It will be a buyer’s market next year in Edmonton.
That’s the word from Royal LePage, which today released its market forecast for nine major Canadian cities.
The realty company said house prices in Edmonton will go up only 1% – from an average of $337,500 to $341,000, a major taming of last year’s almost 35% increase.
House prices were strong during the first half of 2007, but they tumbled on the second half, said Ken Shearer, broker/owner of Royal LePage Noralta Real Estates Inc.
It resulted in a glut of houses for sale which dragged prices down compared from early this year and the previous years.
“So, we’re thinking that the sales are gonna drop in 2008 from a high of about 20,000 to 18,000.” Sales peaked around May and June with an average price of $354,000,
Both sales and prices have been dropping since with an average of $325,000 in November.
“Sellers suffered when prices started to drop.”
However, Edmonton will remain as one of the top four most expensive major Canadian cities to buy a house, just below Toronto.
Vancouver tops the list again as the most expensive market with a forecast of $587, 500 average price, an increase of 4%, followed by Calgary’s price which is predicted to go up also by 4%, from $412, 500 to $429,000.
The most affordable houses in major markets can be found in Regina and Winnipeg. But prices in those cities are expected to climb up 15.4% and 11.4%, respectively.
The average projected price in Regina for this year is $163,500 and it will go up to $188,600. In Winnipeg it will go from $179,500 to $190,000.
“Alberta home price increases will be much more moderate in 2008 as the regional market continues to adjust to the new house value reality,” the survey predicted.
Nationally, house prices are expected to rise by 3.5%, from $306,500 to $317,228, but sales will drop by 4%.
Edmonton Sun - Tuesday, December 18, 2007 - RENATO GANDIA
Tuesday, December 18, 2007
After slump in November, home prices to rise next year
Oversupply expected to tighten in February
EDMONTON - Edmonton home prices will recover in the first half of 2008 from their late-2007 slide, says the Royal LePage Market
Survey Forecast, released Monday.
The average residential sale price is expected to rise only one per cent to $341,000 in 2008 from the projected 2007 average of $337,500. But November prices averaged only $325,060 according to the Realtors Association of Edmonton so the forecast actually is 4.9 per cent above those recent levels.
Ken Shearer, broker/owner of Royal LePage Noralta Real Estate Inc., predicts that the current oversupply of listed homes will start to tighten in February as more properties are sold and others are pulled off the market.
Demand will remain strong with in-migration, low unemployment and low interest rates, Royal LePage predicts.
"The move by the Bank of Canada to reduce its overnight target-lending rate by a quarter of a per cent in 2007 will bode well for first-time buyers," it notes.
Additionally, "the Canadian dollar hovering at parity will continue to bolster the country's high consumer confidence and is anticipated to translate into continued growth in consumer spending," Royal LePage predicts.
"The negative impact of the high dollar on the country's manufacturing sector for export trade will be felt mostly in southern Ontario and Quebec."
The second quarter of 2008 with more balanced supply and demand plus a predictable seasonal surge should bring most of the year's price rise, Shearer says.
Edmonton's one-per-cent price increase from 2007 to 2008 is expected to be the lowest among major Canadian cities, with other Royal LePage forecasts ranging from 3.5 per cent in Toronto and Montreal to 15.4 per cent in Regina.
From 2006 to 2007, Edmonton led the country with a 34.5-per-cent average home price increase.
The number of home sales is expected to fall in 2008 across most of Canada. Royal LePage forecasts a national decline of four per cent, to 500,927 units. Edmonton unit sales are expected to fall 6.5 per cent -- which is more than any other major city -- to 18,950 units.
Edmonton Journal - Tuesday, December 18, 2007 - Ron Chalmers
EDMONTON - Edmonton home prices will recover in the first half of 2008 from their late-2007 slide, says the Royal LePage Market
Survey Forecast, released Monday.
The average residential sale price is expected to rise only one per cent to $341,000 in 2008 from the projected 2007 average of $337,500. But November prices averaged only $325,060 according to the Realtors Association of Edmonton so the forecast actually is 4.9 per cent above those recent levels.
Ken Shearer, broker/owner of Royal LePage Noralta Real Estate Inc., predicts that the current oversupply of listed homes will start to tighten in February as more properties are sold and others are pulled off the market.
Demand will remain strong with in-migration, low unemployment and low interest rates, Royal LePage predicts.
"The move by the Bank of Canada to reduce its overnight target-lending rate by a quarter of a per cent in 2007 will bode well for first-time buyers," it notes.
Additionally, "the Canadian dollar hovering at parity will continue to bolster the country's high consumer confidence and is anticipated to translate into continued growth in consumer spending," Royal LePage predicts.
"The negative impact of the high dollar on the country's manufacturing sector for export trade will be felt mostly in southern Ontario and Quebec."
The second quarter of 2008 with more balanced supply and demand plus a predictable seasonal surge should bring most of the year's price rise, Shearer says.
Edmonton's one-per-cent price increase from 2007 to 2008 is expected to be the lowest among major Canadian cities, with other Royal LePage forecasts ranging from 3.5 per cent in Toronto and Montreal to 15.4 per cent in Regina.
From 2006 to 2007, Edmonton led the country with a 34.5-per-cent average home price increase.
The number of home sales is expected to fall in 2008 across most of Canada. Royal LePage forecasts a national decline of four per cent, to 500,927 units. Edmonton unit sales are expected to fall 6.5 per cent -- which is more than any other major city -- to 18,950 units.
Edmonton Journal - Tuesday, December 18, 2007 - Ron Chalmers
Buying a home can be your first step to financial security
Owning beats renting and sooner is better than later
EDMONTON - Back in 1992, I bought my first place for $55,000. It was a two-bedroom townhouse-style condo.
At the time, the average house price in Edmonton was about $100,000 and the government had just introduced the ability to borrow money from your RRSP to buy a home. I borrowed $5,000 from my RRSP and added another $5,000 of cash for the down payment. I remember both the $10,000 down payment and also the $55,000 price tag seemed like a lot of money.
Today, the average house price in Edmonton is about $375,000. In 2004, the average house price was about $175,000.
Many first-time homebuyers in Alberta are finding that the real estate boom has made it more difficult to buy their first home. In other parts of the country like Toronto and Vancouver, this scenario for first time buyers has been a reality for many years.
Regardless of the boom and the city you live in, buying your first home is always tough. Here are some tips for those looking to get into the housing market.
It's better to get into the market: I believe owning over renting is better for your personal finances.
Some people I've talked to delay buying in order to wait to buy the right house. Let's face it, your first place is your starting point.
I say it's better to get into the market because everything moves together. You'll always want to upgrade no matter what kind of house you start with. For me, a townhouse condo in the west end was not the ideal place but it got me into the market. It got me started into a world of ownership.
I have owned a lot of places and upgraded many times. I'm thankful I got in even though it was not the ideal place.
Buy what you can afford: I know you might think this is tough in this market but don't push yourself to the limit.
Too many people are stretching amortization periods and putting down very small down payments.
As far as I am concerned, you are better off buying less house so that you can minimize the debt and minimize the amortization.
Back in 1992, I could have bought a $100,000 house with the same $10,000 down payment, but it would have meant more interest costs. Instead, I chose a smaller mortgage to build more equity, which consequently allowed me to upgrade a year later.
When you go see mortgage professionals, they will always tell you the biggest mortgage you can qualify for based on your income. Don't necessarily buy the biggest house you can afford according to the mortgage brokers.
Use the Home Buyers Plan: The government allows first-time home buyers to borrow up to $20,000 out of their RRSP to buy their home.
Although you don't have to pay interest or tax on that money, you do have to pay that back over a 15-year period. Some critics will argue that you lose the opportunity to make money inside the RRSP, but you will have the opportunity to make money with your property. For me, I had saved some money to buy the home, but borrowing out of the RRSP allowed me to get my down payment up to almost 20 per cent. As we all know, real estate has been a pretty good investment since then.
Don't speculate: Real estate prices go up and down.
Fortunately, they tend to go up more than they go down and that's why, long term, it is better to own than rent. There's always someone quick to predict what house prices will be in the next months or years, but the fact is nobody knows. Anyone predicting is guessing. Buy because long-term owning is better than renting. Buy within your means so that you can weather through some of the tougher times.
Edmonton Journal - Saturday, December 15, 2007 - Jim Yih
EDMONTON - Back in 1992, I bought my first place for $55,000. It was a two-bedroom townhouse-style condo.
At the time, the average house price in Edmonton was about $100,000 and the government had just introduced the ability to borrow money from your RRSP to buy a home. I borrowed $5,000 from my RRSP and added another $5,000 of cash for the down payment. I remember both the $10,000 down payment and also the $55,000 price tag seemed like a lot of money.
Today, the average house price in Edmonton is about $375,000. In 2004, the average house price was about $175,000.
Many first-time homebuyers in Alberta are finding that the real estate boom has made it more difficult to buy their first home. In other parts of the country like Toronto and Vancouver, this scenario for first time buyers has been a reality for many years.
Regardless of the boom and the city you live in, buying your first home is always tough. Here are some tips for those looking to get into the housing market.
It's better to get into the market: I believe owning over renting is better for your personal finances.
Some people I've talked to delay buying in order to wait to buy the right house. Let's face it, your first place is your starting point.
I say it's better to get into the market because everything moves together. You'll always want to upgrade no matter what kind of house you start with. For me, a townhouse condo in the west end was not the ideal place but it got me into the market. It got me started into a world of ownership.
I have owned a lot of places and upgraded many times. I'm thankful I got in even though it was not the ideal place.
Buy what you can afford: I know you might think this is tough in this market but don't push yourself to the limit.
Too many people are stretching amortization periods and putting down very small down payments.
As far as I am concerned, you are better off buying less house so that you can minimize the debt and minimize the amortization.
Back in 1992, I could have bought a $100,000 house with the same $10,000 down payment, but it would have meant more interest costs. Instead, I chose a smaller mortgage to build more equity, which consequently allowed me to upgrade a year later.
When you go see mortgage professionals, they will always tell you the biggest mortgage you can qualify for based on your income. Don't necessarily buy the biggest house you can afford according to the mortgage brokers.
Use the Home Buyers Plan: The government allows first-time home buyers to borrow up to $20,000 out of their RRSP to buy their home.
Although you don't have to pay interest or tax on that money, you do have to pay that back over a 15-year period. Some critics will argue that you lose the opportunity to make money inside the RRSP, but you will have the opportunity to make money with your property. For me, I had saved some money to buy the home, but borrowing out of the RRSP allowed me to get my down payment up to almost 20 per cent. As we all know, real estate has been a pretty good investment since then.
Don't speculate: Real estate prices go up and down.
Fortunately, they tend to go up more than they go down and that's why, long term, it is better to own than rent. There's always someone quick to predict what house prices will be in the next months or years, but the fact is nobody knows. Anyone predicting is guessing. Buy because long-term owning is better than renting. Buy within your means so that you can weather through some of the tougher times.
Edmonton Journal - Saturday, December 15, 2007 - Jim Yih
Tuesday, December 11, 2007
Wednesday, December 5, 2007
Housing prices tumble even as inventory decreases
Edmonton, December 4, 2007: The REALTORS® Association of Edmonton reports that housing prices in Edmonton suddenly dropped in November. The largest monthly drop in single family prices so far this year was 3.2% in August. The drop in November was 5.3%. The residential inventory is still high as compared to historical levels but has dropped throughout November. There were 8,667 residential properties available on the Multiple Listing Service® at the end of the month
“Home sellers have come to realize that the current market is very price sensitive. If a property is not priced right for this market it may languish in the listings,” said Carolyn Pratt, President of the REALTORS® Association. “Buyers currently have lots of options available and are being selective about homes they consider.” She stressed that REALTORS® using the MLS® can provide the most comprehensive and accurate market prices and current neighbourhood pricing trends.
Single family dwellings listed on the Multiple Listing Service® sold on average for $376,267 in the Edmonton area in November. Condominiums on MLS® sold on average for $252,277 (down 4.0%) and the more volatile duplex/rowhouse prices were down 15.4% and sold for $311,193 on average. The average residential sales price (which includes all types of residential property) was down 6.5% from last month at $325,060.
“As the current listings become sold or are withdrawn the current inventory will drop. As we move into the spring with a more normal inventory, we expect that prices will again begin to rise slowly," said Pratt.
Typically, homes sold more slowly with the average days-on-market up a week to 51 days. The sales-to-listing ratio was higher than October at 45% and total residential volume for November was $397 million; down 10.6% from the same month last year. The total MLS® sales figure for the year to date was $7.9 billion and will be a record setting $8 billion by the end of the year.
Realtors Association of Edmonton
“Home sellers have come to realize that the current market is very price sensitive. If a property is not priced right for this market it may languish in the listings,” said Carolyn Pratt, President of the REALTORS® Association. “Buyers currently have lots of options available and are being selective about homes they consider.” She stressed that REALTORS® using the MLS® can provide the most comprehensive and accurate market prices and current neighbourhood pricing trends.
Single family dwellings listed on the Multiple Listing Service® sold on average for $376,267 in the Edmonton area in November. Condominiums on MLS® sold on average for $252,277 (down 4.0%) and the more volatile duplex/rowhouse prices were down 15.4% and sold for $311,193 on average. The average residential sales price (which includes all types of residential property) was down 6.5% from last month at $325,060.
“As the current listings become sold or are withdrawn the current inventory will drop. As we move into the spring with a more normal inventory, we expect that prices will again begin to rise slowly," said Pratt.
Typically, homes sold more slowly with the average days-on-market up a week to 51 days. The sales-to-listing ratio was higher than October at 45% and total residential volume for November was $397 million; down 10.6% from the same month last year. The total MLS® sales figure for the year to date was $7.9 billion and will be a record setting $8 billion by the end of the year.
Realtors Association of Edmonton
Tuesday, December 4, 2007
Home prices down in November
6.5-per-cent drop from October, but average price still higher than a year ago
Tuesday, December 04, 2007
EDMONTON - Edmonton home prices dropped an average of 6.5 per cent in November from October.
Single-family houses fell 5.3 per cent to $376,267 while condos were down four per cent to $252,277.
Edmonton house prices now are down $50,000 from their May peak of $426,028.
The volatile mixed category of duplexes and rowhouses plummeted 15.4 per cent to $311,193.
The average for all housing forms, $325,060, is still up 15.1 per cent from November 2006.
"The current market is very price-sensitive," Carolyn Pratt, president of the Realtors Association of Edmonton, said today. "If property is not priced right for this market, it may languish in the listings."
During November, residential inventory dropped to 8,667 properties from 9,577 a month earlier.
Pratt predicted that inventory will continue to fall and that prices will rise slowly in the spring.
Edmonton Journal - Tuesday, November 4, 2007
Tuesday, December 04, 2007
EDMONTON - Edmonton home prices dropped an average of 6.5 per cent in November from October.
Single-family houses fell 5.3 per cent to $376,267 while condos were down four per cent to $252,277.
Edmonton house prices now are down $50,000 from their May peak of $426,028.
The volatile mixed category of duplexes and rowhouses plummeted 15.4 per cent to $311,193.
The average for all housing forms, $325,060, is still up 15.1 per cent from November 2006.
"The current market is very price-sensitive," Carolyn Pratt, president of the Realtors Association of Edmonton, said today. "If property is not priced right for this market, it may languish in the listings."
During November, residential inventory dropped to 8,667 properties from 9,577 a month earlier.
Pratt predicted that inventory will continue to fall and that prices will rise slowly in the spring.
Edmonton Journal - Tuesday, November 4, 2007
Monday, October 29, 2007
CMHC relaxes mortgage loan requirements
No money down for investment property raises concerns and a few red flags
TORONTO - You have to wonder what David Dodge will be thinking this time. Just over a year ago, the Bank of Canada governor met with Canada Mortgage and Housing Corp. because of his fears exotic mortgages were juicing an already robust Canadian housing market.
Now, CMHC has decided it is going to let Canadians buy investment properties with no down payment.
The Crown corporation, which controls about 70 per cent of the mortgage insurance market in Canada, has quietly introduced changes that lower the down-payment threshold for an investment property. Instead of needing 15 per cent down, Canadians will be able to buy a second property -- not to mention a third and fourth and fifth -- with no money down.
"These enhancements will ensure continued supply of affordable rental accommodations across Canada," said Pierre Serre, vice-president of insurance products with CMHC.
Critics charge CMHC once again has moved into risky territory, the last time being its decision to allow Canadians no money down on a principle residence. "Look at the fee, anytime it's that high, you know there is a lot of risk," said one senior mortgage industry observer.
The mortgage insurance fee for the new product is 7.25 per cent of the total amount of the loan. So, a $300,000 mortgage would have a $21,750 mortgage insurance fee.
Instead of paying the fee up front, CMHC will allow that fee to be added to the overall mortgage which can be amortized over as many as 40 years. Based on 5.8-per-cent interest, the current discounted rate for a five-year term, it would cost just over $1,700 a month to carry that $321,750 mortgage.
By law, any consumer with less than a 20-per-cent downpayment must buy mortgage insurance if they are borrowing money from a financial institution covered under the Bank Act.
None of CMHC's competitors are coming close to this new offer. Genworth Financial Canada -- the other dominate player with about 30 per cent of the mortgage insurance market -- requires investors to have at least 10 per cent down.
Back in July, 2006, Dodge demanded a meeting with the federal Crown corporation. He was concerned about products like interest-only mortgages which give consumers the option of not making a principle payment for the first 10 years of a mortgage.
