Edmonton Market Stats December 2010

Once again the updated sales, listing and seasonally adjusted charts for Edmonton.


Sales remain above the dismal pace of the financial crisis but below the more robust pace set during the 2nd half of 2009.



Listings are following the rate set during the 2nd hald of 2009.



On a seasonally adjusted basis home sales have recovered somewhat from earlier this year.



The spike of listings which contributed to the year over year increase in inventory has settled down.


The seasonally adjusted sales to new listing ratio has increased due to more sales and reduced listings. The rate currently stands at 57%. I would be cautious reading too much into this due to the lower volume in the winter months. However, if this ratio stays at this level into the spring market we may see YOY inventory drops and prices stabilizing. The question is how big of a listings rush will there be this spring?


The last chart shows sales, new listings and inventory over the years.

The median price of single family homes has moved down considerably since spring. Down to $336,500 from $370,000 in May, or almost 10%. These price declines are a combination of real market deterioration and seasonality as I mentioned in June.

The seasonally adjust sales to listing ratio is 42% and has been flat for three months. Expect price drops soon.

I think that some of the price measures are elevated right now due to seasonality and high level of luxury sales (see Edmonton Real Estate Blog for price stats). This works both ways as it shows prices have been rising all year (when they haven't) and will exaggerate the drops during the second half.

It comes as no surprise that the EREB was way too optimistic on their revised prediction of 19,000 sales half way through the year. I was also optimistic guessing 16,576 when the preliminary total right now stands at 16,241.

19,000 sales? Unlikely.

From the June 2010 Realtors Association of Edmonton market report

“It has been quiet on the news front but very busy in REALTORS® offices as they list client’s properties for sale, book showings for buyers and attend open houses. This has not resulted in immediate sales, however, and, in anticipation that this slowdown will continue through the year, we have reduced our 2010 sales forecast by 2,000 units from 21,000 to just 19,000.”
...
“External influences pulled sales activity into the first four months of the year which reduced the demand in May and June. Overall there were 680 less residential sales in the first half of the year as compared to 2009,” said Westergard.

They have reduced their forecast to 19,000 based on how close we are to last year's sales. However last year started off in the middle of the financial crisis and sales continually increased from very low levels. 2010 has been the opposite of this. To show how unlikely this is see the level of sales that would be required for the rest of the year in the trend below (at a constant seasonally adjusted rate). Sales have to make an immediate and abrupt jump this month to a much higher rate and maintain that level going forward.


Looking at the trend I guess the year end total will be closer to 16,500 assuming a minor recovery in sales (shown below).

Notice a Pattern?

The REALTORS Association reports on several statistics in their report and draw comparisons from either the previous month or the previous year. Below I made the opposite comparison they chose to make in the report [in red].

Edmonton, April 2, 2009: The average* price of single family homes in the Edmonton area has hovered around the $350,000 mark for the first quarter of this year [Average price of a single family home in 2008 increased from 379,567 to 387,632 January to March], reported the REALTORS® Association of Edmonton. At the beginning of January the average price for a SFD was $351,870. The price varied slightly and at the end of March the average SFD price was $349,716, up 0.7% from the previous month [decrease of 9.8% YOY]. Condo prices were a little more volatile but popped up 1.6% in March to $230,469, after a 5% drop in February. The average price of a duplex/rowhouse was $276,776.

“With price stability, low interest rates, spring weather and pent-up demand; it appears that REALTORS® are starting to get busy again,” said Charlie Ponde, president of the REALTORS® Association of Edmonton. “Our offices are reporting an increase in buyer interest. Sales in March were up 28% from the previous month.” [down 11.4% YOY]

Residential sales through the Multiple Listing Service® in March totalled 1,380 units. Total MLS® sales (including commercial and rural sales) were 1,513 units. This is a 30% increase over the previous month. [down 11.5% YOY] Total residential sales for the first quarter were 3,185 units and total MLS® sales were 3,471 with a YTD value of $1.1 billion.

There were 2,891 residential listings in March (down 31.7% from last March) [up 9.0% from February] resulting in a month end inventory of 7,476 residential properties (down from 9,464 in March 2008) [up from 7076 in February]. The sales-to-listing ratio was 48% and average days-on-market was 56 days (down five from February) [up 5 over last March].

