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

CREB Buyer's Market Update

The CREB has cooled down somewhat and acknowledged the buyer's marker in their most recent update. Let's look back at one indicator they have been using to track the market, and how it has been changed over time.

Below are some charts showing absorption rates from the CREB monthly reports. The absorption rate is the number of months it would take to clear inventory assuming sales remain constant.

Absorption rate = Total inventory/monthly sales

Here is the July 2007 report. Note the blue band indicating a balanced market. Between 2-3.5 months inventory.
In the August 2007 report the absorption rate just exceeds the balanced market.

For September 2007 the absorption rate heads up as sales decline and inventory increases. As this value goes way outside the balanced market range the label is conveniently moved up.
Update:

For April 2008 the top of the previous balanced market range has moved up to 4 months.


Source CREB statistics: here
See original post here

An Old What's New

'Bear' with this cheap post while I wait for Realtor board press releases. They will be juicy.

From Bob Truman's What's New:

Apr 13
Last year, sales of SFH dropped from March to April. This year, April sales are 7% ahead of March sales. Condo sales are 24% ahead of March. Condo prices are on the upswing this month, and looking at SFH pending sales(avg price is $500,243)SFH prices will be heading that direction soon as well.

Prices were basically flat except the condo median took a $3000 hit compared to last month. Sales are down slightly with 16 more condos and 55 fewer SFH compared to March. Prices and sales are down year over year. Data from Mike's Stats.

How much time is left in spring? Don Campbell, where are the top Irish Banks? (From March 1st)

"International investors are definitely buying. Calgary and Edmonton real estate is hot in Europe and the U.S., more than I've ever seen before in all my years involved in real estate. The top banks in Ireland, for instance, are buying here. They see it as safe, secure and good for the long-term, compared to other options."
...
It is already happening, says Tim Crough, a realtor with Prudential Toole Peet. "We're starting to see the starter home market pick up, predominantly in condos, but also lower-end singles."

How about this article from 660 news Rate cut boost to market:

Calgary's waning real estate market got a boost by a cut in interest rates, says a local broker who attributes more action on listings to lower mortage payments.
...
He attributes some of the most recent purchases to the Bank of Canada's move to cut the overnight lending rate half a percentage point to 3%. For a single-family home valued at $475,000, with 5% down, this translates into a reduction of monthly mortgage payments by $143, or from $2,110 to $1,967.

I try to run a calculator on a $451,250 mortgage to match his numbers as the payment seemed low. If i use a 4.25% rate over 40 years i get $1,956, if i included the $13,062 CMHC fees (required and generally rolled into the balance) the payment goes up to $2,013. Besides being a pump piece this is interesting because it shows 40-year mortgages are so common they are being assumed into calculations.

Quote of the day

From 15 real estate myths and realities:

Generally though, British Columbians, and Lower Mainlanders in particular, are pretty savvy about their property, the experts believe, with so much information out there about real estate, between Real Estate Weekly, the real-estate sections in newspapers, the realtors' Multiple Listing Service posted online and Home and Garden TV.

People in Vancouver are saavy because they listened to Realtors and HGTV!?!. I'm sure if more people in the states did that they would have absolutely no problems right now (sarcasm).

I know this is not Alberta, but this come from one of CanWest Global minions, the Vancouver Sun. It just reinforces how those set of newspapers are 'pro-establisment' and lustful for juicy ad cash. Other posts examining CanWest previous doses:

Power of the Press Release
What the MSM is serving
Calgary Home Sales
Saskatoon Thought Experiment
Spotlight Calgary Herald
Chicken Little

Update! (thanks tulipboy)

It appears the Vancouver Sun had "technical difficulties" with their comment section. By "technical difficulties" I mean the comments were overwhelming negative and are now disappeared.

Here is a link to some of those cached comments and the discussion has also been moved to Vancouver Condo info. Keep in mind the Vancouver Sun have the same overlords as the Edmonton Journal and the Calgary Herald, which makes it relevant to post here.

On sales mix and tinfoil hats

When prices decrease a larger percentage of lower-priced homes sell. Low-priced may not mean the same thing as low-end in a environment of decreasing prices. I don't know whether to interpret this as useful information or a sophisticated way of implying that the sales mix is responsible for decreasing prices. Thats what the tinfoil hat is for. From Bob Truman's What's New:

Apr 23
There's a higher percentage of low-end homes selling this year. Here are the numbers compared to 2007:

Criteria: single family homes

Total Sales % Sold Under $425,000 % Sold Over $525,000

April 1-23, 2008 1059 51% 23%
April 1-30, 2007 2073 47% 24%

All other sales would be in the price range of $425,000 - $525,000.

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.

Chicken Little

Back in August 2005 now discredited David Lereah gave a presentation of the US housing boom. There is a slide refering to economists predicting a downturn as 'chicken littles'.

NAR Power point presentation

Sky is falling slide

The Calgary Herald just released an article titled Sky isn't falling on Calgary's condo market.

Are you reassured? Why or why not?