Wednesday, February 3, 2010

Edmonton Sales Down

The REALTORS Association of Edmonton and the Edmonton Real Estate Blog have posted January statistics. Just like in Calgary seasonally adjusted sales are very weak. In fact, while we would normally expect sales to increase 18% in January they fell by 7%.

Despite slower sales new listings are following the same rate as the 2nd half of 2009 seasonally adjusted.

The seasonally adjusted sales/new listing ratio has decreased to 51% (non-adjusted is 40%). A sales to new listing ratio of 50% indicates a market with no price appreciation.

The weaker market is due to sales not increasing with listings last month.

Below are the charts for sales and listings seasonally adjusted.

1 comment:

Radley77 said...

What I think is interesting is that if you look at the seasonally adjusted sales to new listings ratio of 0.9 in Q1 2006 which is indicative of an extremely strong bull real estate market and compare to the timeline of CMHC changes in regulations:

February 2006: CMHC to insure 30 year mortgages on a pilot basis
June 2006: CMHC introduces 35 year mortgage and interest-only mortgage insurance
December 2006: CMHC introduces insurance for 40 year mortgages
September 2007: CMHC offers insurance for 100% financed investment properties

One can see that the bull market actually began BEFORE CMHC started changing the mortgage regulations. This is an important point as many people think that the bull market in real estate in Alberta began solely due to changes in lending practices. I do think that some loosening of the CMHC regulations resulted in speculative activity which brought about higher levels of sales, but that same relaxation of mortgage regulations helped bring on much of the mid 2007 and later new listings.

Conventional thinking I think is still geared that CMHC is to blame for high prices. However, it is CMHC regulations that I think lead to a market with a lot less supply risks than the United States.

CMHC has to balance the housing market against being fail-proof and resulting in speculative activity pushing up prices and subsequently falling and not being sturdy enough and resulting in collapsing house prices.

The best answer that I can think of is providing people with the best quality information, but also leaving CMHC to operate as a 'black box' so to speak. This forces consumers to balance risks and rewards against what is achievable via bottom-up analysis.