“The market is once again operating in a normal fashion with typical seasonal fluctuations,” said Ponde. “REALTORS® are prepared with daily statistics and market knowledge to help clients understand the market fluctuations and advise them on pricing and marketing strategies that help buy and sell homes and commercial properties.”

REALTORS® (who are all members of the REALTORS® Association of Edmonton) have just completed their annual membership renewal. Some members choose renewal time to withdraw or retire from the industry so membership numbers dip slightly at the end of March. So far the renewals are typical and the Association expects that the more stable market will encourage most REALTORS® to remain in the industry.

Marc Perras Radio Ad

Some more radio ads from Marc Perras of the REALTORS Association of Edmonton

October Ad 1

While average residential price was down in October the average price of single family homes was up.
Really so where is the decrease?
Condos. Condo sales prices had the biggest single month drop of the year. Down by 5.8%.
So single family homes are up condos are down.

Average price of single family home increased by 0.3% from $362,097 to $363,274. Median price decreased 0.8% from $345,500 to $342,750.

October Ad 2

Global unrest, economic uncertainty most major markets are feeling the effect of fnancial instability....

Unlike most major markets there is still a high degree of consumer confidence in Edmonton and thats being reflected in the housing market

So we are maintaining an even keel?

As compared to a typical fall, absolutely.

Sales generally slow at this time of the year and we have seen that predictable slowdown. Its safe to say that the stronger sales in the third quarter of the year contributed to reduced demand in October?

Which is normal?

It is. This October's resale figures were lower than last year but well with the norm. We're also seeing inventory levels continuing to decrease, heading back towards normal levels.

So all in all the Edmonton market remains stable.

More than most major markets in these strange economic times. I'm not going to use the 'R" word.

Unless you mean REALTOR

Instead of being 'well within the normal range' sales are lower than each of the the previous five years for October.

Notice that there was no mention that the decrease in inventory is also part of a regular seasonal pattern just like sales.

The sales to listing ratio dropped from 55% in September to 40% in October which indicates a deterioration in the market independent of seasonality.

Marc Perras - Spinning like Clockwork

From the latest round of radio ads on the REALTORS Association of Edmonton's site:

August Market Facts - Prices Up
August Market Facts - Sales Up

First off a comment on the titles. Sales were down compared to July and up compared to last year. Prices were down both to last month and last year. Anyway I had the misfortune of listening to these...

Just like the swallows return to Capistrano every year after winter the buyers return to the Edmonton real estate market after summer.
It happens every year like clockwork and we expect it to happen again - Marc Perras

This is simply a fabrication by Marc Perras and is not supported by reality based arguments.

Look at this sales chart again from the Edmonton Real Estate Blog. Compare June, July and August numbers with those of September, October and November. With a few exceptions fall tend to be slower than summer. The only thing happening like clockwork is desperate spinning from the REALTORS Association of Edmonton.


*Chart From Edmonton Real Estate Blog

There is more...

But we usually see softer prices in August because people have so much on the go. That pattern held true this August as the average residential price dipped by about 1.8% from the previous month.
So prices fell slightly as expected...

He then goes on to say how prices are expected to rise in the fall. Using their own numbers I determined the % month price changes for August and September going back to 1990 (from REALTOR Association stats).

	Aug % change	Sep % change
1990	1.37%	-2.61%
1991	0.44%	-1.61%
1992	1.46%	-1.31%
1993	-1.03%	-3.22%
1994	2.70%	-1.80%
1995	-3.85%	-2.04%
1996	2.79%	-2.03%
1997	-0.92%	-0.69%
1998	-0.85%	-0.94%
1999	-4.41%	2.72%
2000	2.07%	-3.43%
2001	-5.72%	2.51%
2002	-1.26%	-0.62%
2003	-0.40%	1.19%
2004	0.79%	-0.92%
2005	0.12%	-2.77%
2006	5.56%	2.95%
2007	-2.80%	-0.15%
Average	-0.22%	-0.82%

Generally September has had higher price drops than August. And the drop of 1.8%, while not devastating, is worse than average.

