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.”