helpful in giving you facts when you make your decision on price, but they are not the whole story.

How many days does it take to sell today?

The days on market average has been fairly consistent for 2008 in the Edmonton market. We started the year at 61 days and dropped down into the 51-55 day range in the remaining months. Many people call me in to sell their home and make the mistake of thinking they can put their home on and have it sold (ie have their money and move out) in 30 days. This is a possibility although very unrealistic.
Firstly, our days on market average does not include homes that sold but were also on the market previously and failed to sell. For example a home may have been on for 180 days with another REALTOR® and then it was relisted and this time it sold in 45 days with the same or different REALTOR®. The days on market reported is 45, NOT 225 (45 when sold + 180 when expired). So our days on market average is always understated. This is a minority of the listings but it does cause the reported days on market to be lower than in reality.
Secondly, the possession date on average is in the 45 day range. So, if you add the average days on market to sell (55 in July) plus the average possession date (45), you end up with 100 days or a little over 3 months from the point you put the home on the market until you receive your funds and move out.
That being said, I have sold homes in the first week and had a 21 day possession, so anything is possible. But, if you look at the law of averages you are better to give yourself 120 days from the point of listing to when you want to move out.

Should we buy or sell first?

This is a common question that people have when they have a home to sell. Should we find a home first, or sell ours first? I understand the worry that you won't find the right home, but in reality that is very rare. Especially today with our current listing inventory in Edmonton we always find a good home if we give ourselves enough time (60-90 day possession on your existing home). I always recommend to sell first. There are quite a few reasons but the biggest is money. Financially you can lose money by buying first. To explain this, when you are buying you are emotionally involved. When you are selling it is much more of a logical (have to do) process. I've seen many people buy first and overpay for their new home (emotional) then they "dump" their home and sell at a low price in order to get into the next home. Not to mention, it almost always puts you in a bad financial spot when you are covering two mortgages for any period of time. I've seen some people in this market that have bought first and have lost 10's of thousands of dollars (eesh!).
Some people try to buy subject to their home selling and this may not put you in a bad position immediately (not having to cover two mortgages), but your negotiating power is lessened when you have this condition on your offer. So, you still end up overpaying for the new home. This is also a real roller coaster emotionally. If you can't buy the new home outright and have to put a subject to sale condition in your offer, the seller of the new home will always put a time clause on the condition. What that means, is that if another offer comes in on the new home, the seller has the right to serve you with 24, 48 or 72 hours notice to either remove all your conditions (ie own both homes) or withdraw your offer. So, you end up back in the bad financial position by removing conditions, or you back away from the offer and lose your dream home. Not fun.
The last remaining problem is that pricing your existing home is not an exact science. Nobody, including appraisers, can tell you exactly what your home will sell for. We as professional Realtors can educate you on what your home should sell for, but until we actually have a buyer offer on your home, we are only working with hypothetical numbers. Not to mention the market can change while you are trying to sell. For example, 5 of your neighbours can put their homes up for sale, a local company can lay off 1000 workers, interest rates can go up etc. You get my point. You are in a much better position when you know exactly what you are netting out of your existing home.
That is why I always recommend you sell first.

July 2008 Edmonton Real Estate Update

Well this month we can definitely see a trend. We are starting to see our listing inventory finally coming down. This follows closely with previous years where we peak out in May with the number of homes on the market. There is then a gradual decline to a low of inventory at the end of December. January sees inventory building up until May and then the number of homes for sale starts to fall again.

On the demand side, the sales have been quite strong. We are just off April, May and June numbers of 1820-1850 sales, we sold 1752 homes. That is particularly good for July as this month is normally the lowest next to December for sales volume. This amount of sales is also much stronger than last July (2007) where we had only 1565 homes sold.