Also remember when the price drops were supposed to only occur in the second quarter? This statement I covered in a previous post.

Q: Should I buy now or wait?

Perras: "I think it's a great time to buy now. If we're going to see any softening in prices, it's going to be in the second quarter, which is right now. This kind of inventory is going to thin out as we get into the fall."

Marc Perras, May 6, 2008.

I don't mind bullish arguments and would expect them from REALTORs. But when they totally make stuff up that is not supported by the numbers they need to be called on it.

Edmonton August Report

The August report is here. Sales were only compared to 2007's devastating numbers and not to other more "balanced" years. While its true that sales are up over 2007 consider some previous statements regarding sales:

“Near record January sales indicate that housing sales will remain strong in the Edmonton area as buyers and sellers adjust to the new pricing levels,” said Marc Perras, president of the REALTORS® Association of Edmonton.
Feb 5, 2008 (21% drop over 2007)

“We predicted that sales would be on par with the last ‘normal’ year that we had in 2005. So far the market is behaving as we anticipated.”
March 4, 2008 (32% drop over 2007)

Actually in the forecast released at the beginning of the year Marc Perras predicted sales to drop slightly. The actually number of sales this year will certainly be less than his forecast.

"The total number of residential sales in 2008 will probably drop slightly from 2007 levels. Perras expects that 19,100 residential properties will sell through the MLS® in 2008. There were 20,544 sales in 2007."
Jan 9, 2008

..There is more....

With the high inventory, demand was strong with residential sales near traditional volumes.
April 3, 2008 (34% sales drop over 2007)

April sales of all types of residential property through the Multiple Listing Service® were lower than the two previous years at 1,823 units but higher than the more typical years of 2004 and 2005.
May 5, 2008 (25% sales drop over 2007)

Sales were up 1% in April when compared to 2004/2005. See previous post.

May sales exceeded same month sales in 2003 and 2004 but were below May sales for 2005-2007 when the market was super-heated.
June 3, 2008 (36% sales drop over 2007)

This is a false statement. May sales were in fact below those of 2004. See previous post.

Don't get me wrong. Number are numbers and there were 18% more sales this August compared to last year. I just don't buy the spin. To EREB 2007 was off limits except when comparing to record low sales. This chart is probably the most enlightening way to look at the sales figures stolen from the Edmonton Real Estate Blog. It is laid out so it is easy to compare sales from each month to the last several years.

See the red line? Thats the sales surge the Edmonton Journal is referring to in this article: Edmonton home sales surge, prices dip.

There is still more. Marc Perras had to comment on price as well.

“Housing prices typically rise slightly through the fall,” said Perras. “We expect that the strong sales this quarter will support rising prices as we approach year-end.

This reminded me of a previous statement which I debunked in this post.

"I think it's a great time to buy now. If we're going to see any softening in prices, it's going to be in the second quarter, which is right now. This kind of inventory is going to thin out as we get into the fall."

.....

Ed Jensen's report for Calgary was less brutal and focused more on sellers. He still managed to call the Calgary market stable and had the same buyer's market charts.

Upset Customers

From the Financial Post - Alberta leads national drop in home prices:

The situation has left brokers like Ken Shearer, of Edmonton-based Royal LePage Noralta, trying to explain the market to upset customers. "People who bought in the last 12 to 15 months are angry. I'm telling them we have an oversupply of listings inventory, the largest in history.

Why would people be angry?! What type of advice was the Edmonton Real Estate Association giving out last year?

In only the first three months of this year, average home prices have climbed 12.4 per cent, so Pratt has abandoned her earlier forecast of a 15 per cent increase for the full year.

"We're predicting that prices will continue to rise until August, at four to five per cent per month, then at two per cent per month," she said today.

April 4, 2007

“Price increases may moderate slightly as the market returns to pre-boom levels but I do not anticipate that actual prices will decrease.”

May 2, 2007

“Rising prices are forcing buyers to explore their housing options. People are being priced into the condo market,” said Pratt. “May figures demonstrate that the trend has not yet abated.” She urged both buyers and sellers to consult a REALTOR® before venturing into the market. “With the average price of a single family dwelling rising by over $400 a day, you need the latest market figures that only a REALTOR® can provide.”

