EDMONTON - Is the city's housing market going into the tank, as it did in the 1980s? Or is it already showing signs of emerging from its year-long funk?
My guess? With the average price of a single-family detached home in Edmonton down to $379,224 in July -- nearly $38,000 or 9.1 per cent below the July 2007 peak of $417,150 -- the recent downturn is largely history.
Sales volumes are picking up, the bloated inventory of unsold homes is shrinking, new housing starts are down by more than 70 per cent, and current prices better reflect what buyers are willing to pay to live in what has become one of Canada's most consistently prosperous cities.
Regarding the comment about sales picking up and inventory shrinking it is technically true there are stats that can be used to show this. By comparing to sales from last year and to inventory from last month this statement is correct. Here is a chart showing sales and inventory from the Edmonton Real Estate Blog. Personally, I wouldn't make the case that recent trend.s in sales and inventory makes for a bottom
...But let's get a grip. Alberta remains an island of prosperity in an otherwise stormy sea. We've had a correction, not a U.S.-style housing market meltdown. And what a run we've had.I like how "we've had a correction" refers to the it in the past tense as if we have already past it.
What this article fails to acknowledge is why prices have fallen at all. Decreasing prices without a change in these economic factors demonstrate that something else responsible for the initial run-up. No details were given about what this "something else" would have been because that would mean discussing looser lending standards and speculation; Basically the same things we share, at least to some degree, with the States.
Since January 2002, the average price of a single-detached home in Edmonton has jumped by more than $216,000, or 133 per cent. And that's after taking into account the price declines of the past 12 months. Local condo prices have risen even faster, soaring 157 per cent since early 2002.
Those numbers reflect a sea change in the global economy, and a rise in commodity prices that remains intact, despite the recent correction.
Still, it's easy to see why some naysayers expect the housing market to continue to weaken. Consider this gloomy headline, which recently appeared atop the front page of one national newspaper: "Housing slump stalks Western Canada."The Merrill report is here. It says that those cities are overvalued by more than 10%, with Edmonton overvalued by 25%.
The accompanying story, based on a report from two Toronto-based economists at Merrill Lynch, said house prices in the major cities of Saskatchewan, Alberta and B.C. are overvalued by 10 per cent, and a "sustained downturn" may be at hand.
So when referencing the Merrill report for Edmonton it uses 10% instead of 25% overvalued. Now that prices have dropped 9% it's "all corrected, time for dessert". Well even then the Merrill report attempts to account for the correction which it had modeled Edmonton at 34% overvalued in 2007 which has decreased to 25% in 2008 with price drops included. Note to Edmonton Journal - READ THE REPORT!
Well, here's the thing. That would have been useful advice a year ago. Not so today. As noted, Alberta's real estate markets have already corrected.
While the average price of a single-detached home in Edmonton fell 9.1per cent through July, on a year-over-year basis, comparable homes in Calgary fell nearly 10 per cent, to $456,380.
The rest of the article I agree with regarding Saskatoon and Vancouver entering into a downturn. They are going to git hit worse than Edmonton going forward. But I didn't read anything convincing in this article that tells me Edmonton is done.