Outdoor Entertaining Ideas

As the weather gets warmer, there's nothing more fun than taking the party outdoors. Whether you're having a backyard bash or an intimate gathering on your condo balcony or rooftop, here are some tips for a simple, sophisticated summer 'do.
Be deliciously different.Think outside the burger, and try something like marinated vegetable skewers or grilled pizza. If you plan to barbecue something that falls apart easily, like fish or veggies, use a grill rack. Put a sprig or two of fresh rosemary on the coals while you're grilling. Not only will the food taste great, but your party will smell wonderful.
Serve a signature cocktail.Set up a margarita or mojito station. Set out rimmed glasses, slice some limes, then serve the drink in pitchers with lots of ice and let guests help themselves. Be sure to offer lots of non-alcoholic options, too.
Let your guests help themselves.Spend time enjoying your guests instead of serving them. Set up an elegant outdoor buffet by covering a side table with a crisp white tablecloth. Create "bouquets" of cutlery in vases, or make a neat pile of restaurant-style "roll-ups" with paper napkins. Decorate with candles, flowers and fresh herbs.
Have an upscale picnic. For the ultimate casual get-together, plan a backyard picnic (or a picnic in the park) on a big blanket. Bring some cushions to keep everyone comfortable, and use serving trays as level surfaces for drinks, snacks and other wobbly items like vases of flowers and pillar candles.
Light up the night.String holiday lights along railings and in trees. Go with white for an elegant look, or coloured lights for a more whimsical mood.
Inexpensive citronella torches add a great ambiance and get rid of bugs.
Set out lots of candles in open mason jars or glass hurricane covers. Group them in big multi-level bunches for an intimate feel, or space them in equal increments along a fence or railing for a modern touch.
Break out the marshmallows.Pick up a portable patio campfire for unbeatable ambiance at your evening soiree. The campfire (available at some home improvement stores) looks like a stone-ringed pit, but is gas-fueled and easy to move around. Be sure to check fire codes in your area, and if you're entertaining on a balcony or a rooftop, check with your building to see what the rules are.
Be on bug patrol.Use citronella lamps and candles to keep mosquitoes away, and put a bottle of insect repellent in plain sight so your guests don't have to ask.
Always remember the first rule of summer entertaining: keep it simple and enjoy yourself. Plan ahead, get everything ready well ahead of time, then sit down and enjoy the sunshine or starlight - and the warm company of friends and family.
Balsamic grilled asparagusA delicious take on a warm-weather favourite
Snap tough ends off 1 pound of asparagus. Combine 3 tbsp balsamic vinegar, 1 tbsp olive oil, 2 tbsp chopped shallots, and a dash of salt and pepper. Drizzle over asparagus and let stand 30 minutes. Brush grill rack with oil, and grill 5 minutes on each side or until done.

Summer Doldrums

Well July is here and that normally means a slowdown in activity in our market. Most people are surprised to hear that December and July are the two slowest months for number of units sold in the real estate market. That being said there are still homes selling, people just tend to have their minds on summer holidays and enjoying the short Edmonton summer. I've put together another graph showing our inventory versus sales.
The sales data has been quite strong, we are pushing 2000 home sales each month for the last 3 months. Actually they have been extremely consistent, 1823 in April, 1821 in May and 1852 in June.
Our inventory has finally started to crest, we actually dropped a little with the number of homes for sale on the market. At the end of May we were sitting at 11,006 homes for sale and now we are down to 10,817. This falls into normal inventory patterns of markets prior to 2006. We normally peak out in May and the inventory gradually falls to a low a the end of December.

Migration and Erratic Home inventory in Edmonton

There is an interesting graph that has come out from our Real Estate Board. It shows the relationship over the past 2 years between migration into the province and our listing inventory. We have went from extreme lows under 2000 homes for sale in a month to approaching 10,000. This graph clearly shows how the increased migration knocks the inventory down and vice versa when migration slows.
Most builders in the past two years were taking over 12 months to build a home. The increased migration was causing quite a building boom in the last two years. The only catch, was the time it took to build. If a home is not ready until 12 months or more and then the migration slows, the overhang of listing inventory starts to develop.
I think our situation is quite different then the inventory buildup and price declines in the U.S. markets. Many of those markets were "false booms". Speculators buying to flip, and builders overbuilding without the strong economic dynamics that there are in Edmonton. Did we see speculators in this market? Sure, but the difference is we have the employment and migration figures to justify the extra building.