June 4, 2007

I wasn't going to bring those quotes up again but decided to after hearing this ad from Marc Perras of the EREB.

It's sort of like driving around on fumes with your gas guage on empty just waiting for fuel prices to go down.

Marc Perras of the REALTORS Association of Edmonton

There are homebuyers waiting on the sidelines of the market anxiously waiting for housing prices to drop.

But there is nothing to suggest that a big drop is coming?

There is still a lot of inventory on the market but sellers have adjusted already. The near record number of sales in July suggests the market has really stabilized.

So there is not much ground to be gained by waiting?

The average price of a single family home fell 0.5% in July. If you consider that amount to an average month's rent...

..Then your sitting there paying rent waiting for prices to drop...

Then you are not gaining any ground. You are just missing out on all that selection.

...

First, if I was living under a bridge and had the cash available to buy a house then the gas analogy might make sense. But I'm not, so it's stupid.

If your rent is cheaper than the mortgage then you gain that difference plus the depreciation each month. I'm not even including if the furnace breaks down or city taxes.

Unobfuscating May Stats

The monthly numbers are out for Edmonton and Calgary and there is a lot to cover.

From Edmonton's report: Never been a better time to buy a home, says REALTORS® Association

May sales exceeded same month sales in 2003 and 2004 but were below May sales for 2005-2007 when the market was super-heated.

WRONG. May sales were in fact below those of 2004. There were 1961 residential sales during May 2004 compared to 1821 May 2008. From archived stats.

The title is laughable. What was the REALTORs Association saying last year this time? From May 2007 report:

“Rising prices are forcing buyers to explore their housing options. People are being priced into the condo market,” said Pratt. “May figures demonstrate that the trend has not yet abated.” She urged both buyers and sellers to consult a REALTOR® before venturing into the market. “With the average price of a single family dwelling rising by over $400 a day, you need the latest market figures that only a REALTOR® can provide.”

Totally disingenuous! When the stats demonstrated a price increase in 2007 the it was extrapolated going forward. With decreasing prices it is now a great time to buy.

Calgary has the same theme: BUYERS NEED TO PAY ATTENTION – HOMES ARE ON SALE TODAY!

Calgary, June 2, 2008 – “Now is not the time to wait until the sale is over and then decide to buy; after you read a headline, the best time to buy has passed,” cautioned, CREB® President, Ed Jensen. Home inventories are high; buyers are reaping the benefits of selection and are able to negotiate the best sale price and terms. Today’s market presents buyers with great purchasing opportunities, according to information released by the Calgary Real Estate Board.

Was similar logic used during the run up? Did CREB ever warn buyers that homes were too expensive during the boom? Did they anticipate this "sale"? Seems like it has been a "short term buying opportunity" for awhile now.

Fact is sales are low, inventory is high and the spring market is closing. Remember the talking heads were counting on spring for the rebound. Here is an interesting article from the one and only Calgary Herald:

Housing market set to catch spring fever

...

Another factor could be that people get over the end of the year and have received their bonuses. This may be giving them some incentive to upgrade homes.

"The dominant factor is seasonality. People are getting out of hibernation mode and they want to get out and enjoy the spring weather and view show homes," he said.

...

Edmonton price weakness limited to Q2?

Mr. Perras was one of the experts quoted in the article How real estate went from boom to buyer's market in the blink of an eye

Q: Should I buy now or wait?

Perras: "I think it's a great time to buy now. If we're going to see any softening in prices, it's going to be in the second quarter, which is right now. This kind of inventory is going to thin out as we get into the fall."

First off why was the title of the article changed from boom to bust to boom to buyer's market? (Just speculating) So here we have yet another call for decreasing inventory, granted this is probably getting more and more likely as time goes on.

More importantly, I am not sure where the idea that the price correction is limited to Q2 came from. Last year prices and inventory fell in the fourth quarter.

Below I determined the frequency of varying rates of appreciation over each quarter going back to 1980. Quarterly appreciation was determined by calculating the difference of the average residential price from the last month of the quarter compared to the last month of the previous quarter.

For example take Q2 2006
June 2006: $254,240
March 2006: $220,124
change: 15.5%

So this is put in the Q2 chart below at 18%, representing the frequency of quarterly appreciation above 15% up to 18%. A histogram.



