As of yesterday, we have listed 635 homes in the Metro Edmonton area so far in October. That puts us on pace to list over 2800 this month. The high new listing pace of August and September looks to be continuing into October.
As for sales, we have sold 213 homes in the Metro Edmonton area. That puts us on pace to sell 943 this month. Traditionally we sell 1200+ in October. So, sales continue to be lower than the last few years' average.
Have a great Thanksgiving! Living in this country, we all have much to be grateful for.
Friday, October 8, 2010
September 2010 Edmonton Real Estate Market Update
Well September wasn't much different then August. We saw 1187 sales in September (1285 in August) and there were 2668 new listings in September (2708 in August). So the supply continues to outpace the demand. Our listing inventory actually did fall in September from 8822 to 8607 properties for sale. That certainly wasn't due to sales, it was due to sellers taking their homes off the market. I hear a lot of people saying that they will take their home off now, and then put it back on in the spring of 2011. The only problem with this theory, is that was what everybody did in the fall/winter of 2007. Our inventory built up in the spring of 2008 to a peak of 11,006 homes for sale. It is hard to predict what is going to happen at any time, but I'm pretty confident that prices will continue to soften this fall due to higher inventory levels. I have to temper this with the increased job prospects and increased immigration into Alberta that was recently announced. These are both very positive developments. So, this increased inventory should be reduced in the coming months and strengthen home prices in the long term.
How about prices? September saw single family detached homes staying stable at $370,654 versus $370,181 in August. Condos were up a little from $236684 in August to $238822 in September. If you look at the price per square foot graph it paints a different picture. The price per square foot for single family detached in Edmonton is starting to move down, ie)you are getting more house for your money in the market.
Wednesday, September 15, 2010
August 2010 Edmonton Real Estate Update
Well high inventory levels continue to be the story the latter half of this year. We are now at 8822 homes for sale in the Metro Edmonton market. This is down only marginally from July's 8892. Normally we see the inventory fall as we go into the fall. This year things are different. So what is going on?
It is actually a combination of two things. The sales were very low, we only saw 1195 homes sold in August. In the last 4 years, we've averaged 1635 sales for August. The other stat that jumps out is the increase in new listings in August. Normally we see about 1582 new listings (average of previous 4 years for August), in August this year we saw 2700 new listings. That is why our inventory has crested but not started to fall.
How is this impacting prices? Well they are starting to fall. Single family homes are down almost 2% from July and Condos are down 3.4%.
It is actually a combination of two things. The sales were very low, we only saw 1195 homes sold in August. In the last 4 years, we've averaged 1635 sales for August. The other stat that jumps out is the increase in new listings in August. Normally we see about 1582 new listings (average of previous 4 years for August), in August this year we saw 2700 new listings. That is why our inventory has crested but not started to fall.
How is this impacting prices? Well they are starting to fall. Single family homes are down almost 2% from July and Condos are down 3.4%.
Friday, September 3, 2010
Edmonton housing bubble?
There is a recent study from Canadian Centre for Policy Alternatives that suggests that Edmonton is in a housing bubble. The article states that our prices should be a lot lower based on an inflation adjustment from the prices housing here in the period of 1980 to 2000. Here are my 2 cents on the issue.
The main flaw in this study is that it bases todays values on housing values from the 80's and 90's. In the 80's and 90's Edmonton real estate was severely depressed in relation to the rest of Canada. Edmonton was hit by two shocks. The National Energy Policy of the early 80's and then Premier Klein's cutbacks in the early 1990's (which I believe was necessary to get our debt and deficit problems under control). These political changes caused a severe negative reaction in the housing market. So, extrapolating numbers today from depressed values in the 80's/90's is one problem.
The other problem is that when you look at incomes in Edmonton, our prices are not in bubble territory. The most recent stat I could find on average household income in Edmonton was from 2007. In 2007, the average household income in Edmonton was $87,300. The Metro Edmonton August 2010 average home price (including condos, duplexes and single family) from the RAE (REALTOR'S Association of Edmonton) is $325,588. If you divide $325,588 by $87,300 that is a ratio of 3.7 times income. The "experts" say that housing should be 3 times household income to make it affordable. So, 3.7 is not really bubble territory in my opinion. The other factor that isn't included in this 3 times income figure is the tax structure of the area. Alberta has the lowest tax rate in Canada. These gross income figures don't factor in the net income to a household after taxes are paid, it only looks at gross. So, I would expect Alberta's cities to be a little higher than other provinces and states due to our lower tax structure. I'm always surprised when people criticize Alberta's housing values, and downplay Toronto and Vancouver values. Alberta is where the jobs are, taxes are low, and many people immigrate into this province for that very reason.
Do I think that our market has some room to fall when it comes to prices? Yes, I do in the short term. We have an oversupply of homes for sale now in relation to our sales. That normally causes prices too fall. A 40% drop? I don't think so. Our last price adjustment was 18% (from spring of 2007 to Feb 2009), and much of that was caused by speculation in the housing market. Many single family homes were built in order to flip or built on speculation by the home builders. That clearly hasn't happened since the market corrected. The oversupply we are seeing today in our market is in apartment style condos. These were overbuilt in response to the 2006-2007 boom and are all finally coming on stream now as these projects often take much longer to complete than a house.