Serre said CMHC did consider the issue of whether the changes could over-stimulate the market. "We look at those kind of considerations all the time," he said, adding that to get a loan consumers will have to meet certain criteria in terms of their overall debt load. "We're not trying to get people into situations they can't manage."
Some question whether there was any need for the latest change, given how strong the market in Canada remains.
The Building Industry and Land Development Association said this week condo sales in Toronto -- the largest market for new high rises in North America -- were up 31 per cent over the first nine months of the year from a year earlier. "I'm not sure why CMHC is relaxing the rules, the logic escapes me," said Stephen Dupuis, chief executive of BILD. "The market is strong. I look at what is happening in the United States and wonder if there is a need to be so free with credit."
The real reason for the new program, suggest some commentators, is CMHC trying to fend off competitors in the marketplace. In a constant battle with Genworth, CMHC is also facing up to four new mortgage insurers who have applied to do business in Canada or are already licensed to do so.
"There are competitors in the marketplace that didn't exist before. They are reacting to competition that hasn't even materialized yet," said Dupuis.
CIBC World Markets senior economist Benjamin Tal said the latest changes by CMHC are probably just the beginning. "The genie is out of the bottle, this mortgage market is starting to move. Over the past 16 months we've seen more changes than the past 30 years," said Tal.
Edmonton Journal
TORONTO - You have to wonder what David Dodge will be thinking this time. Just over a year ago, the Bank of Canada governor met with Canada Mortgage and Housing Corp. because of his fears exotic mortgages were juicing an already robust Canadian housing market.
Now, CMHC has decided it is going to let Canadians buy investment properties with no down payment.
The Crown corporation, which controls about 70 per cent of the mortgage insurance market in Canada, has quietly introduced changes that lower the down-payment threshold for an investment property. Instead of needing 15 per cent down, Canadians will be able to buy a second property -- not to mention a third and fourth and fifth -- with no money down.
"These enhancements will ensure continued supply of affordable rental accommodations across Canada," said Pierre Serre, vice-president of insurance products with CMHC.
Critics charge CMHC once again has moved into risky territory, the last time being its decision to allow Canadians no money down on a principle residence. "Look at the fee, anytime it's that high, you know there is a lot of risk," said one senior mortgage industry observer.
The mortgage insurance fee for the new product is 7.25 per cent of the total amount of the loan. So, a $300,000 mortgage would have a $21,750 mortgage insurance fee.
Instead of paying the fee up front, CMHC will allow that fee to be added to the overall mortgage which can be amortized over as many as 40 years. Based on 5.8-per-cent interest, the current discounted rate for a five-year term, it would cost just over $1,700 a month to carry that $321,750 mortgage.
By law, any consumer with less than a 20-per-cent downpayment must buy mortgage insurance if they are borrowing money from a financial institution covered under the Bank Act.
None of CMHC's competitors are coming close to this new offer. Genworth Financial Canada -- the other dominate player with about 30 per cent of the mortgage insurance market -- requires investors to have at least 10 per cent down.
Back in July, 2006, Dodge demanded a meeting with the federal Crown corporation. He was concerned about products like interest-only mortgages which give consumers the option of not making a principle payment for the first 10 years of a mortgage.
Serre said CMHC did consider the issue of whether the changes could over-stimulate the market. "We look at those kind of considerations all the time," he said, adding that to get a loan consumers will have to meet certain criteria in terms of their overall debt load. "We're not trying to get people into situations they can't manage."
Some question whether there was any need for the latest change, given how strong the market in Canada remains.
The Building Industry and Land Development Association said this week condo sales in Toronto -- the largest market for new high rises in North America -- were up 31 per cent over the first nine months of the year from a year earlier. "I'm not sure why CMHC is relaxing the rules, the logic escapes me," said Stephen Dupuis, chief executive of BILD. "The market is strong. I look at what is happening in the United States and wonder if there is a need to be so free with credit."
The real reason for the new program, suggest some commentators, is CMHC trying to fend off competitors in the marketplace. In a constant battle with Genworth, CMHC is also facing up to four new mortgage insurers who have applied to do business in Canada or are already licensed to do so.
"There are competitors in the marketplace that didn't exist before. They are reacting to competition that hasn't even materialized yet," said Dupuis.
CIBC World Markets senior economist Benjamin Tal said the latest changes by CMHC are probably just the beginning. "The genie is out of the bottle, this mortgage market is starting to move. Over the past 16 months we've seen more changes than the past 30 years," said Tal.
Edmonton Journal
Canadian real estate sales slip
Sales in Canada's red-hot real estate market cooled in September, but average prices ticked up, according to new figures from the Canadian Real Estate Association.
Seasonally adjusted sales last month in 24 major markets fell 3.1 per cent from August to 28,591, CREA said. Sales in the four biggest markets of Toronto, Vancouver, Montreal and Calgary all declined.
But the average price of a resale home rose by almost $3,000 to $328,660 — up 11.1 per cent from September last year.
Prices were up year over year in every major market except Thunder Bay, Ont., where they were 0.9 per cent lower.
The big price increases in Saskatoon, Edmonton and Calgary showed some signs of easing. Saskatoon's average resale home sold for $242,091 in September — still up 49.3 per cent from last year's average.
But the number of new listings in those hot western markets also rose dramatically year over year, CREA said, helping to bring more balance to those markets.
"Buyers in [Alberta] will likely take more time to shop and remove some of the steam from price increases," said CREA chief economist Gregory Klump.
He said resale housing activity across the country "remains strong," but it's "beginning to ease back from its breakneck pace recorded in the first half of the year."
Vancouver's real estate market once again topped the country's most expensive. The average home sold for $582,354. That's down by about $5,000 from August, but still represents a better than 10 per cent hike in the past year.
Average resale prices in the Toronto real estate market showed a $19,000 gain from August. The September average of $380,132 was up 8.9 per cent from September 2006.
In the July to September quarter, CREA said sales broke records in London, Ont., Ottawa and St. John's, N.L.
"The underlying economic conditions in Canada that affect real estate are still very strong," said CREA president Ann Bosley in a statement. She attributed lower overall sales to the "volume of new listings."
CREA's report is based on sales through the MLS system.
CBC News
Seasonally adjusted sales last month in 24 major markets fell 3.1 per cent from August to 28,591, CREA said. Sales in the four biggest markets of Toronto, Vancouver, Montreal and Calgary all declined.
But the average price of a resale home rose by almost $3,000 to $328,660 — up 11.1 per cent from September last year.
Prices were up year over year in every major market except Thunder Bay, Ont., where they were 0.9 per cent lower.
The big price increases in Saskatoon, Edmonton and Calgary showed some signs of easing. Saskatoon's average resale home sold for $242,091 in September — still up 49.3 per cent from last year's average.
But the number of new listings in those hot western markets also rose dramatically year over year, CREA said, helping to bring more balance to those markets.
"Buyers in [Alberta] will likely take more time to shop and remove some of the steam from price increases," said CREA chief economist Gregory Klump.
He said resale housing activity across the country "remains strong," but it's "beginning to ease back from its breakneck pace recorded in the first half of the year."
Vancouver's real estate market once again topped the country's most expensive. The average home sold for $582,354. That's down by about $5,000 from August, but still represents a better than 10 per cent hike in the past year.
Average resale prices in the Toronto real estate market showed a $19,000 gain from August. The September average of $380,132 was up 8.9 per cent from September 2006.
In the July to September quarter, CREA said sales broke records in London, Ont., Ottawa and St. John's, N.L.
"The underlying economic conditions in Canada that affect real estate are still very strong," said CREA president Ann Bosley in a statement. She attributed lower overall sales to the "volume of new listings."
CREA's report is based on sales through the MLS system.
CBC News
Tuesday, October 16, 2007
Condos still king among builders
Edmonton-area apartment and condo builders are experiencing their strongest year since 1982.
This September, 1,3069 multiple units were started, compared to 522 in September 2006.
For the full year, builders “are poised to exceed 6,000 units for the first time since 1982,” said market analyst Richard Goatcher at Canada Mortgage and Housing Corp., which released the figures, Tuesday.
“The lion’s share are condominiums,” Gaotcher said.
For the year to date, Edmonton has captured 72 per cent of the area’s multiple starts.
“A lot of people who look at condos are young professionals without children or empty-nesters who work downtown and want to talk to work or to the Winspear,” Goatcher said.
SINGLE STARTS FALL
The area’s single family starts fell 24 per cent in September, from last September.
They also had fallen in July and August.
“The single detached builders have been throttling back for a while now, similar to the pullback in the resale market, caused by a consumer reaction to the price increases,” Goatcher said.
“And there has been a run-up in inventory.”
“The single-detached house building industry is still expected to achieve the second-best year on record,” he said.
For the year to date, Edmonton city has captured only 49 per cent of the area’s single-family starts.
“Single-family housing goes where the land is cheaper,” Goatcher says.
“Younger families want to be in the suburbs,” he added.
Total housing starts in September were up 54 per cent in Red Deer, 40 per cent in greater Edmonton, 34 per cent in greater Calgary, 34 per cent in Wood Buffalo, and 20 per cent across Canada.
Edmonton Journal – Wednesday, October 10, 2007
This September, 1,3069 multiple units were started, compared to 522 in September 2006.
For the full year, builders “are poised to exceed 6,000 units for the first time since 1982,” said market analyst Richard Goatcher at Canada Mortgage and Housing Corp., which released the figures, Tuesday.
“The lion’s share are condominiums,” Gaotcher said.
For the year to date, Edmonton has captured 72 per cent of the area’s multiple starts.
“A lot of people who look at condos are young professionals without children or empty-nesters who work downtown and want to talk to work or to the Winspear,” Goatcher said.
SINGLE STARTS FALL
The area’s single family starts fell 24 per cent in September, from last September.
They also had fallen in July and August.
“The single detached builders have been throttling back for a while now, similar to the pullback in the resale market, caused by a consumer reaction to the price increases,” Goatcher said.
“And there has been a run-up in inventory.”
“The single-detached house building industry is still expected to achieve the second-best year on record,” he said.
For the year to date, Edmonton city has captured only 49 per cent of the area’s single-family starts.
“Single-family housing goes where the land is cheaper,” Goatcher says.
“Younger families want to be in the suburbs,” he added.
Total housing starts in September were up 54 per cent in Red Deer, 40 per cent in greater Edmonton, 34 per cent in greater Calgary, 34 per cent in Wood Buffalo, and 20 per cent across Canada.
Edmonton Journal – Wednesday, October 10, 2007
Edmonton’s ever-changing housing market continues to fluctuate
Reports from September indicate it is a buyers’ market out there
Prices of homes sold through Edmonton's Multiple Listing Service (MLS) continued to soften last month while housing inventory bulged once again.
According to the Realtors Association of Edmonton, single family dwellings listed on the MLS sold on average for $399,555 in the Edmonton area for the month of September down one per cent from an August average of $403,757. This is down just 0.99% from last month.
MARKET CORRECTING ITSELF
“Every market has fluctuations and this market is still correcting after a dramatic upswing,” said Carolyn Pratt, president of the Realtors Association. “Right now buyers can take advantage of prices that are below the peak of last May. Sellers, on the other hand, are still realizing significant equity gains from prices that are still 23.5% above this time last year.”
Condominium sale prices rallied in September, selling on average for $270,745 up 0.6% from Augusts’ average condo selling price of $269,139 duplex/rowhouses were down six per cent over the month, selling for $310,110 on average. The average residential sales price was nearly a wash thanks to the gains made by condo sales, dipping just 0.15% from last month to $344,286.
“Condos are still affordable for a lot of people and that’s why that end of the market is holding up,” said Pratt. “It wasn’t that long ago that $270,000 was a lot of money for a house. A lot of first-time home buyers do not have the income to spend $400,000 on a home, so they put their emphasis on buying a condo to build up equity.”
From January 2006 to May 2007, the average price of single family dwellings rose 74%, setting back just six per cent since then. This cooling trend may be the cause of an industry inventory explosion that saw the month’s sales-to-listing ratio hit 26% with 3,952 residential listings.
With only 1,042 sales, September’s homes sales represent the lowest number in almost 10 years, registering a drop of 43.5% over September 2006. As a result, the residential inventory increased to 9,918 from 9,185 over the past 30 days. The average days-on-market in Septembers increased from 36 to 43 days.
“I think buyers are sitting on the sidelines because they have a lot to choose from,” said Pratt. “They’re taking their time making decisions and deciding if the market is sustaining itself yet.”
RECORD AMOUNT OF CHOICE
At the end of the third quarter, year-to-date sales were down slightly compared to last year. Total residential sales were 17,188 units, down 1.5% from the same time last year with a year-to-date sales-to-listings ratio of 52%.
“There is a record amount of inventory and there are a number of factors,” said Pratt, listing investors rushing to dump rentals, spec homes coming due, families who build new, putting their previous homes for sale, builders continuing to build to meet forecasted demand all added on top of normal MLS activity.
“The fundamentals are still good for a growing market. Edmonton has high employment, a lot of people are still moving into the city, low interest rates, I think we’re going through a correction and in the new year we see the market stabilizing and starting to increase gradually again.”
The north central quadrant of the city was the most active with 83 single family dwelling sales while the central and northwest regions were the least active with just 18 sales each.
Central also offered the most affordable single family homes with median sales below $300,000. An average priced house in the southwest was priced at $517,106.
Outside the City of Edmonton, St. Albert was the most active community with 387 single family dwelling sales and the highest average price of $497,380. Six homes sold in Morinville where the average price was just $327,333.
Edmonton Sun – Sunday, October 7, 2007
Prices of homes sold through Edmonton's Multiple Listing Service (MLS) continued to soften last month while housing inventory bulged once again.
According to the Realtors Association of Edmonton, single family dwellings listed on the MLS sold on average for $399,555 in the Edmonton area for the month of September down one per cent from an August average of $403,757. This is down just 0.99% from last month.
MARKET CORRECTING ITSELF
“Every market has fluctuations and this market is still correcting after a dramatic upswing,” said Carolyn Pratt, president of the Realtors Association. “Right now buyers can take advantage of prices that are below the peak of last May. Sellers, on the other hand, are still realizing significant equity gains from prices that are still 23.5% above this time last year.”
Condominium sale prices rallied in September, selling on average for $270,745 up 0.6% from Augusts’ average condo selling price of $269,139 duplex/rowhouses were down six per cent over the month, selling for $310,110 on average. The average residential sales price was nearly a wash thanks to the gains made by condo sales, dipping just 0.15% from last month to $344,286.
“Condos are still affordable for a lot of people and that’s why that end of the market is holding up,” said Pratt. “It wasn’t that long ago that $270,000 was a lot of money for a house. A lot of first-time home buyers do not have the income to spend $400,000 on a home, so they put their emphasis on buying a condo to build up equity.”
From January 2006 to May 2007, the average price of single family dwellings rose 74%, setting back just six per cent since then. This cooling trend may be the cause of an industry inventory explosion that saw the month’s sales-to-listing ratio hit 26% with 3,952 residential listings.
With only 1,042 sales, September’s homes sales represent the lowest number in almost 10 years, registering a drop of 43.5% over September 2006. As a result, the residential inventory increased to 9,918 from 9,185 over the past 30 days. The average days-on-market in Septembers increased from 36 to 43 days.
“I think buyers are sitting on the sidelines because they have a lot to choose from,” said Pratt. “They’re taking their time making decisions and deciding if the market is sustaining itself yet.”
RECORD AMOUNT OF CHOICE
At the end of the third quarter, year-to-date sales were down slightly compared to last year. Total residential sales were 17,188 units, down 1.5% from the same time last year with a year-to-date sales-to-listings ratio of 52%.
“There is a record amount of inventory and there are a number of factors,” said Pratt, listing investors rushing to dump rentals, spec homes coming due, families who build new, putting their previous homes for sale, builders continuing to build to meet forecasted demand all added on top of normal MLS activity.
“The fundamentals are still good for a growing market. Edmonton has high employment, a lot of people are still moving into the city, low interest rates, I think we’re going through a correction and in the new year we see the market stabilizing and starting to increase gradually again.”
The north central quadrant of the city was the most active with 83 single family dwelling sales while the central and northwest regions were the least active with just 18 sales each.
Central also offered the most affordable single family homes with median sales below $300,000. An average priced house in the southwest was priced at $517,106.
Outside the City of Edmonton, St. Albert was the most active community with 387 single family dwelling sales and the highest average price of $497,380. Six homes sold in Morinville where the average price was just $327,333.
Edmonton Sun – Sunday, October 7, 2007
Housing Market Correcting After Temporary High
Average home prices fell one per cent in September after peaking in May
Fall home prices are forcing Edmonton-area realtors to market more aggressively.
Average prices for single family houses slipped another on per cent in September to $399,555 from $403,757 in August. They peaked in May at $426,028.
“This market is still correcting after a dramatic upswing,” Carolyn Pratt, president of the Realtors Association of Edmonton, said Wednesday.
Average prices for all homes, including condos, duplexes and row houses, fell $506 to $344,286.
During September, 3,952 homes were newly listed with the Multiple Listing Service while only 1,042 were sold-for the slowest sales month since December, 2005.
MLS residential inventory rose, for the ninth consecutive month, to 9,918 units.
The excess of supply over demand means more choices and less pressure for buyers, Pratt said-but it pushes sellers and realtors to market homes more effectively.
During the past two hears, she said, “we rarely had to do an open house,” because homes sold so quickly.
“Now, with a lot more competition, you have to really step up your marketing,” she said.
“It’s important to expose your property and attract people into the property.”
Most realtors have returned to holding weekend open houses for shoppers, she said.
But the practice of realtors-only open houses, on weekday morning, has been largely overtaken by the Internet, she said, Now, realtors scan new listings online.