Source

Note that going back price weakness generally occurs in Q3 and to a lesser extent in Q4. In fact for Q3 there has been only 4 instances of positive quarterly price growth. While Q2 is the opposite with only 3 price decreases.

After this I wonder if the argument presented in the article is a genuine conclusion based on some sort of analysis? Or was it conjured out of nothingness to promote sales?

Edmonton April Report

From the Realtors Association of Edmonton April report:

April sales of all types of residential property through the Multiple Listing Service® were lower than the two previous years at 1,823 units but higher than the more typical years of 2004 and 2005.

It's technically correct by ignoring a few years sales are up. Compared to 2004/2005 they are up 1%.

RESIDENTIAL SALES:
2008 - 1823
2007 - 2441
2006 - 2026
2005 - 1802
2004 - 1805


Also, consider some choice words from the Realtors Association of Edmonton over the last few months regarding inventory

The current inventory of residential properties is now 7,094 homes. The inventory will decrease through the year but the wide choice of properties will have a dampening effect on prices offsetting increased demand from in-migration and economic growth.

Marc Perras,REALTORS Association of Edmonton, Jan 9, 2008

“We predicted that sales would be on par with the last ‘normal’ year that we had in 2005. So far the market is behaving as we anticipated.” The number of available residential properties listed on the MLS® at the end of February was up 12.7% from the previous month at 8,284 properties.

Marc Perras, REALTORS Association of Edmonton, March 4, 2008

"Now is the time to be buying," said Marc Perras, president of the REALTORS® Association of Edmonton. "The selection of available homes is very high and prices will increase by year end as inventory levels drop.

Marc Perras, REALTORS Association of Edmonton, April 3, 2008
Inventory = 9,464

“The Edmonton housing market is stable and buyers and sellers seem to be coming to a realistic view of housing prices,” said Marc Perras, president of the REALTORS® Association of Edmonton. “In this market, with a very high inventory, pricing is a key component of a successful sale.”

Marc Perras, REALTORS Association of Edmonton, May 5, 2008
Inventory = 10,606

REALTOR Association of Edmonton Radio Spin

The REALTORS Association of Edmonton put out a Radio Ad discussing market conditions from the first quarter. I found it interesting enough to duplicate most of it below:

With three months of data to back it up I think we can safely say the market is stable.

And what do you mean by stable?
We had two years of unpredictable prices and sales volumes. By contrast this year we had slight fluctuations but no wild jumps. Prices are trending upward.

How have prices changed?
Since the start of the year single family homes are selling for an avergae of $5600 more and there is about a $10,000 difference in the average condo. So again, stable. Those are normal increases over a three month span.

And sales volume?
So far in 2008 we are seeing higher than normal sales. Keep in mind the two prior years were anything but normal and the first quarter is generally slower than the rest of the year so we expect sales to increase at a stable pace.

Your REALTOR will help you figure out how this stable market effects you....

1. "Prices are trending upward."

The only way to reach this conclusion is to look at only the numbers over this specific time period. It is my opinion that this is a shallow and disingenuous take on the situation. Are same home comparable sales actually increasing?

2. "So far in 2008 we are seeing higher than normal sales"

Absolutely amazing. I do not remember REALTORS ignoring strong 2006 and 2007 sales when pumping the boom. I stole the charts below from Sheldon and Sara at the Edmonton Real Estate Blog:

Sales are low when compared to listings as shown by the sales to listing ratio.
Sales are low when compared to inventory.
Sales are "about par" when comparing to prior years of 2003-2005.

3. Whats really telling is what is not discussed: Record high inventory, very low sales to listing ratio, large number of price reductions.

Compare the words with the numbers

The Following are some recent statements from the REALTORs association of Edmonton regarding inventory and sales compared to the numbers provided in their press releases.

The current inventory of residential properties is now 7,094 homes. The inventory will decrease through the year but the wide choice of properties will have a dampening effect on prices offsetting increased demand from in-migration and economic growth. Condominiums are expected to become a stronger option (especially for first time buyers) because of the lower price point.

