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

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

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