More and more realtors use “virtual tours” on their listed homes, with websites including video clips rather than just still photos, Pratt said.
Increasing numbers also are using software that links to Google Earth, so online shoppers can located listed homes within the city, and see surrounding features such as roads, parks and schools, she said.
Pratt noted that professional “home staging” also is becoming more popular, to show properties at their best.
Despite the current “correction,” Pratt pointed out that Edmonton prices are up 24 per cent from 12 months ago, so sellers are still earning good returns on their investments.
Greater Edmonton’s population is forecast to grow by 83,000 in the next five years, Pratt said.
With a strong economic outlook, the ear’s real estate should do well over the next several years, she said-while refusing to predict when prices will rise again.
Edmonton Journal
Fall home prices are forcing Edmonton-area realtors to market more aggressively.
Average prices for single family houses slipped another on per cent in September to $399,555 from $403,757 in August. They peaked in May at $426,028.
“This market is still correcting after a dramatic upswing,” Carolyn Pratt, president of the Realtors Association of Edmonton, said Wednesday.
Average prices for all homes, including condos, duplexes and row houses, fell $506 to $344,286.
During September, 3,952 homes were newly listed with the Multiple Listing Service while only 1,042 were sold-for the slowest sales month since December, 2005.
MLS residential inventory rose, for the ninth consecutive month, to 9,918 units.
The excess of supply over demand means more choices and less pressure for buyers, Pratt said-but it pushes sellers and realtors to market homes more effectively.
During the past two hears, she said, “we rarely had to do an open house,” because homes sold so quickly.
“Now, with a lot more competition, you have to really step up your marketing,” she said.
“It’s important to expose your property and attract people into the property.”
Most realtors have returned to holding weekend open houses for shoppers, she said.
But the practice of realtors-only open houses, on weekday morning, has been largely overtaken by the Internet, she said, Now, realtors scan new listings online.
More and more realtors use “virtual tours” on their listed homes, with websites including video clips rather than just still photos, Pratt said.
Increasing numbers also are using software that links to Google Earth, so online shoppers can located listed homes within the city, and see surrounding features such as roads, parks and schools, she said.
Pratt noted that professional “home staging” also is becoming more popular, to show properties at their best.
Despite the current “correction,” Pratt pointed out that Edmonton prices are up 24 per cent from 12 months ago, so sellers are still earning good returns on their investments.
Greater Edmonton’s population is forecast to grow by 83,000 in the next five years, Pratt said.
With a strong economic outlook, the ear’s real estate should do well over the next several years, she said-while refusing to predict when prices will rise again.
Edmonton Journal
Friday, September 14, 2007
City's housing market going through a correction, not a crash
After six years of escalating prices, only surprise is that it took so long
EDMONTON - Relax, folks. It's time for a chill pill. The sky isn't falling on Edmonton's once-torrid housing market.
Yes, prices are softening a bit. The average price of a single-detached home slipped 3.2 per cent in August, to $403,757. The average condo price slid one per cent, to $269,139.
With MLS inventories at record levels, buyers can now take their time. The pressure on buyers has lifted. Multiple offers -- common just a few months ago -- have all but disappeared. Sellers are reducing their prices.
In stock market lingo, this is called a correction. Every other housing market in the country has had one. Now it's Edmonton's turn.
Realtors say they wouldn't be surprised if average prices fall by six or seven per cent from their July peak, before levelling off in early 2008. If so, that would take the average single-detached home price down to $388,000.
Still, for anyone who has both feet planted firmly on the ground, none of this should come as a surprise. The only surprise is that it took so long for Edmonton's overheated housing market to take a breather.
Consider a few facts. Between January 2002 and July 2007 -- a period of 72 months -- local house prices went virtually straight up.
During that period, the average price of a single-detached home rose from $162,780 to an all-time high of $417,150, for a gain of 156 per cent. At the same time, average city condo prices soared by 173 per cent -- to $269,139 from $98,554.
The biggest gains occurred between the end of 2005 and July 2007, when inventory levels simply couldn't keep up with rising demand. During that 17-month stretch, average single-detached house prices rose from $225,130 to $417,150 -- a gain of 85 per cent. Condo prices soared 82 per cent, to nearly $272,000 from $149,254.
There were sound reasons for the big jump in demand, of course. Interest rates were low, and Edmonton's economy was among the hottest in Canada. That drew thousands of newcomers from all parts of the country.
On the economic front, not much has changed. Edmonton is still a magnet for job seekers. Unemployment remains low, job creation is still high and local rental vacancy rates are puny.
Oil prices -- the key driver of Alberta's economy -- hit the highest level in history Wednesday, touching $80 US a barrel.
Roughly $150 billion (Cdn) worth of oilsands megaprojects or related upgraders are planned or underway.
Oilsands output is expected to triple to three millions barrels a day over the next decade.
Roughly a dozen upgraders are slated for the Edmonton region. Thousands of new jobs will be created.
If anything, Alberta's oilsands, despite rising costs and growing pressure to curb greenhouse gas emissions, are only growing in stature, accounting for much of the gain in worldwide oil reserves in recent years.
There's another key factor behind the big surge in Edmonton house prices. Much of it was catch-up. While house prices soared in cities like Vancouver and Toronto in the 1980s and 1990s, prices in Edmonton stagnated.
Even after including the gains racked up through the end of 2006, local house prices rose by less than one per cent annually, on an inflation-adjusted basis, over the previous quarter-century.
By comparison, average house prices in Vancouver rose three times as fast, and prices in Toronto, Ottawa and Montreal rose more than twice as fast. Even cities like Halifax and Winnipeg outpaced Edmonton.
So where does all this leave Edmonton today? Well, despite the gains of recent years, local house prices remain among the most affordable of any major city in Canada.
According to an RBC Economics study released Wednesday, which measures the percentage of median pre-tax household income needed to cover the cost of mortgage payments, property taxes and utilities on four common housing types, Edmonton still looks like a bargain.
Whether the house in question is a condo, a townhouse or a standard two-storey home, Edmonton trails only Ottawa in terms of affordability. For detached bungalows, Edmonton ranks third, behind Montreal and Ottawa.
At the other end of the spectrum is Vancouver, which consistently ranks as Canada's most expensive city. If anyone can explain to me what keeps the housing market in Lotus Land afloat, I'm all ears.
To keep a roof over your head on the West Coast, RBC calculates that you'll need to allocate nearly 71 per cent of all pre-tax household income for a bungalow, and more than 73 per cent for a standard two-storey home. That's roughly twice what any financial adviser considers sustainable.
The benchmark price for a single-family home in Vancouver? It hit $726,067 in August, up 11 per cent from a year ago. That's roughly $323,000 or 80 per cent above the average price for a single detached home in Edmonton.
Curiously, I don't hear any economists ringing the alarm bells over a pending housing crash on the West Coast, where the economy is less robust and median household income levels are lower than they are in Edmonton.
The lesson in all this is clear, friends. Don't worry. Be happy.
The Edmonton Journal - September 13, 2007
EDMONTON - Relax, folks. It's time for a chill pill. The sky isn't falling on Edmonton's once-torrid housing market.
Yes, prices are softening a bit. The average price of a single-detached home slipped 3.2 per cent in August, to $403,757. The average condo price slid one per cent, to $269,139.
With MLS inventories at record levels, buyers can now take their time. The pressure on buyers has lifted. Multiple offers -- common just a few months ago -- have all but disappeared. Sellers are reducing their prices.
In stock market lingo, this is called a correction. Every other housing market in the country has had one. Now it's Edmonton's turn.
Realtors say they wouldn't be surprised if average prices fall by six or seven per cent from their July peak, before levelling off in early 2008. If so, that would take the average single-detached home price down to $388,000.
Still, for anyone who has both feet planted firmly on the ground, none of this should come as a surprise. The only surprise is that it took so long for Edmonton's overheated housing market to take a breather.
Consider a few facts. Between January 2002 and July 2007 -- a period of 72 months -- local house prices went virtually straight up.
During that period, the average price of a single-detached home rose from $162,780 to an all-time high of $417,150, for a gain of 156 per cent. At the same time, average city condo prices soared by 173 per cent -- to $269,139 from $98,554.
The biggest gains occurred between the end of 2005 and July 2007, when inventory levels simply couldn't keep up with rising demand. During that 17-month stretch, average single-detached house prices rose from $225,130 to $417,150 -- a gain of 85 per cent. Condo prices soared 82 per cent, to nearly $272,000 from $149,254.
There were sound reasons for the big jump in demand, of course. Interest rates were low, and Edmonton's economy was among the hottest in Canada. That drew thousands of newcomers from all parts of the country.
On the economic front, not much has changed. Edmonton is still a magnet for job seekers. Unemployment remains low, job creation is still high and local rental vacancy rates are puny.
Oil prices -- the key driver of Alberta's economy -- hit the highest level in history Wednesday, touching $80 US a barrel.
Roughly $150 billion (Cdn) worth of oilsands megaprojects or related upgraders are planned or underway.
Oilsands output is expected to triple to three millions barrels a day over the next decade.
Roughly a dozen upgraders are slated for the Edmonton region. Thousands of new jobs will be created.
If anything, Alberta's oilsands, despite rising costs and growing pressure to curb greenhouse gas emissions, are only growing in stature, accounting for much of the gain in worldwide oil reserves in recent years.
There's another key factor behind the big surge in Edmonton house prices. Much of it was catch-up. While house prices soared in cities like Vancouver and Toronto in the 1980s and 1990s, prices in Edmonton stagnated.
Even after including the gains racked up through the end of 2006, local house prices rose by less than one per cent annually, on an inflation-adjusted basis, over the previous quarter-century.
By comparison, average house prices in Vancouver rose three times as fast, and prices in Toronto, Ottawa and Montreal rose more than twice as fast. Even cities like Halifax and Winnipeg outpaced Edmonton.
So where does all this leave Edmonton today? Well, despite the gains of recent years, local house prices remain among the most affordable of any major city in Canada.
According to an RBC Economics study released Wednesday, which measures the percentage of median pre-tax household income needed to cover the cost of mortgage payments, property taxes and utilities on four common housing types, Edmonton still looks like a bargain.
Whether the house in question is a condo, a townhouse or a standard two-storey home, Edmonton trails only Ottawa in terms of affordability. For detached bungalows, Edmonton ranks third, behind Montreal and Ottawa.
At the other end of the spectrum is Vancouver, which consistently ranks as Canada's most expensive city. If anyone can explain to me what keeps the housing market in Lotus Land afloat, I'm all ears.
To keep a roof over your head on the West Coast, RBC calculates that you'll need to allocate nearly 71 per cent of all pre-tax household income for a bungalow, and more than 73 per cent for a standard two-storey home. That's roughly twice what any financial adviser considers sustainable.
The benchmark price for a single-family home in Vancouver? It hit $726,067 in August, up 11 per cent from a year ago. That's roughly $323,000 or 80 per cent above the average price for a single detached home in Edmonton.
Curiously, I don't hear any economists ringing the alarm bells over a pending housing crash on the West Coast, where the economy is less robust and median household income levels are lower than they are in Edmonton.
The lesson in all this is clear, friends. Don't worry. Be happy.
The Edmonton Journal - September 13, 2007
Thursday, September 13, 2007
Housing boom will falter, bank says
The current housing boom is "unsustainable" because prices in 14 of 15 major Canadian markets are above their long-term trends, the Bank of Nova Scotia economics department said in a report Thursday.
With the exception of St. John’s, N.L., price levels have risen above the historic rate of increase over a nine-year boom, the longest since the end of the Second World War.
"There is growing evidence of overvaluation in home prices in some parts of the country," the report said, and "the further domestic home prices climb above underlying economic fundamentals, the greater the risk of an eventual correction."
In nine of the 15 markets, prices are within a few percentage points of the long-term trend. But in six western cities, the increases are in the double digits, ranging from 10 per cent in Winnipeg to 25 per cent in Edmonton.
The bank said the market is still quite good, with little evidence of overbuilding or speculative buying. But the real price gain of 60 per cent over the boom period is high by historic standards, and signs of a slowdown are building.
Housing starts through August are down nine per cent, compared to the same period in 2006, and price increases — 7.7 per cent in July compared to July 2006 —are moderating.
"We continue to anticipate a gradual cooling in both housing demand and price appreciation in the months ahead. Affordability is becoming increasingly stretched for many would-be buyers after almost a decade of rising home prices," the bank said.
It's the second bank report in two days to suggest that the housing boom could be faltering. On
Wednesday, the Royal Bank said housing was becoming less affordable.
CBC News - September 13, 2007
With the exception of St. John’s, N.L., price levels have risen above the historic rate of increase over a nine-year boom, the longest since the end of the Second World War.
"There is growing evidence of overvaluation in home prices in some parts of the country," the report said, and "the further domestic home prices climb above underlying economic fundamentals, the greater the risk of an eventual correction."
In nine of the 15 markets, prices are within a few percentage points of the long-term trend. But in six western cities, the increases are in the double digits, ranging from 10 per cent in Winnipeg to 25 per cent in Edmonton.
The bank said the market is still quite good, with little evidence of overbuilding or speculative buying. But the real price gain of 60 per cent over the boom period is high by historic standards, and signs of a slowdown are building.
Housing starts through August are down nine per cent, compared to the same period in 2006, and price increases — 7.7 per cent in July compared to July 2006 —are moderating.
"We continue to anticipate a gradual cooling in both housing demand and price appreciation in the months ahead. Affordability is becoming increasingly stretched for many would-be buyers after almost a decade of rising home prices," the bank said.
It's the second bank report in two days to suggest that the housing boom could be faltering. On
Wednesday, the Royal Bank said housing was becoming less affordable.
CBC News - September 13, 2007
Housing affordability still sliding: Royal Bank
Housing affordability continued to erode steadily across the country in the spring and early summer, Royal Bank said Wednesday in a quarterly report.
"In the second quarter, Canada's housing affordability experienced one of the largest and most broadly based quarterly deteriorations since the mid-1990s," said Derek Holt, assistant chief economist at the bank.
"Higher house prices, mortgage rates, utilities and property taxes all combined to drive the countrywide deterioration," he said.
In the April-June quarter of the year, the proportion of pre-tax household income required to service the cost of owning a standard condominium rose to 29 per cent from 27.5 per cent in the first three months of the year. A standard townhouse required 33 per cent of income, compared with 31.5 per cent in the previous quarter.
A detached bungalow took 41 per cent of pre-tax income, up from 39 per cent, while a standard two-storey home remained the least affordable housing type at 46 per cent — up from 44 per cent in first quarter.
Saskatchewan, Alberta and British Columbia saw the biggest reductions in housing affordability, the bank said.
Affordability deteriorated by approximately 20 per cent across each of the home segments in
Saskatchewan, making it the worst quarterly deterioration on record.
"[Saskatchewan] jumped into the spotlight at the start of the year when an influx of people caught the housing supply off guard, forcing affordability to deteriorate," said Holt. "This momentum continued into the second quarter as the pace of annual price gains soared into the double digit range."
Housing market conditions from Manitoba eastward are relatively stable compared to the western provinces, the bank added.
CBC News - September 12, 2007
"In the second quarter, Canada's housing affordability experienced one of the largest and most broadly based quarterly deteriorations since the mid-1990s," said Derek Holt, assistant chief economist at the bank.
"Higher house prices, mortgage rates, utilities and property taxes all combined to drive the countrywide deterioration," he said.
In the April-June quarter of the year, the proportion of pre-tax household income required to service the cost of owning a standard condominium rose to 29 per cent from 27.5 per cent in the first three months of the year. A standard townhouse required 33 per cent of income, compared with 31.5 per cent in the previous quarter.
A detached bungalow took 41 per cent of pre-tax income, up from 39 per cent, while a standard two-storey home remained the least affordable housing type at 46 per cent — up from 44 per cent in first quarter.
Saskatchewan, Alberta and British Columbia saw the biggest reductions in housing affordability, the bank said.
Affordability deteriorated by approximately 20 per cent across each of the home segments in
Saskatchewan, making it the worst quarterly deterioration on record.
"[Saskatchewan] jumped into the spotlight at the start of the year when an influx of people caught the housing supply off guard, forcing affordability to deteriorate," said Holt. "This momentum continued into the second quarter as the pace of annual price gains soared into the double digit range."
Housing market conditions from Manitoba eastward are relatively stable compared to the western provinces, the bank added.
CBC News - September 12, 2007
Thursday, September 6, 2007
Average up 27% in single year despite $10,000 hit
Cooling of torrid local real estate market 'nothing to panic about'
EDMONTON - Edmonton-area home prices fell almost $10,000 in August -- the deepest drop in the city's history.
The $344,792 average, for all forms of housing, was down 2.8 per cent from July -- well below past declines on a percentage basis.
Single-family house prices fell an average of $13,393, to $403,757.
Housing inventories at Multiple Listing Service plus ComFree rose to 12,112 units. But only 1,466 homes -- 12.1 per cent of those for sale -- were sold in August.
During the month, 88 per cent of single-family home sales were below list prices, by an average of $13,200, the Realtors Association of Edmonton reported Wednesday.
Sellers lost the luxury of bidding wars but "buyers have a lot of choice," said association president Carolyn Pratt.
While August prices have rolled back to April levels, they're still up 27.3 per cent from the previous August.
"It's only natural to expect them to correct a little," ComFree co-president Travis Holowach said. "A four- to six-per-cent correction, following that kind of growth, is nothing to panic about."
Erin Holowach, also at ComFree, said inventory totals can be misleading because some people list their homes without being committed to selling. " 'Hmm, the market's up,' they say. 'Is my house worth $600,000? No -- only $550,000? Guess I won't sell!' "
She thinks some of those "market testers" will drop their listings, and prices will gradually rise next spring.
