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