Lastly, I would like to say that in my 17 years of selling real estate in the Edmonton area, I have heard many predictions. I remember people complaining that we were overvalued in the late 90's and the market was going to crash. Our average price was in the $110,000 range at that time. These people were going to rent until the prices came down. I guess they are still renting.
The main flaw in this study is that it bases todays values on housing values from the 80's and 90's. In the 80's and 90's Edmonton real estate was severely depressed in relation to the rest of Canada. Edmonton was hit by two shocks. The National Energy Policy of the early 80's and then Premier Klein's cutbacks in the early 1990's (which I believe was necessary to get our debt and deficit problems under control). These political changes caused a severe negative reaction in the housing market. So, extrapolating numbers today from depressed values in the 80's/90's is one problem.
The other problem is that when you look at incomes in Edmonton, our prices are not in bubble territory. The most recent stat I could find on average household income in Edmonton was from 2007. In 2007, the average household income in Edmonton was $87,300. The Metro Edmonton August 2010 average home price (including condos, duplexes and single family) from the RAE (REALTOR'S Association of Edmonton) is $325,588. If you divide $325,588 by $87,300 that is a ratio of 3.7 times income. The "experts" say that housing should be 3 times household income to make it affordable. So, 3.7 is not really bubble territory in my opinion. The other factor that isn't included in this 3 times income figure is the tax structure of the area. Alberta has the lowest tax rate in Canada. These gross income figures don't factor in the net income to a household after taxes are paid, it only looks at gross. So, I would expect Alberta's cities to be a little higher than other provinces and states due to our lower tax structure. I'm always surprised when people criticize Alberta's housing values, and downplay Toronto and Vancouver values. Alberta is where the jobs are, taxes are low, and many people immigrate into this province for that very reason.
Do I think that our market has some room to fall when it comes to prices? Yes, I do in the short term. We have an oversupply of homes for sale now in relation to our sales. That normally causes prices too fall. A 40% drop? I don't think so. Our last price adjustment was 18% (from spring of 2007 to Feb 2009), and much of that was caused by speculation in the housing market. Many single family homes were built in order to flip or built on speculation by the home builders. That clearly hasn't happened since the market corrected. The oversupply we are seeing today in our market is in apartment style condos. These were overbuilt in response to the 2006-2007 boom and are all finally coming on stream now as these projects often take much longer to complete than a house.
Lastly, I would like to say that in my 17 years of selling real estate in the Edmonton area, I have heard many predictions. I remember people complaining that we were overvalued in the late 90's and the market was going to crash. Our average price was in the $110,000 range at that time. These people were going to rent until the prices came down. I guess they are still renting.
Thursday, August 12, 2010
July 2010 Edmonton real estate update
The stats are out. And, July was a slower month. That is to be expected with summer holidays, but our sales were lower than normal. We had 1294 sales in July and that is off our normal range of 1500-1800. It is way off July of 2009's numbers of 2223, but last year was an exception. 2009 started with record low sale numbers due to the financial crisis and then turned sharply up with pent up demand that came through in the spring. The inventory has finally crested at 8892 homes and condos for sale in the metro Edmonton area. The inventory should continue to fall as homes sell and come off the market. I've attached a graph showing the inventory and sales levels to put it into perspective.
Tuesday, July 27, 2010
June 2010 Edmonton Real Estate Market Update
We are entering the summer doldrums. Prices have flattened out this month. We've actually seen a fall in prices in the condo and duplex market.
SFD $391,497 Up 0.4% from last month
CONDO $242,644 Down 2.4% from last month
DUPLEX/ROWHOUSE $306,905 Down 4.5% from last month.
The big news is the inventory has risen. We are up to 9406 properties for sale, combine that with 1539 sales last month and that translates into a 6.1 month supply of inventory. 6 months is the borderline between a buyers and a sellers market. So, officially we are dipping into a buyer's market. I expect to see our prices stabilizing and softening as we go into the fall. This is a normal annual occurence, but the excess inventory may add to the softening.
The good news is that the inventory appears to be peaking out, July's inventory level should be similar to the end of June. So, the buildup in the number of listings for sale appears to be ending.
SFD $391,497 Up 0.4% from last month
CONDO $242,644 Down 2.4% from last month
DUPLEX/ROWHOUSE $306,905 Down 4.5% from last month.
The big news is the inventory has risen. We are up to 9406 properties for sale, combine that with 1539 sales last month and that translates into a 6.1 month supply of inventory. 6 months is the borderline between a buyers and a sellers market. So, officially we are dipping into a buyer's market. I expect to see our prices stabilizing and softening as we go into the fall. This is a normal annual occurence, but the excess inventory may add to the softening.
The good news is that the inventory appears to be peaking out, July's inventory level should be similar to the end of June. So, the buildup in the number of listings for sale appears to be ending.
Wednesday, June 2, 2010
May 2010 Edmonton Real Estate Update
The official stats are out for May. The market is moving more and more into a balanced market. Prices have still climbed for single family houses (1% increase over April), but condos and duplexes fell (both by 2%). Our inventory level has increased to 8780 properties which is higher than our peak last year. Buyers are finding that they have a little more time to look, the average days on market is sitting at 44. The sales were off last years torrid pace of over 2200. We were just shy of 1700 sales this month (1682).
The slowdown in sales could be attributed to the tightening of mortgage requirements that came in mid April. I've attached some price graphs for different property classes to show you the trends since early 2007.
Subscribe to:
Posts (Atom)