Pratt expects a soft market for a couple of months, followed by slow price increases. "September has come, holidays are over, and I think we'll see more activity."
She cautioned, however, that "it all has to do with inventory, and it will take time to get that inventory down."
Many new-home buyers will leave their resale homes on the market, she said, and recent condo conversions also will remain in the market.
"Going forward, we see prices softening a little bit more in the next couple of months, but employment is high, interest rates are low and people still are moving into Edmonton," she said.
On balance, "we think the market will be strong again in the new year, but not with dramatic price increases."
Meanwhile, buyers can enjoy this break from the previous pandemonium of making hasty offers with few conditions about financing or inspections.
"They can take their time, do their homework and make their offers with conditions," Pratt said.
On a percentage basis, the August slump was far from a record. From December 1994 to January 1995, prices fell an average 6.5 per cent to $106,645. They fell 7.9 per cent ($75,800) from June to July 1984, and 23.1 per cent ($10,720) from February to March 1964.
Economist Carl Gomez, at TD Financial Group, in the latest issue of his quarterly Housing Bubble Watch, has written that "Edmonton still remains the second most affordable" large Canadian city in which to own a home.
He compared home prices to rents, saw "little evidence of speculation" and found a "very low" risk of an Edmonton housing bubble.
In Calgary, meanwhile, the average price of a single-family home plunged by about $20,000 in August, from a record high $505,920 in July to $485,566, according to preliminary figures from Calgary realtor Bob Truman.
The median price has fallen in the past three months from $439,000 in June to $435,000 in July and $430,000 last month.
Truman said Wednesday night that the average sale price in August was affected by the number of sales in the million-dollar-plus category.
In August, he said, 38 homes sold for more than $1 million, at an average sale price of $1.5 million. That compares with 61 sales in the upper-end market in July, when the average sale price was $1.7 million.
"If you get rid of the million-dollar sales . . . and compare them month to month, well August was down $2,000 compared to July," Truman said of the average sale prices for single-family homes. "So what happened was there were fewer million-dollar sales in August, and that really skewed the average price.
"But if you look at the median price it was only down by $5,000 and that means the same thing, there were fewer million-dollar sales."
In August, the average sale price of condos was $320,790 -- a slight increase from the $318,582 in July.
Edmonton Journal
EDMONTON - Edmonton-area home prices fell almost $10,000 in August -- the deepest drop in the city's history.
The $344,792 average, for all forms of housing, was down 2.8 per cent from July -- well below past declines on a percentage basis.
Single-family house prices fell an average of $13,393, to $403,757.
Housing inventories at Multiple Listing Service plus ComFree rose to 12,112 units. But only 1,466 homes -- 12.1 per cent of those for sale -- were sold in August.
During the month, 88 per cent of single-family home sales were below list prices, by an average of $13,200, the Realtors Association of Edmonton reported Wednesday.
Sellers lost the luxury of bidding wars but "buyers have a lot of choice," said association president Carolyn Pratt.
While August prices have rolled back to April levels, they're still up 27.3 per cent from the previous August.
"It's only natural to expect them to correct a little," ComFree co-president Travis Holowach said. "A four- to six-per-cent correction, following that kind of growth, is nothing to panic about."
Erin Holowach, also at ComFree, said inventory totals can be misleading because some people list their homes without being committed to selling. " 'Hmm, the market's up,' they say. 'Is my house worth $600,000? No -- only $550,000? Guess I won't sell!' "
She thinks some of those "market testers" will drop their listings, and prices will gradually rise next spring.
Pratt expects a soft market for a couple of months, followed by slow price increases. "September has come, holidays are over, and I think we'll see more activity."
She cautioned, however, that "it all has to do with inventory, and it will take time to get that inventory down."
Many new-home buyers will leave their resale homes on the market, she said, and recent condo conversions also will remain in the market.
"Going forward, we see prices softening a little bit more in the next couple of months, but employment is high, interest rates are low and people still are moving into Edmonton," she said.
On balance, "we think the market will be strong again in the new year, but not with dramatic price increases."
Meanwhile, buyers can enjoy this break from the previous pandemonium of making hasty offers with few conditions about financing or inspections.
"They can take their time, do their homework and make their offers with conditions," Pratt said.
On a percentage basis, the August slump was far from a record. From December 1994 to January 1995, prices fell an average 6.5 per cent to $106,645. They fell 7.9 per cent ($75,800) from June to July 1984, and 23.1 per cent ($10,720) from February to March 1964.
Economist Carl Gomez, at TD Financial Group, in the latest issue of his quarterly Housing Bubble Watch, has written that "Edmonton still remains the second most affordable" large Canadian city in which to own a home.
He compared home prices to rents, saw "little evidence of speculation" and found a "very low" risk of an Edmonton housing bubble.
In Calgary, meanwhile, the average price of a single-family home plunged by about $20,000 in August, from a record high $505,920 in July to $485,566, according to preliminary figures from Calgary realtor Bob Truman.
The median price has fallen in the past three months from $439,000 in June to $435,000 in July and $430,000 last month.
Truman said Wednesday night that the average sale price in August was affected by the number of sales in the million-dollar-plus category.
In August, he said, 38 homes sold for more than $1 million, at an average sale price of $1.5 million. That compares with 61 sales in the upper-end market in July, when the average sale price was $1.7 million.
"If you get rid of the million-dollar sales . . . and compare them month to month, well August was down $2,000 compared to July," Truman said of the average sale prices for single-family homes. "So what happened was there were fewer million-dollar sales in August, and that really skewed the average price.
"But if you look at the median price it was only down by $5,000 and that means the same thing, there were fewer million-dollar sales."
In August, the average sale price of condos was $320,790 -- a slight increase from the $318,582 in July.
Edmonton Journal
Thursday, August 30, 2007
Buyer's Market
Home Sellers Forced to Slash Prices
Home sellers are slashing their asking prices by tens of thousands of dollars as Edmonton's once sizzling housing market continues to cool, says a city real estate agent.
And new figures from the Edmonton Real Estate Board show the vast majority of sellers are now getting less than they're asking for - a stark contrast to the bidding wars of a year ago that routinely forced buyers to pay more than the list price.
"There's tons of stuff on the market. There's twice as much inventory in residential real estate today as there was a year ago at this time," Re/Max agent Abe Hering told Sun Media yesterday.
"If your supply mushrooms tremendously, inevitably the only product that will get consumed is the one that's best priced."
As a result, Hering said he routinely advises clients who've had their homes on the market for awhile to drop their asking price by 10% in order to remain competitive. On an average $417,000 single-detached home, that works out to more than $40,000.
"There's no sense reducing any product by 5% because it just doesn't work. We're seeing reductions of 10% and more," he said.
Jon Hall, with the Edmonton Real Estate Board, said 85% of single family homes that sold over the past 30 days went for less than the asking price. On average, the final figure was nearly $12,000 less than the seller was seeking.
Condos didn't fair much better, with 79% going for less than the asking price.
"What most realtors seem to be saying is that the sellers haven't adjusted their mindset to the new reality - that we have over 8,000 listings and that buyers have choice," Hall said.
He said many sellers are knowingly asking for more than their home can fetch.
"And quite frankly, the realtors are getting a bit frustrated," Hall said.
"The client sets the price. If the seller says, 'I want it listed $20,000 above the market price,' they've got to do it. Ten days or two weeks later, the realtor's coming back and saying, 'I told you so,' and dropping the price."
There are several theories as to why there are so many homes on the market.
Carolyn Pratt, president of the Realtors Association of Edmonton, said some investors are trying to dump property.
Other people are moving into larger or smaller homes, while trying to capitalize on the market. Some sellers like to list during the summer months, she said.
Pratt said she's also heard some homeowners cashing out and moving back to their home provinces, like Saskatchewan, where homes are cheaper.
Keith Mackie, fleet director for Budget Rent-a-Car, sees it every day. He said demand for moving trucks going to Saskatchewan from Alberta and B.C. has recently increased three-fold.
"It seems like a lot of people are going home," said Mackie. "There's no doubt about it, it's a significant number."
Hall said many sellers with homes on the market in Edmonton today won't sell.
"It would be fair to say a lot of listings will melt. They'll just disappear," Hall said. "They'll just be withdrawn after a typical 60- or 90-day listing period."
The Edmonton Real Estate Board recently reported there was virtually no increase in the selling price of single family residence in July. That month, condo prices went up 2.5%, while townhomes increased 1%. The figures for August are expected to be released early next month.
The Edmonton Sun
Home sellers are slashing their asking prices by tens of thousands of dollars as Edmonton's once sizzling housing market continues to cool, says a city real estate agent.
And new figures from the Edmonton Real Estate Board show the vast majority of sellers are now getting less than they're asking for - a stark contrast to the bidding wars of a year ago that routinely forced buyers to pay more than the list price.
"There's tons of stuff on the market. There's twice as much inventory in residential real estate today as there was a year ago at this time," Re/Max agent Abe Hering told Sun Media yesterday.
"If your supply mushrooms tremendously, inevitably the only product that will get consumed is the one that's best priced."
As a result, Hering said he routinely advises clients who've had their homes on the market for awhile to drop their asking price by 10% in order to remain competitive. On an average $417,000 single-detached home, that works out to more than $40,000.
"There's no sense reducing any product by 5% because it just doesn't work. We're seeing reductions of 10% and more," he said.
Jon Hall, with the Edmonton Real Estate Board, said 85% of single family homes that sold over the past 30 days went for less than the asking price. On average, the final figure was nearly $12,000 less than the seller was seeking.
Condos didn't fair much better, with 79% going for less than the asking price.
"What most realtors seem to be saying is that the sellers haven't adjusted their mindset to the new reality - that we have over 8,000 listings and that buyers have choice," Hall said.
He said many sellers are knowingly asking for more than their home can fetch.
"And quite frankly, the realtors are getting a bit frustrated," Hall said.
"The client sets the price. If the seller says, 'I want it listed $20,000 above the market price,' they've got to do it. Ten days or two weeks later, the realtor's coming back and saying, 'I told you so,' and dropping the price."
There are several theories as to why there are so many homes on the market.
Carolyn Pratt, president of the Realtors Association of Edmonton, said some investors are trying to dump property.
Other people are moving into larger or smaller homes, while trying to capitalize on the market. Some sellers like to list during the summer months, she said.
Pratt said she's also heard some homeowners cashing out and moving back to their home provinces, like Saskatchewan, where homes are cheaper.
Keith Mackie, fleet director for Budget Rent-a-Car, sees it every day. He said demand for moving trucks going to Saskatchewan from Alberta and B.C. has recently increased three-fold.
"It seems like a lot of people are going home," said Mackie. "There's no doubt about it, it's a significant number."
Hall said many sellers with homes on the market in Edmonton today won't sell.
"It would be fair to say a lot of listings will melt. They'll just disappear," Hall said. "They'll just be withdrawn after a typical 60- or 90-day listing period."
The Edmonton Real Estate Board recently reported there was virtually no increase in the selling price of single family residence in July. That month, condo prices went up 2.5%, while townhomes increased 1%. The figures for August are expected to be released early next month.
The Edmonton Sun
Tuesday, August 28, 2007
Canada's house-price escalator pauses in July
Average Toronto house price down nearly $16,000 from June
Led downward by a $15,951 drop in Toronto, the average price of a house sold through multiple listing services in 24 Canadian markets fell 0.8 per cent in July from June's record level.
But that average price — $332,442 — was still up 13.1 per cent from the July 2006 level, the biggest year-over-year rise since April 2004, the Canadian Real Estate Association said.
The figures were released Wednesday by CREA.
Among markets showing gains, Vancouver was one of the standouts.
Its average July price of $581,108 was up $16,406 or 2.9 per cent from June and was 12.2 per cent higher than in July 2006.Toronto's July average, $366,012, was down $15,951 or 4.1 per cent from June but up seven per cent from July 2006.Toronto Real Estate Board president Donald Bentley said the month-to-month drop was no shock because high-end properties don't tend to sell well in July and August.
"People are at the cottage and so on," he told CBC News Online.
Brian Naphtali, president of the Real Estate Board of Greater Vancouver, said high-end sales were one of the forces behind his city's surge.
There have been 45 sales above $5 million in the Vancouver area so far this year, compared with 23 in all of 2006, he told CBC News Online.
On a year-to-year basis, the biggest percentage price jumps were in Saskatoon (where the July average price was $245,152, up 53.7 per cent), Edmonton ($353,919, up 38 per cent) and Regina ($176,537, up 28.7 per cent).
Prices were down in St. Catharines, Ont., and nearly unchanged in Thunder Bay and Windsor-Essex.
In a commentary on CREA's figures on Wednesday, BMO Capital Markets economist Douglas Porter focused on the fact that 32,420 homes changed hands in July.
"Sales rose 0.8 per cent from already lofty June levels, and were up a towering 19.5 per cent from year-ago levels," he said.
He called this "another clear sign that the underlying Canadian economy had plenty of momentum before the credit squalls broke."
CBC News
Led downward by a $15,951 drop in Toronto, the average price of a house sold through multiple listing services in 24 Canadian markets fell 0.8 per cent in July from June's record level.
But that average price — $332,442 — was still up 13.1 per cent from the July 2006 level, the biggest year-over-year rise since April 2004, the Canadian Real Estate Association said.
The figures were released Wednesday by CREA.
Among markets showing gains, Vancouver was one of the standouts.
Its average July price of $581,108 was up $16,406 or 2.9 per cent from June and was 12.2 per cent higher than in July 2006.Toronto's July average, $366,012, was down $15,951 or 4.1 per cent from June but up seven per cent from July 2006.Toronto Real Estate Board president Donald Bentley said the month-to-month drop was no shock because high-end properties don't tend to sell well in July and August.
"People are at the cottage and so on," he told CBC News Online.
Brian Naphtali, president of the Real Estate Board of Greater Vancouver, said high-end sales were one of the forces behind his city's surge.
There have been 45 sales above $5 million in the Vancouver area so far this year, compared with 23 in all of 2006, he told CBC News Online.
On a year-to-year basis, the biggest percentage price jumps were in Saskatoon (where the July average price was $245,152, up 53.7 per cent), Edmonton ($353,919, up 38 per cent) and Regina ($176,537, up 28.7 per cent).
Prices were down in St. Catharines, Ont., and nearly unchanged in Thunder Bay and Windsor-Essex.
In a commentary on CREA's figures on Wednesday, BMO Capital Markets economist Douglas Porter focused on the fact that 32,420 homes changed hands in July.
"Sales rose 0.8 per cent from already lofty June levels, and were up a towering 19.5 per cent from year-ago levels," he said.
He called this "another clear sign that the underlying Canadian economy had plenty of momentum before the credit squalls broke."
CBC News
Thursday, August 9, 2007
Average housing prices increase despite record inventory
Edmonton, August 7, 2007: The average residential price increased 1.9% in July driven by price increases of 2.5% for condominiums. The average residential price includes all types of housing listed and sold on the Multiple Listing Service® operated by the REALTORS® Association of Edmonton. July listings were double the number in July 2006 and inventory reached an all-time record level of 8,183 homes as of July 31. Last year at this time there were just 1,856 homes available.
There was no change in the average price* of a single family residence in July. The average price of $417,150 was just $115 less than the price in June. Condo average prices rose to $271,908 from $265,172 last month (up 2.5%). Duplex and rowhouses dipped 1% to $339,417. The average residential price was $354,718 and the median price was $395,000 in the greater Edmonton area.
“Buyers have a large selection of homes to choose from and they are taking more time to make a decision,” said Carolyn Pratt, President of the REALTORS® Association. “Sellers cannot just throw their property on the market and wait for a sale; they now have to develop a strong marketing plan with their REALTOR® to realize the best value for their property.” The average days on market was 30 days in July as compared to 25 in June.
The large inventory is a result of a high number of properties being listed for sale and slower than usual sales in July. There were 4,463 residential properties listed in July as compared to 2,230 in July 2006. Total sales of 1,565 properties in July was the lowest figure in the past five years. Just 882 single family dwellings sold in July (1,190 in July 2006) and 553 condominium sales (down from 602 in July 2006) represents a growing share of the total market at 27.8%. The slower July has not dampened annual sales which are still up 9.8% over the same time last year.
“The housing market is changing rapidly right now and only a REALTOR® who is active in the market every day can help you determine an appropriate buying or selling strategy," said Pratt. "Timing, pricing and advertising are just three elements of a marketing strategy. Your REALTOR® can also advise on neighbourhood specific trends and amenities, eye-catching improvements you can make to improve ‘curb appeal’ and which specialists you need for repairs, financing and legal services.” Only REALTORS® can list a property for sale on mls.ca; the largest real estate web site in Canada.
Five communities in and around Edmonton had average prices for single family homes higher than the overall average. They were Southwest Edmonton at $573,428, West Edmonton at $528,072, St. Albert at $483,491, Sherwood Park at $482,344 and Southeast Edmonton at $419,082
Edmonton Real Estate Board
There was no change in the average price* of a single family residence in July. The average price of $417,150 was just $115 less than the price in June. Condo average prices rose to $271,908 from $265,172 last month (up 2.5%). Duplex and rowhouses dipped 1% to $339,417. The average residential price was $354,718 and the median price was $395,000 in the greater Edmonton area.
“Buyers have a large selection of homes to choose from and they are taking more time to make a decision,” said Carolyn Pratt, President of the REALTORS® Association. “Sellers cannot just throw their property on the market and wait for a sale; they now have to develop a strong marketing plan with their REALTOR® to realize the best value for their property.” The average days on market was 30 days in July as compared to 25 in June.