Selling your Home in Edmonton

I often hear the question, "How is the real estate market?" There are many buyers out there, and there are many sellers too. The reason there is a high supply of homes for sale is one word, price. If you as a seller are pricing your home based on the 2006 or early 2007 home pricing strategy, you are going to be sitting on the market for quite some time. What I mean by that is this, the previous 2 years saw unbelievable price increases. If your neighbour sold for $400,000 you could tack on another $10,000 or $20,000 and list for $410,000+. You would probably even sell for more than your list say $425,000.
We are in a different market now. Much more of a balanced market. Buyers are aware that there is a good source of inventory and they are not going to pay you a premium for your home. If the neighbour's home sold for $400,000 last month, it doesn't mean your home will sell for $410,000 or more. Shrewd buyers will pay you market value, not premium value. I have been involved in two multiple offers on my listed homes in the past week. Multiple offers happen in a strong market where there are numerous buyers. So, when people ask me "how is the market?" my answer is that there is a strong demand for quality reasonably priced homes. The most important part of that sentence is reasonably priced.

Edmonton March Update

The stats are out and the sales finished strong again in February. 1287 properties sold (1227 sold in Jan 08). Historical figures for February are:
2007 1886 sales
2006 1605 sales
2005 1257 sales
2004 1195 sales
So, February sales were back on track with 2005/2004 numbers. We aren't seeing the "manic" buying of the previous two years. January and February are back to "normal " levels for properties sold.
Inventory is still climbing. We are now sitting at 8284 sfd and condos for sale (7352 at end of Jan 2008). Buyers have good selection without the pressure of multiple offers bidding up the price overlist.

Prices are moving up:
Average price increase for SFD (from $379,567 to $381,965)
Average price increased for condos (from $257,956 to $264,204)
Rowhouse/duplex price went down (from $301756 to $294,780) historically this category is always more volatile because of the small segment of the market this category consists of.
Overall average price (duplex/sfd/condos) increased from $332,051 to $338,347 from Jan 2008. Prices actually increased close to 2% for all categories average.

Overall the market is still high with inventory, but I've seen three multiple offers on new listings of SFDs in the last 2 weeks in the lower price ranges (under $450,000 in the better neighbourhoods and under $350,000 in the average areas). Both homes selling for under list price and with conditions, which is of course different from the previous 2 years where we saw unconditional overlist offers.
For buyers this market has been the best of both worlds. Prices have stabilized and have started to increase over the last 3 consecutive months, and there is a good selection of homes for sale. I'm not predicting a large increase in prices as of yet. The prices should be strong though, the inflow of buyers this spring will continue to work on the supply of homes for sale.

For sellers, pricing is very important. Tacking on $10,000 or $20,000 to a realistic sales price just doesn't work in this market. The realistic sellers are selling quicker than the 60 day on market average. Those testing the market, are either not selling or having to reduce their price below market value in order to generate offers.

Edmonton Real Estate Outlook in 2008

Where are we going in 2008? The market has definitely picked up in recent weeks. The one thing that is consistent with the last 6 months, is that buyers still have an abundance of listings to pick from. Our listing inventory is sitting at just over 7000 properties. Historically in a balanced market, we are at a 4000-5000 listing inventory.

The sales over January are going to come under right around 1000. The last 2 years we saw sales over 1000 in January (markets with large price increases). 2003-05 saw sales just under 1000 properties in the month of January. So, we are back to the "normal" and/or balanced number of sales.

What does this all mean? In my opinion, the market has come back to a normal level of sales, the listing inventory is still higher than it should be. Does this mean prices will fall? No, but don't expect large price increases in the current market. We have too many listings to justify significant price increases, but if a significant number of buyers move into the area, we could see a real shift in prices and reduction of inventory. The predictions are that we will have a net immigration of 15,000 people into the Metro Edmonton area this year. We are currently sitting at an inventory that is 3000+ in excess. The average family is 3, and if we have 15,000 people moving in, that would require 5000 homes for new residents. So, the new residents of Edmonton will definitely help in eliminating this excess inventory.
As I have said before, time will tell.