The total number of residential sales in 2008 will probably drop slightly from 2007 levels. Perras expects that 19,100 residential properties will sell through the MLS® in 2008. There were 20,544 sales in 2007.

Marc Perras,REALTORS Association of Edmonton, Jan 9, 2008

Dec 2007 Stats
Inventory: 7094
Sales: 857 (-20% YOY)

“Near record January sales indicate that housing sales will remain strong in the Edmonton area as buyers and sellers adjust to the new pricing levels,”

Marc Perras,REALTORS Association of Edmonton, Feb 5, 2008

Jan 2008 Stats
Inventory: 7352
Sales: 1227 (-21% YOY)

“We predicted that sales would be on par with the last ‘normal’ year that we had in 2005. So far the market is behaving as we anticipated.” The number of available residential properties listed on the MLS® at the end of February was up 12.7% from the previous month at 8,284 properties.

Marc Perras, REALTORS Association of Edmonton, March 4, 2008

Feb 2008 Stats
Inventory: 8284
Sales: 1287 (-32% YOY)

"Now is the time to be buying," said Marc Perras, president of the REALTORS® Association of Edmonton. "The selection of available homes is very high and prices will increase by year end as inventory levels drop.

Marc Perras, REALTORS Association of Edmonton, April 3, 2008

Mar 2008 Stats
Inventory: 9464
Sales: 1557 (-34% YOY)
______________________________________________________________________

Any ideas how EREB determined how inventory will drop? And when? Sales/Listing Ratio is at 37%. Inventory is rising at a rate similar to last year which didn't peak until September. See chart from Sheldon's blog.

February Real Estate Meta-Analysis

In the press release for February the Realtors association of Edmonton commented on sales falling 32% from last year and the increase in inventory:

“We predicted that sales would be on par with the last ‘normal’ year that we had in 2005. So far the market is behaving as we anticipated.” The number of available residential properties listed on the MLS® at the end of February was up 12.7% from the previous month at 8,284 properties. In February 2007 the inventory had just 2,120 properties.

Compare this to their forecast released less than 2 month ago:

The current inventory of residential properties is now 7,094 homes. The inventory will decrease through the year but the wide choice of properties will have a dampening effect on prices offsetting increased demand from in-migration and economic growth. Condominiums are expected to become a stronger option (especially for first time buyers) because of the lower price point.

The total number of residential sales in 2008 will probably drop slightly from 2007 levels. Perras expects that 19,100 residential properties will sell through the MLS® in 2008. There were 20,544 sales in 2007.

_____________________________________________________________

From Edmonton Weekly Stats on Working Together

The “sales to listing ratio” remains healthy, which is what really matters for the Edmonton real estate market.

Sales to listing for the week was 239/601=39.8% which is on the line balanced and buyers market. For every 4 people that bought 10 people listed - It is a stretch to label that healthy.

No real shock to anyone, the number of new listings in Edmonton is much higher than it was for the same week last year, and the number of property sales is much lower. But last year wasn’t a typical real estate market, and we all have to stop measuring against it.

Last year the high level of sales was seen as soley being attributed to Alberta's boom. Some did predict that price increases would moderate, but did not questions the legitimacy of the demand during this time. Comparing current demand to last year illustrates that some of this demand may not have been justified.

Based on the last 3 months worth of sales, we have 6.62 months of Edmonton housing inventory for sale. That puts us into a very balanced market, as 6 months of inventory is considered to be a perfectly balanced market, and anything over 8 months is a buyers’ market. We aren’t even over 7 months yet, so I don’t think you have to panic.

On the same page there is a graphic:

more than six months is considered a buyer's market.
Less than six months is considered a seller's market

Andrew Kyle, a Calgary Realtor defines a buyer's market over 3.5 months of inventory. The CREB had defined it a similar way until adjusting charts.

_________________________________________________________________

Consider the title of the Calgary Real Estate Board Statistics:

MLS® RESALE MARKET PICKS UP MOMENTUM IN FEBRUARY 2008

Single family Calgary metro properties changing hands in February 2008 were 1,252, an increase of 15.6 per cent over the 1,083 sales reported in January 2008 but showing a decrease of 35.5 from the same period last year, when the sales were 1,942.