The large inventory is a result of a high number of properties being listed for sale and slower than usual sales in July. There were 4,463 residential properties listed in July as compared to 2,230 in July 2006. Total sales of 1,565 properties in July was the lowest figure in the past five years. Just 882 single family dwellings sold in July (1,190 in July 2006) and 553 condominium sales (down from 602 in July 2006) represents a growing share of the total market at 27.8%. The slower July has not dampened annual sales which are still up 9.8% over the same time last year.
“The housing market is changing rapidly right now and only a REALTOR® who is active in the market every day can help you determine an appropriate buying or selling strategy," said Pratt. "Timing, pricing and advertising are just three elements of a marketing strategy. Your REALTOR® can also advise on neighbourhood specific trends and amenities, eye-catching improvements you can make to improve ‘curb appeal’ and which specialists you need for repairs, financing and legal services.” Only REALTORS® can list a property for sale on mls.ca; the largest real estate web site in Canada.
Five communities in and around Edmonton had average prices for single family homes higher than the overall average. They were Southwest Edmonton at $573,428, West Edmonton at $528,072, St. Albert at $483,491, Sherwood Park at $482,344 and Southeast Edmonton at $419,082
Edmonton Real Estate Board
Tuesday, July 10, 2007
Further Evidence that Housing Market is Achieving Balance.
Edmonton July 5, 2007: Further evidence of the rebalancing of the Edmonton housing market was released by the REALTORS® Association of Edmonton this afternoon. Unlike many sales in the past year and a half, most homes sellers who sold their single family home in June accepted a lower price than they were asking for to complete the transaction.
There were 801 single family homes sold in the City of Edmonton through the Multiple Listing Service® in June 2007.
- 76.4% or 612 homes were sold for less than their list price
- 11.2% or 90 homes were sold for the exact price expected by the seller
- 12.3% or 99 homes were sold for more than the list price
The average sale price for homes sold below list were discounted by about $12,500.
Homes sold above list gained an average of $8,760 for the seller.
By comparison, in July 2006, just 66% of homes sold under the list price and 23.6% of homes sold were sold for more than the asking price. In September 2006, 65.8% of single family homes sold below the list price and 19% of homes sold for more than the list price.
Edmonton Real Estate Board
There were 801 single family homes sold in the City of Edmonton through the Multiple Listing Service® in June 2007.
- 76.4% or 612 homes were sold for less than their list price
- 11.2% or 90 homes were sold for the exact price expected by the seller
- 12.3% or 99 homes were sold for more than the list price
The average sale price for homes sold below list were discounted by about $12,500.
Homes sold above list gained an average of $8,760 for the seller.
By comparison, in July 2006, just 66% of homes sold under the list price and 23.6% of homes sold were sold for more than the asking price. In September 2006, 65.8% of single family homes sold below the list price and 19% of homes sold for more than the list price.
Edmonton Real Estate Board
Housing Market Regains Balance from Spike in Listings
Edmonton, July 5, 2007: Residential inventory on the Multiple Listing Service® spiked to near record highs in June as the number of listings soared according to the REALTORS® Association of Edmonton. Total inventory at the end of June 2007 was 6,367 residential properties. Residential inventory at the end of July 1994 set a record at 7,747 properties available. June, September, October and November that year were also record months for number of listings.
Sales remained strong as buyers took advantage of a wider selection of homes available. At the midpoint for the year 13,282 residential properties have been sold through the MLS® valued at almost $4.5 billion. That is 1,712 more properties than the same time last year.
The average price* of a single family residence fell 2% in June to $417,265 erasing most of the gains made last month. Condo prices fell slightly to $265,172 on average. Duplex and rowhouses sold for an average price of $342,836 (down 1.3%).
“The Edmonton housing market has achieved some balance after 18 months of rapidly increasing prices and low inventory,” said Carolyn Pratt, President of the REALTORS® Association. “Our members have reported a number of price reductions and less multiple offer situations than we have faced in the recent past.”
“The fundamentals of the Edmonton market are still strong and should sustain steadily rising prices for all classes of property,” said Pratt. “Even if prices dip slightly in one or two months, homeowners will still have realized phenomenal growth in the value of their homes.” The market has shown remarkable price increases since the end of 2005. The average residential price in the Edmonton market area has risen 73.9% in the past 18 months.
Average prices in other major cities continue to top Edmonton prices. In May (the last month available) the average price for all types of residences was: $591,722 in Greater Vancouver, $429,298 in Calgary and $382,689 in Toronto. In Fort McMurray you can find a home for just $562,200 on average. The all-residential average price for Edmonton in May was $354,410 and $348,056 in June.
There were 4,982 residential properties listed on the Edmonton MLS® in June with 2,203 sales. The sales-to-listing ratio was 44%. Average days on market increased slightly from 22 to 25 days. Inventory increased dramatically from 4,485 residential properties available on June 1 to 6,367 available at the end of the month.
* Average prices indicate market trends only. They do not reflect actual prices, which may vary.
Edmonton Real Estate Board
Sales remained strong as buyers took advantage of a wider selection of homes available. At the midpoint for the year 13,282 residential properties have been sold through the MLS® valued at almost $4.5 billion. That is 1,712 more properties than the same time last year.
The average price* of a single family residence fell 2% in June to $417,265 erasing most of the gains made last month. Condo prices fell slightly to $265,172 on average. Duplex and rowhouses sold for an average price of $342,836 (down 1.3%).
“The Edmonton housing market has achieved some balance after 18 months of rapidly increasing prices and low inventory,” said Carolyn Pratt, President of the REALTORS® Association. “Our members have reported a number of price reductions and less multiple offer situations than we have faced in the recent past.”
“The fundamentals of the Edmonton market are still strong and should sustain steadily rising prices for all classes of property,” said Pratt. “Even if prices dip slightly in one or two months, homeowners will still have realized phenomenal growth in the value of their homes.” The market has shown remarkable price increases since the end of 2005. The average residential price in the Edmonton market area has risen 73.9% in the past 18 months.
Average prices in other major cities continue to top Edmonton prices. In May (the last month available) the average price for all types of residences was: $591,722 in Greater Vancouver, $429,298 in Calgary and $382,689 in Toronto. In Fort McMurray you can find a home for just $562,200 on average. The all-residential average price for Edmonton in May was $354,410 and $348,056 in June.
There were 4,982 residential properties listed on the Edmonton MLS® in June with 2,203 sales. The sales-to-listing ratio was 44%. Average days on market increased slightly from 22 to 25 days. Inventory increased dramatically from 4,485 residential properties available on June 1 to 6,367 available at the end of the month.
* Average prices indicate market trends only. They do not reflect actual prices, which may vary.
Edmonton Real Estate Board
Thursday, June 14, 2007
Financial reality doesn’t always fit into dream home
Edmonton Journal – Saturday, June 9, 2007
Wendy McLellan - Vancouver Province
Buyers urged to ask themselves what sacrifices they are willing to make
Looking to get into the housing market? Before you start scanning the weekend open house listings, consider how much house you can afford.
“You might technically qualify for a certain mortgage payment, but the lender’s calculations won’t take your personal budget and lifestyle into account,” said Paul Siemens, a mortgage broker with Invis. “You have to look at all your expenses, then figure out how much you’re comfortable paying in housing costs.”
Mortgage lenders use standard calculations, called debt-service ratios, to determine how much borrows can afford to pay. Under these ratios, housing costs-principal, interest, property taxes and maintenance-cannot exceed 32 per cent of gross income and total debt can’t exceed 40 per cent. For people with strong credit records and low debt, lenders may consider a 44 per cent total debt ratio rather than using two separate calculations.
The ratios often suggest you can afford a whopping mortgage payment and buy the house of your dreams, but house-hunters need to take a harder look at their financial picture.
“Anything that is not a loan payment isn’t factored into those ratios. Gym memberships, life-insurance premiums, RRSP deductions – all of these should be considered to figure out what you can afford. It’s not how much you qualify for, but how much you are comfortable paying.”
For James DeBoer, the toughest part of his job is talking to clients about the financial reality of the dream house.
“It’s really hard to coach people who are determined to get into a particular home and they’re willing to take risks,” said DeBoer, a certified Financial planner with Investors Group. “They are ready to scrape together anything to live in a beautiful home they can’t afford, and it’s hard to bring their expectations down.”
DeBoer works with clients to calculate their monthly income and how much their current lifestyle costs. From there, clients can see how much disposable income they have, and how much they are willing to pay for mortgage.
“Maybe you can qualify for a high mortgage payment, but what are the sacrifices you will have to make?”
Vancouver money coach Sheila Walkington suggests people practice being homeowners before deciding they can afford to get into the house market. For example, if they think they can pay $2,000 a month in mortgage and housing expenses, save that amount, less rent costs, for a few months. They should also plan to put aside about $200 a month to deal with inevitable home maintenance costs.
“It’s always good to practice for a few months beforehand, so it’s not such a shock when you do start paying a big mortgage payment – and the more time you have to practice, the better,” said Walkington, a certified financial planner.
Wendy McLellan - Vancouver Province
Buyers urged to ask themselves what sacrifices they are willing to make
Looking to get into the housing market? Before you start scanning the weekend open house listings, consider how much house you can afford.
“You might technically qualify for a certain mortgage payment, but the lender’s calculations won’t take your personal budget and lifestyle into account,” said Paul Siemens, a mortgage broker with Invis. “You have to look at all your expenses, then figure out how much you’re comfortable paying in housing costs.”
Mortgage lenders use standard calculations, called debt-service ratios, to determine how much borrows can afford to pay. Under these ratios, housing costs-principal, interest, property taxes and maintenance-cannot exceed 32 per cent of gross income and total debt can’t exceed 40 per cent. For people with strong credit records and low debt, lenders may consider a 44 per cent total debt ratio rather than using two separate calculations.
The ratios often suggest you can afford a whopping mortgage payment and buy the house of your dreams, but house-hunters need to take a harder look at their financial picture.
“Anything that is not a loan payment isn’t factored into those ratios. Gym memberships, life-insurance premiums, RRSP deductions – all of these should be considered to figure out what you can afford. It’s not how much you qualify for, but how much you are comfortable paying.”
For James DeBoer, the toughest part of his job is talking to clients about the financial reality of the dream house.
“It’s really hard to coach people who are determined to get into a particular home and they’re willing to take risks,” said DeBoer, a certified Financial planner with Investors Group. “They are ready to scrape together anything to live in a beautiful home they can’t afford, and it’s hard to bring their expectations down.”
DeBoer works with clients to calculate their monthly income and how much their current lifestyle costs. From there, clients can see how much disposable income they have, and how much they are willing to pay for mortgage.
“Maybe you can qualify for a high mortgage payment, but what are the sacrifices you will have to make?”
Vancouver money coach Sheila Walkington suggests people practice being homeowners before deciding they can afford to get into the house market. For example, if they think they can pay $2,000 a month in mortgage and housing expenses, save that amount, less rent costs, for a few months. They should also plan to put aside about $200 a month to deal with inevitable home maintenance costs.
“It’s always good to practice for a few months beforehand, so it’s not such a shock when you do start paying a big mortgage payment – and the more time you have to practice, the better,” said Walkington, a certified financial planner.
May home sales hit $1.2B
Edmonton Journal – Tuesday, June 5, 2007.
Ron Chalmers-Journal Business Writer
Interest rate hike fears make businesses and buyers edgy
Edmonton-area real estate sales hit $1.2 billion in May and $4.3 billion for the first five months of 2007.
That’s more than the entire year of 2005 and up to 37.4 per cent over the first five months of 2006.
Sales through the multiple-listings service had been constrained by a tight supply. But realtors listed 4.850 homes in May compared to 3,151 in April.
With more inventory, sales rose to 2,839 units in May from 2,441 in April.
Buyers enjoyed more choice, said Carolyn Pratt, president of the Realtors Association of Edmonton, in a new release issued Monday.
But the extra supply did not relieve prices, which rose about $400 per day.
They climbed three percent from April to an average of $354,410 for all forms of housing. Single-family houses averaged $426,028 while condos averaged $266,100.
ComFree, which sells services to support sales by owner, reported 1,212 new listings in May.
“Never before has any for-sale-by-owner company in the world listed that many houses in one month,” presidents Travis and Erin Holowach stated in a new release.
ComFree reported 556 sales in May at an average price of $369,400 for a total of $207.5 million.
Both REA and Comfree reported average listing periods of 22 days for homes that sold.
But fears of higher interest rates have hurt confidence among Alberta business leaders and consumers – especially about home buying – in a new survey for PricewaterhouseCoopers, released Monday.
“The majority of indices stayed relatively stable, but people are less optimistic than in February,” said Marc Tremblay, vice-president of Leger Marketing in Calgary.
It surveyed 306 business leaders through an online questionnaire and 931 representative Albertans by telephone in May.
Responses to each of give questions were aggregated to produce scores between zero and 200. A score of 100 would be neutral with higher scores revealing degrees of optimism or confidence, and lower scores showing pessimism.
The two samples were equally pessimistic about future interest rates, with the business sample scoring 40, and consumers scoring 39.
“This may not be surprising given the fact that the Canadian dollar recently reached a 30-year high at 93 cents US,” prompting predictions of higher interest rates to prevent higher inflation, said the Leger report.
The business and consumer samples were optimistic about falling unemployment, scoring 128 and 121 respectively.
The consumer sample was overwhelmingly positive about future household income and about the timing for buying major household items, with scores of 139 and 151 respectively.
But it scored a pessimistic 66 on the timing of buying a house.
On balance, consumer attitudes toward interest rates and home buying depressed their overall index score to 103-barely optimistic. Three months earlier, it was 113, “indicating that consumers in Alberta are a bit less optimistic about the economy than they were in February,” the Leger report commented.
The purpose of the Leger study was to “provide a barometer on how things may change in the future,” Tremblay said. “It could be used by business people as a tool to help them make business decisions.”
Ron Chalmers-Journal Business Writer
Interest rate hike fears make businesses and buyers edgy
Edmonton-area real estate sales hit $1.2 billion in May and $4.3 billion for the first five months of 2007.
That’s more than the entire year of 2005 and up to 37.4 per cent over the first five months of 2006.
Sales through the multiple-listings service had been constrained by a tight supply. But realtors listed 4.850 homes in May compared to 3,151 in April.
With more inventory, sales rose to 2,839 units in May from 2,441 in April.
Buyers enjoyed more choice, said Carolyn Pratt, president of the Realtors Association of Edmonton, in a new release issued Monday.
But the extra supply did not relieve prices, which rose about $400 per day.
They climbed three percent from April to an average of $354,410 for all forms of housing. Single-family houses averaged $426,028 while condos averaged $266,100.
ComFree, which sells services to support sales by owner, reported 1,212 new listings in May.
“Never before has any for-sale-by-owner company in the world listed that many houses in one month,” presidents Travis and Erin Holowach stated in a new release.
ComFree reported 556 sales in May at an average price of $369,400 for a total of $207.5 million.
Both REA and Comfree reported average listing periods of 22 days for homes that sold.
But fears of higher interest rates have hurt confidence among Alberta business leaders and consumers – especially about home buying – in a new survey for PricewaterhouseCoopers, released Monday.
“The majority of indices stayed relatively stable, but people are less optimistic than in February,” said Marc Tremblay, vice-president of Leger Marketing in Calgary.
It surveyed 306 business leaders through an online questionnaire and 931 representative Albertans by telephone in May.
Responses to each of give questions were aggregated to produce scores between zero and 200. A score of 100 would be neutral with higher scores revealing degrees of optimism or confidence, and lower scores showing pessimism.
The two samples were equally pessimistic about future interest rates, with the business sample scoring 40, and consumers scoring 39.
“This may not be surprising given the fact that the Canadian dollar recently reached a 30-year high at 93 cents US,” prompting predictions of higher interest rates to prevent higher inflation, said the Leger report.
The business and consumer samples were optimistic about falling unemployment, scoring 128 and 121 respectively.
The consumer sample was overwhelmingly positive about future household income and about the timing for buying major household items, with scores of 139 and 151 respectively.
But it scored a pessimistic 66 on the timing of buying a house.
On balance, consumer attitudes toward interest rates and home buying depressed their overall index score to 103-barely optimistic. Three months earlier, it was 113, “indicating that consumers in Alberta are a bit less optimistic about the economy than they were in February,” the Leger report commented.
The purpose of the Leger study was to “provide a barometer on how things may change in the future,” Tremblay said. “It could be used by business people as a tool to help them make business decisions.”
Wednesday, May 30, 2007
Average home sale tops $300,000 for first time
The average price of a resale home in Canada has moved above the $300,000 level for the first time ever.
Data from the Multiple Listing Service show that the average home sold for $305,542 in April, according to the Canadian Real Estate Association.
Average MLS price for resale home
Region Apr/07 Increase from Apr/06
B.C. $431,909 11.1%
Alberta $359,640 29.8%
Saskatchewan $163,811 23.8%
Manitoba $171,130 8.2%
Ontario $299,796 4.7%
Quebec $208,693 6.0%
Nova Scotia $191,076 6.6%
N.B. $139,138 3.6%
P.E.I. $135,019 7.5%
N.L. $142,497 1.1%
Yukon $250,255 23.9%
N.W.T. $328,904 15.0%
Canada $305,542 9.3%
Source: Canadian Real Estate Assn.
That's up 9.3 per cent (or $26,000) from the average sale a year ago.
New record highs were recorded in every province from Quebec westward, as well as in Nova Scotia.
The highest provincial average can still be found in British Columbia. Its $431,909 average is up 11.1 per cent year-over-year as the average resale price in Vancouver topped $564,000 last month.
Alberta's average resale price of $359,640 was up 29.8 per cent over the April 2006 figure — the biggest percentage increase among any province. Put another way, that means that the average homeowner in Alberta made $82,500 on paper simply by living in their home over the past year.
Data released earlier this month showed average resale prices in Calgary had reached $420,000 in April.
Saskatchewan posted a 23.8 per cent price hike to $163,811.
But Manitoba, Ontario, Quebec, and the Atlantic provinces reported much more modest, single-digit price increases.
"Anecdotal evidence suggests that resale housing activity in westernmarkets is being boosted by a shortage of lots and by buyers who are ready to move up but don’t want to wait for a newly constructed home to be completed," said Gregory Klump, chief economist for the Canadian Real Estate Association.
MLS stats also showed year-to-date sales at a record high. In the first four months of 2007, 172,421 homes were sold in Canada through the MLS system. That's up 6.7 per cent from the same period last year.
CBC News
Wednesday, May 23, 2007
Here today, gone tomorrow
Everyone is asking, 'What's yours worth?' But better questions might be: 'How'd this happen?' and 'Where will it stop?'
Alexandra Zabjek, The Edmonton Journal-Published: Friday, May 18, 2007
EDMONTON - A few weeks ago, a Vancouver investor called Jon Hall at the Realtors Association of Edmonton to ask where she could buy a house in this city for $140,000.
Hall laughed.
Anyone living in Edmonton these days would laugh, too. Housing statistics in this city are as well-known as they are mind-boggling.
RUNAWAY HOUSING MARKET: Other real estate agents put "sold" stickers on their signs, but Lee Bourgeois of Realty Executives, gets right to the point -- his properties aren't just sold, they're "GONE." Bourgeois has used gone signs for three years, but says the word is particularly accurate these days. "The moment I list them, they're sold -- within days."
In April, the average price of a single-family home soared to more than $413,000; less than a year ago, those homes sold for about $282,000. Condo prices have also skyrocketed, averaging $261,000.
It's a phenomenon that has everyone talking. Long-time residents shake their heads at what their property is worth, and scoff at the asking price for the house across the street. Newcomers and twenty-somethings nervously watch the prices and wonder how they'll ever break into the market.
If real estate watching has become a sport, two questions keep people on the edge of their seats: Just how high can prices go? And what might cause them to fall?
Analysts agree that 50 per cent increases can't last for long, but they can't identify a limit on housing prices. They do, however, offer some explanations, straight from Economics 101.
"What's largely been driving this is the very strong levels of inmigration to the province and into the city, to the point where the new home industry can't keep up," says Richard Goatcher, senior market analyst for the Canadian Mortgage and Housing Corporation's Edmonton office.
"You've got a new home industry that's running flat-out but it can't keep up."
Population growth is one of the "fundamental" drivers for rising house prices. Add strong levels of job creation and low mortgage rates, and "you've got a pretty heady brew for strong housing demand," Goatcher says.
Mortgage rates -- which have been steady at around six per cent for several years -- have fuelled demand for housing in Edmonton and around the world. During the last boom in the early 1980s, buyers faced fluctuating rates that sometimes rose into the 20-per-cent range. Today's homebuyers seem to expect single-digit rates.
But that creates a catch-22.
Low rates lure more people into the market, but that creates increased demand, which translates into higher prices.
A quick look around this city shows signs of the other "fundamentals:" Help-wanted signs dot store windows, signaling job creation and the potential for in-migration.
So what, then, will turn the tide on rising price increases?
"We're starting to outstrip income growth," says Goatcher. "There's going to be a whole segment of the population who are going to get priced out. That should put a brake on demand because they won't be able to afford the size of mortgage that's required to get in the door."
Compared to other Canadian cities, Edmonton is still a relatively affordable place to buy a house.
The Royal Bank of Canada, for example, calculates an "affordability measure" that looks at the percentage of median gross household income needed to own a home. The measure includes costs like mortgage payments, taxes and utility bills.
At the end of 2006, the affordability measure for a two-storey home in Edmonton was 37 per cent, according to Amy Goldbloom, an RBC Financial Group economist.
That's a significant jump from the 29-per-cent affordability measure at the end of 2005. And it pushes the cost of owning a home beyond the recommended 32 per cent of a household's annual gross income.
Edmonton might seem like a terrific deal compared to Calgary, where the 2006 affordability measure stood at 43 per cent, or Toronto at 49 per cent, or the alarming 74 per cent in Vancouver.
But most job-seekers aren't coming from those cities, Goatcher says. Migrants to Alberta have typically come from Manitoba and Saskatchewan. While Joe Vancouver might not blink at paying $500,000 for a starter home in Edmonton's suburbs, Jane Saskatchewan just might decide to stay home.
There is already evidence that a new demographic swing is taking place; in March, Statistics Canada reported that in the last quarter of 2006, more people moved to Saskatchewan from Alberta than the other way around.
At first glance, the slowing in-migration might seem like a solution to runaway housing costs. But it would cost this province one thing it desperately needs: labour.
Edmonton's home building industry is hooked on the horns of a dilemma.
"Our industry today is facing labour shortages never seen before, plus a demand way above what we can deliver," states the Edmonton region website of the Canadian Homebuilders' Association.
The labour shortage is driving up costs to the point where homebuilders are reluctant to take on new projects because they're unsure if they can recover their money, says Patrick Adams, vice-president of the association.
"If you sell a house today ... you have to deliver it in a year and you have to absorb all of the costs that go up during that period," he says.
"When it took us three or four months to build a house that wasn't a big deal. But now that it's taking us 11 or 12 months to build a house, it is a big deal."
Builders need more money up-front if they want to build first and sell later; they're also contending with a backlog of unserviced lots.
But despite the construction boom, Adams says homebuilders today are not making more money than in the past.
"You can say in absolute terms, there's more money and that's true," he says. "But everything we buy costs more, so you need more dollars to pay for it."
Adams' description of labour shortages and mounting costs raise concerns for the future of Alberta's housing market.
If housing prices are being driven more by capacity constraints than by "fundamentals," a slight decrease in demand could cause the prices to fall as quickly as they rose.
Once prices start to tumble, no one knows where they'll stop.
"The biggest concern for Alberta right now is simply the overheating," says Carl Gomez, vice-president of research for Bentall Capital, a full-service real estate firm. "When the economy grows so quickly, inflation is always a threat and when inflation picks up, it makes things much more difficult."
Statistics for April show Alberta continues to lead the country with an inflation rate of 5.5 per cent. In Edmonton, the inflation rate rose to five per cent, up from 4.6 per cent in March.
Record-breaking prices and spiraling costs can also create a frenzied environment for homebuyers, which can be just as dangerous for a housing market as labour shortages.
"(With overheating) there's this fear where people start to say, 'If I don't get into the market now, I'm never going to get in.' That's the sort of thing that causes the speculation to pick up," Gomez says.
Market demand that is based on speculation rather than fundamentals can lay the ground for a much feared real estate bubble, which forms when the rising cost of housing becomes unsustainable compared to income growth.
But bubbles are difficult to spot until after they burst. And at that point, it's too late -- prices have flattened or fallen and can leave some home owners carrying debt loads that are higher than the value of their homes.
In the United States, home buyers in places like San Diego and Las Vegas are reeling from burst bubbles. From about 2002 to 2005, house prices rose in ways that didn't correspond with population growth. A frenzied mentality grew as people took advantage of loose regulations in the mortgage industry.
"People were stretching themselves as much as they could to get into the housing market," Gomez says about the U.S. bubble. "People were saying that houses were always the best investment possible."
Despite 50-per-cent increases in Edmonton housing prices since last year, analysts are confident we're not in a bubble, maintaining that population growth and first-time movers to this province are fuelling much of the demand.
And this is Alberta, so there's something else bubbling in the background of real estate costs: oil.
Many analysts predict the rise and fall of Edmonton's housing prices will ultimately correspond with fluctuations in the energy market.
Goldbloom, from the RBC Financial Group, says her company predicts housing costs will start tapering this year, and particularly in 2008, alongside a cooling in Alberta's overall growth.
Whereas the province experienced 6.8-per-cent growth in 2006, it's expected to dip down towards 3.6 per cent in 2007 and 3.2 per cent in 2008.
Homeowners won't lose the equity they build up in their homes, but the wild increases are likely to end.
Gomez agrees that easing energy prices are the ultimate key to tempering the housing market.
In the meantime, industry experts urge people to step back and think about whether this is really the time to cruise the MLS listings.
"I'd like to think that people would spend as much time on buying a house as they do on buying a car, but unfortunately it's not that way," says Alan Silverstein, a real-estate lawyer who has written books about real-estate buying.
"People should be buying according to the fundamentals -- debt ratios and incomes. When you start tinkering with those things, then you have people who are going to be suffering down the road."
Experts say people who buy property as rush investments are most likely to take a hit if prices fall.
And Silverstein reminds buyers of a more basic truth.
"It's a place to plant some roots, to bring up your kids and to be part of a community," he says.
"Yes, (real estate) is an investment, but it's also a place to live."
IT'S NOT YOUR DAD'S MORTGAGE ANYMORE
Annual price comparison of an average single-family dwelling, as compiled by the Edmonton Real Estate Board.
- 1966: $13,752
- 1971: $22,227
- 1976: $58,064
- 1981: $91,438
- 1986: $74,306
- 1991: $107,076
- 1996: $109,042
- 2001: $133,441
- 2006: $250,915
- 2007: $340,886*
* Average of monthly house prices between January and April 2007.
Prices not adjusted for inflation
THE LAST BOOM
Some explanations from Mike Percy, dean of the School of Business, University of Alberta:
- What contributed to the last housing boom in Edmonton in the early '80s? Higher energy prices, investment and large net migration to the province.
- What was different then? That was a period of rampant inflation -- interest rates in the 20-per-cent range, inflation in the double-digit range.
- What led to the collapse? The National Energy Program, and interest rates were so high that it was impossible to carry and finance debt. This was the period of the walk-away, the $1 sale of a house. People couldn't afford to maintain their houses, so they would sell it for a dollar to get it off their credit record.
- What happened after the collapse? A tremendous number of bankruptcies ... . In Edmonton and Calgary you had see-through buildings, ghost buildings -- they were in place, but there were no tenants. You saw a net negative migration from the province. It was dramatic and it was sustained. It wasn't until the mid '90s that housing prices on average had reached their '81 level.
Is that kind likely to happen again? I think it's far less likely. The economy is inherently more stable ... and what's driving growth in Edmonton and Calgary is sustained capital investment in the oilsands. ... After living through '81/'82, I'm still reasonably optimistic that we'll get the policies right.
Alexandra Zabjek, The Edmonton Journal-Published: Friday, May 18, 2007
EDMONTON - A few weeks ago, a Vancouver investor called Jon Hall at the Realtors Association of Edmonton to ask where she could buy a house in this city for $140,000.
Hall laughed.
Anyone living in Edmonton these days would laugh, too. Housing statistics in this city are as well-known as they are mind-boggling.
RUNAWAY HOUSING MARKET: Other real estate agents put "sold" stickers on their signs, but Lee Bourgeois of Realty Executives, gets right to the point -- his properties aren't just sold, they're "GONE." Bourgeois has used gone signs for three years, but says the word is particularly accurate these days. "The moment I list them, they're sold -- within days."
In April, the average price of a single-family home soared to more than $413,000; less than a year ago, those homes sold for about $282,000. Condo prices have also skyrocketed, averaging $261,000.
It's a phenomenon that has everyone talking. Long-time residents shake their heads at what their property is worth, and scoff at the asking price for the house across the street. Newcomers and twenty-somethings nervously watch the prices and wonder how they'll ever break into the market.
If real estate watching has become a sport, two questions keep people on the edge of their seats: Just how high can prices go? And what might cause them to fall?
Analysts agree that 50 per cent increases can't last for long, but they can't identify a limit on housing prices. They do, however, offer some explanations, straight from Economics 101.
"What's largely been driving this is the very strong levels of inmigration to the province and into the city, to the point where the new home industry can't keep up," says Richard Goatcher, senior market analyst for the Canadian Mortgage and Housing Corporation's Edmonton office.
"You've got a new home industry that's running flat-out but it can't keep up."
Population growth is one of the "fundamental" drivers for rising house prices. Add strong levels of job creation and low mortgage rates, and "you've got a pretty heady brew for strong housing demand," Goatcher says.
Mortgage rates -- which have been steady at around six per cent for several years -- have fuelled demand for housing in Edmonton and around the world. During the last boom in the early 1980s, buyers faced fluctuating rates that sometimes rose into the 20-per-cent range. Today's homebuyers seem to expect single-digit rates.
But that creates a catch-22.
Low rates lure more people into the market, but that creates increased demand, which translates into higher prices.
A quick look around this city shows signs of the other "fundamentals:" Help-wanted signs dot store windows, signaling job creation and the potential for in-migration.
So what, then, will turn the tide on rising price increases?
"We're starting to outstrip income growth," says Goatcher. "There's going to be a whole segment of the population who are going to get priced out. That should put a brake on demand because they won't be able to afford the size of mortgage that's required to get in the door."
Compared to other Canadian cities, Edmonton is still a relatively affordable place to buy a house.
The Royal Bank of Canada, for example, calculates an "affordability measure" that looks at the percentage of median gross household income needed to own a home. The measure includes costs like mortgage payments, taxes and utility bills.
At the end of 2006, the affordability measure for a two-storey home in Edmonton was 37 per cent, according to Amy Goldbloom, an RBC Financial Group economist.
That's a significant jump from the 29-per-cent affordability measure at the end of 2005. And it pushes the cost of owning a home beyond the recommended 32 per cent of a household's annual gross income.
Edmonton might seem like a terrific deal compared to Calgary, where the 2006 affordability measure stood at 43 per cent, or Toronto at 49 per cent, or the alarming 74 per cent in Vancouver.
But most job-seekers aren't coming from those cities, Goatcher says. Migrants to Alberta have typically come from Manitoba and Saskatchewan. While Joe Vancouver might not blink at paying $500,000 for a starter home in Edmonton's suburbs, Jane Saskatchewan just might decide to stay home.
There is already evidence that a new demographic swing is taking place; in March, Statistics Canada reported that in the last quarter of 2006, more people moved to Saskatchewan from Alberta than the other way around.
At first glance, the slowing in-migration might seem like a solution to runaway housing costs. But it would cost this province one thing it desperately needs: labour.
Edmonton's home building industry is hooked on the horns of a dilemma.
"Our industry today is facing labour shortages never seen before, plus a demand way above what we can deliver," states the Edmonton region website of the Canadian Homebuilders' Association.
The labour shortage is driving up costs to the point where homebuilders are reluctant to take on new projects because they're unsure if they can recover their money, says Patrick Adams, vice-president of the association.
"If you sell a house today ... you have to deliver it in a year and you have to absorb all of the costs that go up during that period," he says.
"When it took us three or four months to build a house that wasn't a big deal. But now that it's taking us 11 or 12 months to build a house, it is a big deal."
Builders need more money up-front if they want to build first and sell later; they're also contending with a backlog of unserviced lots.
But despite the construction boom, Adams says homebuilders today are not making more money than in the past.
"You can say in absolute terms, there's more money and that's true," he says. "But everything we buy costs more, so you need more dollars to pay for it."
Adams' description of labour shortages and mounting costs raise concerns for the future of Alberta's housing market.
If housing prices are being driven more by capacity constraints than by "fundamentals," a slight decrease in demand could cause the prices to fall as quickly as they rose.
Once prices start to tumble, no one knows where they'll stop.
"The biggest concern for Alberta right now is simply the overheating," says Carl Gomez, vice-president of research for Bentall Capital, a full-service real estate firm. "When the economy grows so quickly, inflation is always a threat and when inflation picks up, it makes things much more difficult."
Statistics for April show Alberta continues to lead the country with an inflation rate of 5.5 per cent. In Edmonton, the inflation rate rose to five per cent, up from 4.6 per cent in March.
Record-breaking prices and spiraling costs can also create a frenzied environment for homebuyers, which can be just as dangerous for a housing market as labour shortages.
"(With overheating) there's this fear where people start to say, 'If I don't get into the market now, I'm never going to get in.' That's the sort of thing that causes the speculation to pick up," Gomez says.
Market demand that is based on speculation rather than fundamentals can lay the ground for a much feared real estate bubble, which forms when the rising cost of housing becomes unsustainable compared to income growth.
But bubbles are difficult to spot until after they burst. And at that point, it's too late -- prices have flattened or fallen and can leave some home owners carrying debt loads that are higher than the value of their homes.
In the United States, home buyers in places like San Diego and Las Vegas are reeling from burst bubbles. From about 2002 to 2005, house prices rose in ways that didn't correspond with population growth. A frenzied mentality grew as people took advantage of loose regulations in the mortgage industry.
"People were stretching themselves as much as they could to get into the housing market," Gomez says about the U.S. bubble. "People were saying that houses were always the best investment possible."
Despite 50-per-cent increases in Edmonton housing prices since last year, analysts are confident we're not in a bubble, maintaining that population growth and first-time movers to this province are fuelling much of the demand.
And this is Alberta, so there's something else bubbling in the background of real estate costs: oil.
Many analysts predict the rise and fall of Edmonton's housing prices will ultimately correspond with fluctuations in the energy market.
Goldbloom, from the RBC Financial Group, says her company predicts housing costs will start tapering this year, and particularly in 2008, alongside a cooling in Alberta's overall growth.
Whereas the province experienced 6.8-per-cent growth in 2006, it's expected to dip down towards 3.6 per cent in 2007 and 3.2 per cent in 2008.
Homeowners won't lose the equity they build up in their homes, but the wild increases are likely to end.
Gomez agrees that easing energy prices are the ultimate key to tempering the housing market.
In the meantime, industry experts urge people to step back and think about whether this is really the time to cruise the MLS listings.
"I'd like to think that people would spend as much time on buying a house as they do on buying a car, but unfortunately it's not that way," says Alan Silverstein, a real-estate lawyer who has written books about real-estate buying.
"People should be buying according to the fundamentals -- debt ratios and incomes. When you start tinkering with those things, then you have people who are going to be suffering down the road."
Experts say people who buy property as rush investments are most likely to take a hit if prices fall.
And Silverstein reminds buyers of a more basic truth.
"It's a place to plant some roots, to bring up your kids and to be part of a community," he says.
"Yes, (real estate) is an investment, but it's also a place to live."
IT'S NOT YOUR DAD'S MORTGAGE ANYMORE
Annual price comparison of an average single-family dwelling, as compiled by the Edmonton Real Estate Board.
- 1966: $13,752
- 1971: $22,227
- 1976: $58,064
- 1981: $91,438
- 1986: $74,306
- 1991: $107,076
- 1996: $109,042
- 2001: $133,441
- 2006: $250,915
- 2007: $340,886*
* Average of monthly house prices between January and April 2007.
Prices not adjusted for inflation
THE LAST BOOM
Some explanations from Mike Percy, dean of the School of Business, University of Alberta:
- What contributed to the last housing boom in Edmonton in the early '80s? Higher energy prices, investment and large net migration to the province.
- What was different then? That was a period of rampant inflation -- interest rates in the 20-per-cent range, inflation in the double-digit range.
- What led to the collapse? The National Energy Program, and interest rates were so high that it was impossible to carry and finance debt. This was the period of the walk-away, the $1 sale of a house. People couldn't afford to maintain their houses, so they would sell it for a dollar to get it off their credit record.
- What happened after the collapse? A tremendous number of bankruptcies ... . In Edmonton and Calgary you had see-through buildings, ghost buildings -- they were in place, but there were no tenants. You saw a net negative migration from the province. It was dramatic and it was sustained. It wasn't until the mid '90s that housing prices on average had reached their '81 level.
Is that kind likely to happen again? I think it's far less likely. The economy is inherently more stable ... and what's driving growth in Edmonton and Calgary is sustained capital investment in the oilsands. ... After living through '81/'82, I'm still reasonably optimistic that we'll get the policies right.
Jump in listings dampens rapid price increases
But home costs in catch-up market staying strong
David Finlayson – Journal Business Writer - Edmonton Journal - May 3, 2007.
House price increases slowed in April as more inventory came on the market, but don’t expect them to actually drop in the coming months, Edmonton Real Estate Board president Carolyn Pratt said Wednesday.
“We have said before that the Edmonton market is just catching up to market increases that appeared in other markets one or two years ago.
“Price increases may moderate slightly as the market returns to pre-boom levels but I do not anticipate that actual prices will decrease. There is a strong demand for housing and market value is an elusive target.”
More than 30 per cent of last year’s home sales were in the second “moving” quarter and Pratt expect that to continue despite the price increases.
Single family homes sold through Multiple Listing Service averaged $413,488 in April – 3.77 per cent higher than March, when prices had increased 6.7 per cent over February.
The average price a year ago was $265,557. Condominiums jumped 5.8 percent after a slight drop in March to average $261,044, while duplex and row houses prices were up 5.49 per cent to $341,083.
There were 3,232 residences listed, 2,441 sold, and inventory increased to 3,151 units.
The average time on market was 22 days.
The southwest continued to boast the highest single family home prices at $534,760, up from $368,846 in April last year.
St. Albert was at $491,616, up from $308,625, while west end prices were $479,477, up from $294,890.
The least expensive areas were central at $285,347, northeast at $338,973, and Stony Plain, $358,182.
Total sales, including residential and commercial, were $982 million, pushing the year to date numbers to more than $3 billion.
Sales of 48 commercial properties totaled $34.8 million, compared with 45 properties valued at $15.7 million in April 2006.
David Finlayson – Journal Business Writer - Edmonton Journal - May 3, 2007.
House price increases slowed in April as more inventory came on the market, but don’t expect them to actually drop in the coming months, Edmonton Real Estate Board president Carolyn Pratt said Wednesday.
“We have said before that the Edmonton market is just catching up to market increases that appeared in other markets one or two years ago.
“Price increases may moderate slightly as the market returns to pre-boom levels but I do not anticipate that actual prices will decrease. There is a strong demand for housing and market value is an elusive target.”
More than 30 per cent of last year’s home sales were in the second “moving” quarter and Pratt expect that to continue despite the price increases.
Single family homes sold through Multiple Listing Service averaged $413,488 in April – 3.77 per cent higher than March, when prices had increased 6.7 per cent over February.
The average price a year ago was $265,557. Condominiums jumped 5.8 percent after a slight drop in March to average $261,044, while duplex and row houses prices were up 5.49 per cent to $341,083.
There were 3,232 residences listed, 2,441 sold, and inventory increased to 3,151 units.
The average time on market was 22 days.
The southwest continued to boast the highest single family home prices at $534,760, up from $368,846 in April last year.
St. Albert was at $491,616, up from $308,625, while west end prices were $479,477, up from $294,890.
The least expensive areas were central at $285,347, northeast at $338,973, and Stony Plain, $358,182.
Total sales, including residential and commercial, were $982 million, pushing the year to date numbers to more than $3 billion.
Sales of 48 commercial properties totaled $34.8 million, compared with 45 properties valued at $15.7 million in April 2006.
Busy Spring Expected Despite Price Increases
Edmonton, May 2, 2007
The REALTORS’® busy season is April, May and June as home buyers plan for moves over the summer. Last year over 30% of all home sales in the year took place in the second quarter. REALTORS® with the Edmonton Real Estate Board expect that trend to continue despite steady price increases.
“The average price for a single family home continues to increase in a very active market,” said Carolyn Pratt, president of the EREB. April 2007 residential sales were 20% higher than the previous April. “There is a strong demand for housing and market value is an elusive target. Our members must constantly balance the buyer and seller requirements to ensure good value in each transaction.”
The rate of increase for single family homes sold through the Edmonton Multiple Listing Service® (MLS®) slowed in April from 6.14% to just 3.77%. That raised the average price to $413,488 in April. Condominium prices leapt ahead after a slight drop in March. Average condo prices increased 5.81% to $261,044. Duplex and row house prices were up 5.49% to $341,083.
The average residential price in April was $344,137 which is 5.8% higher than the March figure of $325,339. There were 3,232 residences listed in April with sales of 2,441. The sales-to-listing ratio was 76%, unchanged from March. Average days-on-market was just 22 days and inventory increased to 3,151 units.
“We have said before that the Edmonton market is just catching up to market increases that appeared in other major markets one or two years ago,” said Pratt. She noted that there are more homes being listed than last year at this time and inventory is growing slowly. “Price increases may moderate slightly as the market returns to pre-boom levels but I do not anticipate that actual prices will decrease.”
Total Board sales were over $3 billion year-to-date with sales of $982 million in April. There are 3,139 REALTORS® cooperating to manage 2,758 Board sales in April.
April 2007 activity Record * % change from April 2006
Total MLS® sales this month 2,758* 19.9%
Value of total MLS® sales - month $982 Million* 84.5%
Value of total MLS® sales - year $3.12 Billion* 81.9%
Residential¹ sales this month 2,441* 20.5%
Residential average price $344,137* 51.7%
SFD² average selling price - month $413,488* 55.7%
SFD² median³ selling price $397,208* 55.8%
Condo average selling price $261,044* 60.6%
¹. Residential includes SFD, condos and duplex/row houses. ². Single Family Dwelling ³. The middle figure in a list of all sales prices
* Average prices indicate market trends only. They do not reflect actual prices, which may vary.
Edmonton Real Estate Board
The REALTORS’® busy season is April, May and June as home buyers plan for moves over the summer. Last year over 30% of all home sales in the year took place in the second quarter. REALTORS® with the Edmonton Real Estate Board expect that trend to continue despite steady price increases.
“The average price for a single family home continues to increase in a very active market,” said Carolyn Pratt, president of the EREB. April 2007 residential sales were 20% higher than the previous April. “There is a strong demand for housing and market value is an elusive target. Our members must constantly balance the buyer and seller requirements to ensure good value in each transaction.”
The rate of increase for single family homes sold through the Edmonton Multiple Listing Service® (MLS®) slowed in April from 6.14% to just 3.77%. That raised the average price to $413,488 in April. Condominium prices leapt ahead after a slight drop in March. Average condo prices increased 5.81% to $261,044. Duplex and row house prices were up 5.49% to $341,083.
The average residential price in April was $344,137 which is 5.8% higher than the March figure of $325,339. There were 3,232 residences listed in April with sales of 2,441. The sales-to-listing ratio was 76%, unchanged from March. Average days-on-market was just 22 days and inventory increased to 3,151 units.
“We have said before that the Edmonton market is just catching up to market increases that appeared in other major markets one or two years ago,” said Pratt. She noted that there are more homes being listed than last year at this time and inventory is growing slowly. “Price increases may moderate slightly as the market returns to pre-boom levels but I do not anticipate that actual prices will decrease.”
Total Board sales were over $3 billion year-to-date with sales of $982 million in April. There are 3,139 REALTORS® cooperating to manage 2,758 Board sales in April.
April 2007 activity Record * % change from April 2006
Total MLS® sales this month 2,758* 19.9%
Value of total MLS® sales - month $982 Million* 84.5%
Value of total MLS® sales - year $3.12 Billion* 81.9%
Residential¹ sales this month 2,441* 20.5%
Residential average price $344,137* 51.7%
SFD² average selling price - month $413,488* 55.7%
SFD² median³ selling price $397,208* 55.8%
Condo average selling price $261,044* 60.6%
¹. Residential includes SFD, condos and duplex/row houses. ². Single Family Dwelling ³. The middle figure in a list of all sales prices
* Average prices indicate market trends only. They do not reflect actual prices, which may vary.
Edmonton Real Estate Board
Friday, April 20, 2007
2006 Pricing Trends Continue into First Quarter 2007
Edmonton, April 4, 2007: The Edmonton Real Estate Board announced today that the average* price of a single family dwelling (SFD) in the Edmonton area increased over 6% in March. Single family homes have increased 16.5% this quarter to continue a trend that started in 2006. The average selling price for the 1,263 SFDs sold in March was just under $400,000.
“It is clear that housing prices have not yet peaked in the Edmonton area,” said Carolyn Pratt, president of the EREB. “The spring season is always very active for REALTORS® and we do not anticipate that the pace of price increases will slow until early summer.”
The SFD average price was $398,476 in March, up from $375,412 in February. A slight drop in condominium prices meant that the average price for all types of housing was up just 1.25%. Last March the average residential price was $220,124 and this March it was $325,339: an increase of 47.8% over the past 12 months. Condo prices dropped back slightly (-0.22%) from $247,266 in February to $246,719 in March. Condo prices are much more volatile than single family dwellings; dropping suddenly but rebounding the next month.
“There are lots of stories about the slowdown or reversal of certain American housing markets,” said Pratt. “But all markets are local and Edmonton is unique in that the fundamentals of low interest rates, strong demand, low inventory, steady in-migration and high consumer confidence are still driving our local economy.” The inventory of available housing (2,574 residences at the end of March) has slowly increased from a low point last May (1,857 units) but is just one month supply. There were 2,359 residential sales in March with 3,091 new listings.
The strength of the Edmonton market is also shown by the commercial MLS® sales. The value of apartment buildings sold in March 2007 quadrupled the previous March. The total value of commercial sales in the first quarter was more than double the value at the same point in each of the last three years. Total commercial sales for March were $33.2 million and $101.9 million for the first three months combined.
Prices in four surrounding communities were higher than the market average. Sherwood Park, St. Albert, Fort Saskatchewan and Spruce Grove all had average SFD prices over $400,000. Morinville had an average price of $320,600 down from $338,442 in February.
* Average prices indicate market trends only. They do not reflect actual prices, which vary from house to house and area to area.
“It is clear that housing prices have not yet peaked in the Edmonton area,” said Carolyn Pratt, president of the EREB. “The spring season is always very active for REALTORS® and we do not anticipate that the pace of price increases will slow until early summer.”
The SFD average price was $398,476 in March, up from $375,412 in February. A slight drop in condominium prices meant that the average price for all types of housing was up just 1.25%. Last March the average residential price was $220,124 and this March it was $325,339: an increase of 47.8% over the past 12 months. Condo prices dropped back slightly (-0.22%) from $247,266 in February to $246,719 in March. Condo prices are much more volatile than single family dwellings; dropping suddenly but rebounding the next month.
“There are lots of stories about the slowdown or reversal of certain American housing markets,” said Pratt. “But all markets are local and Edmonton is unique in that the fundamentals of low interest rates, strong demand, low inventory, steady in-migration and high consumer confidence are still driving our local economy.” The inventory of available housing (2,574 residences at the end of March) has slowly increased from a low point last May (1,857 units) but is just one month supply. There were 2,359 residential sales in March with 3,091 new listings.
The strength of the Edmonton market is also shown by the commercial MLS® sales. The value of apartment buildings sold in March 2007 quadrupled the previous March. The total value of commercial sales in the first quarter was more than double the value at the same point in each of the last three years. Total commercial sales for March were $33.2 million and $101.9 million for the first three months combined.
Prices in four surrounding communities were higher than the market average. Sherwood Park, St. Albert, Fort Saskatchewan and Spruce Grove all had average SFD prices over $400,000. Morinville had an average price of $320,600 down from $338,442 in February.
* Average prices indicate market trends only. They do not reflect actual prices, which vary from house to house and area to area.
Housing Starts Lower in First Quarter
OTTAWA, April 11, 2007 — The seasonally adjusted annual rate1 of housing starts was 210,900 units in March, up from 196,000 units in February, according to Canada Mortgage and Housing Corporation (CMHC).
“Both multiple and single starts regained some ground in March. Nevertheless, housing starts are gradually trending lower and were down more than 10 per cent in the first quarter of 2007 compared to a year ago,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “This downward trend is consistent with our view that housing starts in 2007 will be lower than in 2006.”
March’s seasonally adjusted annual rate of urban starts was 177,900 units, up 9.1 per cent from February. Urban multiple starts rose 12.0 per cent to 92,700 units in March, while single starts increased 6.2 per cent to 85,200 units.
Seasonally adjusted urban starts in March increased in all regions except the Atlantic. The Prairies led the way with a 26.2 per cent increase, followed by British Columbia at 11.3 per cent and Quebec with 10.5 per cent. In Ontario, urban starts remained relatively flat. Urban multiple starts increased in all regions except in the Atlantic and Ontario, while urban single starts were up in all regions.
Rural starts were estimated at a seasonally adjusted annual rate of 33,000 units in March.
Actual starts, in rural and urban areas combined, were down an estimated 8.8 per cent in the first quarter of 2007 compared to the same period in 2006. Actual starts in urban areas alone were down an estimated 10.3 per cent. Actual single starts in urban areas were 16.3 per cent lower than they were a year earlier, while actual urban multiple starts were down 5.3 per cent.
Canada Mortgage and Housing Corporation (CMHC) www.cmhc.ca
“Both multiple and single starts regained some ground in March. Nevertheless, housing starts are gradually trending lower and were down more than 10 per cent in the first quarter of 2007 compared to a year ago,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “This downward trend is consistent with our view that housing starts in 2007 will be lower than in 2006.”
March’s seasonally adjusted annual rate of urban starts was 177,900 units, up 9.1 per cent from February. Urban multiple starts rose 12.0 per cent to 92,700 units in March, while single starts increased 6.2 per cent to 85,200 units.
Seasonally adjusted urban starts in March increased in all regions except the Atlantic. The Prairies led the way with a 26.2 per cent increase, followed by British Columbia at 11.3 per cent and Quebec with 10.5 per cent. In Ontario, urban starts remained relatively flat. Urban multiple starts increased in all regions except in the Atlantic and Ontario, while urban single starts were up in all regions.
Rural starts were estimated at a seasonally adjusted annual rate of 33,000 units in March.
Actual starts, in rural and urban areas combined, were down an estimated 8.8 per cent in the first quarter of 2007 compared to the same period in 2006. Actual starts in urban areas alone were down an estimated 10.3 per cent. Actual single starts in urban areas were 16.3 per cent lower than they were a year earlier, while actual urban multiple starts were down 5.3 per cent.
Canada Mortgage and Housing Corporation (CMHC) www.cmhc.ca
Tuesday, March 13, 2007
Housing starts slow in February after January surge
New home prices in January show year-over-year gains above 10 per cent
Canadian housing starts slowed by about 21 per cent in February, failing to keep up a pace set in a mild January.
The figure — reported Thursday by the Canada Mortgage and Housing Corp. — may be a blip in an otherwise strong Canadian housing market, exempt so far from some of the credit headaches plaguing the U.S. market.
A separate report by Statistics Canada on Thursday showed prices of new homes rising moderately across most of the country between December and January, maintaining year-over-year increases of more than 10 per cent.
The biggest jumps were were in Edmonton and Calgary, where the 12-month gains exceeded 40 per cent.
The CMHC report shows builders beginning work on houses and apartments in February at a rate that would yield about 196,200 units a year, down from 248,500 in January. The figures are statistically adjusted to remove normal seasonal variations.
Even so, the federal agency expects the year to turn out better than its report suggests.
"Following the unusually strong surge in construction activity in January, which was partly attributable to the unseasonably warm weather, housing starts in February returned to levels more in line with expectations," CMHC economist Bob Dugan said in a statement.
"Housing starts are likely to increase in the coming months and are forecasted to reach 209,500 units in 2007."
BMO Capital Markets economist Bart Melek said the 21-per-cent drop was much larger than expected but was not cause for alarm in a chilly Feburary after a January thaw.
In a commentary on Thursday, Melek called it "a giving-back of borrowed activity" that "does not point to a deepening downward trend."
In the CMHC report, multiple-family projects in urban areas showed some of the sharpest declines in February, down 33 per cent from January on a seasonally adjusted basis There were declines in all regions except in the Atlantic, which showed a 15.6-per-cent increase.
Urban single-family home starts fell 12.6 per cent amid slowdowns everywhere but British Columbia, where the rate was unchanged from January.
The Statistics Canada report on contractors' selling prices showed a January-to-January national increase of 10.1 per cent, down from a December-to-December figure of 10.7 per cent.
The national increase from December to January was 0.3 per cent.
Edmonton's prices showed a one-month gain of 1.6 per cent and a 12-month gain of 40.2 per cent. Calgary's figures were 0.8 per cent and 40.8 per cent.
Thursday, March 8, 2007
City set to lead house prices
'Sizeable' double-digit increases likely again, housing study predicts
Ron Chalmers
The Edmonton Journal
Thursday, March 08, 2007
EDMONTON - Edmonton will see the biggest jump in housing prices in Canada this year, according to a major Scotiabank study released Wednesday.
"Edmonton is the only city to meet all three criteria of strong demand, tight supply and affordability," said Scotiabank economist Adrienne Warren, who studied 23 Canadian cities.
"This powerful combination will sustain a market-leading pace of construction, sales and price increases."
The Edmonton area will see the largest price increases of any major market, Warren said, predicting "double-digit increases below last year, but still sizeable."
By the end of December 2006, Edmonton prices were up 48.7 per cent from December 2005.
The Edmonton Real Estate Board predicted price growth would slow to 15 per cent in 2007.
But after only two months, prices are already up almost 10 per cent over last year, to an average of $321,307 for all housing and $375,412 for single-family homes.
Housing demand in Edmonton is sustained by Canada's second-highest rate of combined population and employment growth, trailing only Calgary.
She rated Edmonton's housing supply as tighter than any other metropolitan area of more than one million people.
Rising prices are "a major concern," said Richard Nutter, a retired professor of social work who works with the Greater Edmonton Alliance to organize renters threatened by conversions of low-rent apartments to condominiums.
Middle-income families still can buy homes, but "there is a real shortage of affordable housing in Edmonton" for people on low incomes, he said.
Warren measured affordability by comparing mortgage payments to rents, and found that owning a home in Edmonton costs on average $590 more per month.
The gap is $899 in Toronto, $952 in Calgary and $1,794 in Vancouver. On balance, Warren rated Edmonton homes as relatively affordable.
Nutter sees little affordability for the tenants of 504 Strathearn Heights apartments that may be demolished and replaced by 1,750 condo units.
"I met one woman who has lived there for 50 years. A substantial number of tenants have no place to go."
The City of Edmonton has a policy that includes a vague requirement that five per cent of units in new developments be reserved for affordable housing.
"The Greater Edmonton Alliance would like to expand that to 10 or 15 per cent," Nutter said. "Twenty per cent of families are living below the low-income cut-off."
Warren's prediction of strong housing starts sounds right to Reza Nasseri, CEO of Landmark Group of Builders.
"We certainly have felt it already," he said. "In the last three or four months of last year, there was a pause by purchasers and by builders -- because there was no land available."
But sales and starts have been brisk since January, and "a lot of the land that was being serviced last year will be available in June and July," he said.
"We see sales continuing at least as good as last year."
Warren called Canada's housing market "the rabbit that just keeps on going and going," while in the U.S., housing starts are down roughly 25 per cent and resales by 10 per cent in the past year, and prices "are posting significant declines" in many markets in the western and southern states.
Canada is unlikely to follow the U. S. because "speculative investing has been less active, overbuilding less prevalent, and high-risk lending less widespread," she wrote.
Ron Chalmers
The Edmonton Journal
Thursday, March 08, 2007
EDMONTON - Edmonton will see the biggest jump in housing prices in Canada this year, according to a major Scotiabank study released Wednesday.
"Edmonton is the only city to meet all three criteria of strong demand, tight supply and affordability," said Scotiabank economist Adrienne Warren, who studied 23 Canadian cities.
"This powerful combination will sustain a market-leading pace of construction, sales and price increases."
The Edmonton area will see the largest price increases of any major market, Warren said, predicting "double-digit increases below last year, but still sizeable."
By the end of December 2006, Edmonton prices were up 48.7 per cent from December 2005.
The Edmonton Real Estate Board predicted price growth would slow to 15 per cent in 2007.
But after only two months, prices are already up almost 10 per cent over last year, to an average of $321,307 for all housing and $375,412 for single-family homes.
Housing demand in Edmonton is sustained by Canada's second-highest rate of combined population and employment growth, trailing only Calgary.
She rated Edmonton's housing supply as tighter than any other metropolitan area of more than one million people.
Rising prices are "a major concern," said Richard Nutter, a retired professor of social work who works with the Greater Edmonton Alliance to organize renters threatened by conversions of low-rent apartments to condominiums.
Middle-income families still can buy homes, but "there is a real shortage of affordable housing in Edmonton" for people on low incomes, he said.
Warren measured affordability by comparing mortgage payments to rents, and found that owning a home in Edmonton costs on average $590 more per month.
The gap is $899 in Toronto, $952 in Calgary and $1,794 in Vancouver. On balance, Warren rated Edmonton homes as relatively affordable.
Nutter sees little affordability for the tenants of 504 Strathearn Heights apartments that may be demolished and replaced by 1,750 condo units.
"I met one woman who has lived there for 50 years. A substantial number of tenants have no place to go."
The City of Edmonton has a policy that includes a vague requirement that five per cent of units in new developments be reserved for affordable housing.
"The Greater Edmonton Alliance would like to expand that to 10 or 15 per cent," Nutter said. "Twenty per cent of families are living below the low-income cut-off."
Warren's prediction of strong housing starts sounds right to Reza Nasseri, CEO of Landmark Group of Builders.
"We certainly have felt it already," he said. "In the last three or four months of last year, there was a pause by purchasers and by builders -- because there was no land available."
But sales and starts have been brisk since January, and "a lot of the land that was being serviced last year will be available in June and July," he said.
"We see sales continuing at least as good as last year."
Warren called Canada's housing market "the rabbit that just keeps on going and going," while in the U.S., housing starts are down roughly 25 per cent and resales by 10 per cent in the past year, and prices "are posting significant declines" in many markets in the western and southern states.
Canada is unlikely to follow the U. S. because "speculative investing has been less active, overbuilding less prevalent, and high-risk lending less widespread," she wrote.
Wednesday, February 7, 2007
St. Albert house prices continue upward trend
St. Albert house prices continue upward trend
Median price for all city homes in January was $365K
By Susan JonesStaff Writer
House prices continue to climb in St. Albert in a market that reflects Edmonton’s buoyant economy.
"We’re taken aback because we forecast an increase in prices of 15 per cent in Edmonton for the entire year. But already from December 2006, prices are up 4.5 per cent and that’s in just one month," said Jon Hall, spokesman for the Edmonton Real Estate Board.
Historically houses are harder to sell in the first cold weeks of a new year, but this January in St. Albert a total of 87 properties were sold, compared to 62 homes in December. On average houses here sold in 28 days compared to 33 days in Edmonton.
The Edmonton region’s market is more robust than in Calgary, where prices have dropped by 1.5 per cent each month since November.
"Edmonton’s is a unique market. I think Calgary has reached the saturation point and Calgary prices are unsustainable. Calgary’s inventory of houses for sale is way up but there is no sign of that happening here," Hall said.
Hall used Canadian Real Estate Agency figures from November to explain his belief that Edmonton-area homes are still relatively inexpensive compared to other areas of the province and the country. In November, the average selling price for houses in St. Albert was $14,000 less than in Calgary. For the same month, average house prices in Edmonton were $79,000 less than Calgary’s average of $361,600.
"Our market is undervalued and our prices are still below the provincial average," said Hall.
Though price increases in St. Albert remained steady, people are still buying, Hall pointed out, and in January they had a variety of homes to choose from.
The lowest priced property in St. Albert was a condo that sold for $172,000 and the highest priced home was a bungalow that sold for $745,300. A total of 28 condos were sold, while 50 single family homes changed hands. Three bi-levels sold for $314,900, $382,000 and $385,000 respectively. The median selling price for all St. Albert house types was $365,000.
"There is still a range of houses for sale in St. Albert under $200,000 but there are top-end properties as well and obviously people are still buying and still have the capacity to buy. St. Albert is in step with the rest of the Edmonton market and prices haven’t crested yet by any sense," Hall said.
January Price Range
Sold St. Albert Homes
$172,000---------------lowest
$365,000--------------median
$745,300--------------highest
Article from the St. Albert Gazette - February 7, 2007
Tuesday, February 6, 2007
High prices may depress house demand
But more workers arriving in Alberta will keep cost of homes climbing, says CMHC
David Finlayson
The Edmonton Journal; with files from Canadian Press
Tuesday, February 06, 2007
EDMONTON - The vibrant job market will continue to attract workers to Edmonton, but the "dark cloud" of escalating prices will temper housing demand over the next two years, Canada Mortgage and Housing Corp. said Monday.
New home starts are expected to decline from 14,970 last year to 13,500 by 2008, and resales will finally pull back this year after six successive records, the agency said.
They will drop from 74,000 last year to 69,500 by 2008, while the average price will rise 13 per cent this year and seven per cent next year after an astronomical 29-per-cent jump in 2006.
"Though the majority of economic indicators point to persistent strength in Alberta's housing markets, strong price gains in the new and resale sectors remain a dark cloud on the horizon," CMHC said.
The outlook is for robust economic growth through 2008, but high housing costs and other provinces' efforts to retain workers will push the record net in-migration of 86,000 last year down to 60,000 by 2008, the report added.
Low vacancy rates and strong demand by people priced out of the single-family home market will keep Edmonton rents rising this year, with the average rent for all units hitting $841 a month by October.
Most multi-family housing starts last year were condominium units, further pressuring the apartment market, CMHC said.
According to Edmonton Real Estate Board figures released Monday, the average single-family home price in Edmonton was $357,325 in January, up 4.5 per cent from December and 51.9 per cent higher than January last year.
Condominium prices rose a more moderate 2.5 per cent to $233,175, but were still 74.3 per cent higher than 2006, while duplex and rowhouse prices actually went down $1,030 last month. "Sales are typically sluggish at the beginning of the year, but realtors have been kept busy in January with increased sales and higher average prices," EREB president Carolyn Pratt said.
January residential sales jumped 45 per cent from December and were up 32 per cent over January 2006. There were 1,554 residential sales last month with 2,043 listings.
The total value of MLS residential sales was $472 million, double the same month last year, with homes spending an average 33 days on the market compared with 30 days in December. Strong commercial and rural sales drove total board sales up 107 per cent over the same month last year.
Economists are divided on whether the house price bubble is ready to burst."Some people do think that those price gains are going to be unwound fairly quickly in the spring time," said Gregor Bush, an economist with the Bank of Montreal.
Others say the global glut in savings and liquidity will keep long-term interest rates low and act as a cushion for the housing market.
"We're seeing a slow deceleration in housing activity, but still with activity at fairly high levels, and we expect that to continue through 2007 as starts come off their very robust pace of 2005 and 2006," Bush said.
"That's still very high by historical standards."
David Finlayson
The Edmonton Journal; with files from Canadian Press
Tuesday, February 06, 2007
EDMONTON - The vibrant job market will continue to attract workers to Edmonton, but the "dark cloud" of escalating prices will temper housing demand over the next two years, Canada Mortgage and Housing Corp. said Monday.
New home starts are expected to decline from 14,970 last year to 13,500 by 2008, and resales will finally pull back this year after six successive records, the agency said.
They will drop from 74,000 last year to 69,500 by 2008, while the average price will rise 13 per cent this year and seven per cent next year after an astronomical 29-per-cent jump in 2006.
"Though the majority of economic indicators point to persistent strength in Alberta's housing markets, strong price gains in the new and resale sectors remain a dark cloud on the horizon," CMHC said.
The outlook is for robust economic growth through 2008, but high housing costs and other provinces' efforts to retain workers will push the record net in-migration of 86,000 last year down to 60,000 by 2008, the report added.
Low vacancy rates and strong demand by people priced out of the single-family home market will keep Edmonton rents rising this year, with the average rent for all units hitting $841 a month by October.
Most multi-family housing starts last year were condominium units, further pressuring the apartment market, CMHC said.
According to Edmonton Real Estate Board figures released Monday, the average single-family home price in Edmonton was $357,325 in January, up 4.5 per cent from December and 51.9 per cent higher than January last year.
Condominium prices rose a more moderate 2.5 per cent to $233,175, but were still 74.3 per cent higher than 2006, while duplex and rowhouse prices actually went down $1,030 last month. "Sales are typically sluggish at the beginning of the year, but realtors have been kept busy in January with increased sales and higher average prices," EREB president Carolyn Pratt said.
January residential sales jumped 45 per cent from December and were up 32 per cent over January 2006. There were 1,554 residential sales last month with 2,043 listings.
The total value of MLS residential sales was $472 million, double the same month last year, with homes spending an average 33 days on the market compared with 30 days in December. Strong commercial and rural sales drove total board sales up 107 per cent over the same month last year.
Economists are divided on whether the house price bubble is ready to burst."Some people do think that those price gains are going to be unwound fairly quickly in the spring time," said Gregor Bush, an economist with the Bank of Montreal.
Others say the global glut in savings and liquidity will keep long-term interest rates low and act as a cushion for the housing market.
"We're seeing a slow deceleration in housing activity, but still with activity at fairly high levels, and we expect that to continue through 2007 as starts come off their very robust pace of 2005 and 2006," Bush said.
"That's still very high by historical standards."
Thursday, January 25, 2007
Appreciating your house.
Long-term homeowners see big profits
By Meagan Fitzpatrick
CanWest News Service
Wednesday, January 24, 2007
OTTAWA — If you bought a house 25 years ago and have stayed put since, you made a wise investment, according to a new study that found the average price for a Canadian home appreciated 264 per cent since 1981.
By Meagan Fitzpatrick
CanWest News Service
Wednesday, January 24, 2007
OTTAWA — If you bought a house 25 years ago and have stayed put since, you made a wise investment, according to a new study that found the average price for a Canadian home appreciated 264 per cent since 1981.
An analysis of 17 housing markets across the country by Re/Max real estate company released Wednesday found that the average price of a home in Canada rose 5.3 per cent annually on a compounded basis over the 25-year period studied, rising from $76,021 in 1981 to an estimated $277,000 in 2006. On a non-compounded basis, prices rose 11 per cent annually.
The study shows that Canadians who poured their savings into a house 25 years ago are getting a very solid return on their investment, said Michael Polzler, executive vice-president and regional director of Re/Max for Ontario and Atlantic Canada.
“What we see is that Canadians like home ownership. It’s very predictable,” he said in an interview. “They see it as a logical, long-term investment.”
It’s also one you can live in, he added.
“Everybody has to live somewhere, you can’t raise your family in a mutual fund and because of that, there’s always going to be that demand for housing and traditionally real estate has always appreciated,” Polzler said.
Barrie, Ont., a small city located about an hour north of Toronto, led the way with a huge jump of 372 per cent between 1981 and 2006. The compounded annual rate of return for Barrie is 6.4 per cent.
Price appreciation topped 240 per cent in seven other Canadian cities including Ottawa (297 per cent), Montreal (292 per cent), Greater Toronto Area (290 per cent), and Greater Vancouver Area (242 per cent). Victoria reported a 229 per cent jump and Calgary was up 227 per cent.
The top seven markets experienced an annual compounded rate of return ranging from five per cent to 6.4 per cent.
The report highlights several factors that likely contributed to the gradual rise in housing values in Canada. Number one is a 25 per cent increase in Canada’s population over the period studied.
The report also said greater economic diversity in many regions of Canada has increased housing demand and therefore pushed up prices.
Alberta has done well to attract major corporations, for example, Saskatchewan shifted its economic base from agriculture to natural resources and the addition of the high-tech sector to Ottawa played a big role in the health of its residential real estate market, the survey said.
Immigration is another influence, and baby boomers have also been a powerful driver behind housing demand, according to Re/Max. Canadians in that demographic have not only been buying their own homes or retirement properties, but also helping their children to buy their own homes.
“It’s very common that you see the baby boomers helping with the down payments, sometimes more than that,” Polzler explained.
He predicts housing values will continue to climb over the coming year and in the foreseeable future. His advice to younger Canadians is to buy now and reap the rewards later in life.
“You have to live somewhere. You’re paying for your lodging either way so it makes sense to have that as a primary investment strategy,” Polzler said.
The survey used data from real estate boards in the cities included in the study. Of those surveyed, Vancouver was the city where it was most expensive to buy a house last year. The average price was $509,876, making Regina look like a bargain where the average house went for $131, 851.
Average price for a residence in 2006:
- Canada $276,824
- Vancouver $509,876
- Victoria $400,000
- Calgary $346,673
- Edmonton $250,915
- Regina $131, 851
- Saskatoon $160,577
- Toronto $351,941
- Ottawa $257,481
- Montreal $215,659
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