Edmonton Real Estate Blog

Edmonton, February 2, 2010: Single family homes sold through the Edmonton Multiple Listing Service® System sold on average for the same amount in January as at year-end while condominium prices dipped 2%. Month-to-month sales slowed by 6.8% as compared to December but the number of new listings in January doubled the December numbers. 

The average* residential price was $314,783 for January, down 1.4% from last month and down just 0.7% from a year ago. Single family home prices on average were stable increasing minutely from $366,761 in December to $367,747 in January. Condominium prices dipped just 2% in the month from $244,174 to $239,006. Duplex and rowhouse prices were up 1.5% to $300,563.

“There will be month-to-month fluctuations in prices for all types of properties,” said Larry Westergard, president of the REALTORS® Association of Edmonton. “We expect that the local market will continue to be robust and prices will trend upwards through the year.”

Compared to December, housing sales were down in January with 524 single family sales and 288 condominium sales. Total residential sales were 884 units – 154 ahead of last January. There were 2,199 residential listings added during January resulting in a 40% sales-to-listing ratio and a month-end inventory of 4,864 homes. The average days-on-market was 57 days. Total sales (including residential, commercial and rural properties) in January were valued at $315 million (up 19% from last year).

“While the low prices may have motivated some buyers, the continuing low interest rates are probably a bigger factor for first time and repeat buyers,” said Westergard. “The inventory increase shows that current owners are poised to enter the market and to offer their homes for sale. Buyers and sellers should consult their REALTOR® to work out an appropriate strategy for their situation.”

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Highlights of MLS® activity

¹. Residential includes SFD, condos and duplex/row houses.
². Single Family Dwelling
³. The middle figure in a list of all sales prices

* Average prices indicate market trends only. They do not reflect actual prices, which may vary.

Source: REALTORS® Association of Edmonton

Breakthroughs in technology mean homeowners in older houses can now enjoy the same advantages in home automation formerly available only in new homes.

The heart of home automation is the ability for a homeowner to control or monitor, sometimes remotely, electrical devices in a home. Practical applications include the control of lighting, draperies, audio systems, the monitoring of home security and the adjustment of heating, ventilation and air-conditioning.

It used to be that only new homes being built were connected digital homes, sometimes referred to as Smart Homes. The systems were typically controlled and interconnected by wire; installation was easy to do only before the drywall was put up in the construction of new homes. Retrofitting an existing house was theoretically possible, but the added labour drove up costs.

“The availability of wireless systems has made a big difference when updating and retrofitting older, frequently heritage, structures,” says Paul Titterton, general manager of Lenius Osborne, an electrical contractor who specializes in home automation systems. “While you just can’t beat wire in some applications, wireless systems are usually cheaper. Jobs that now cost $10,000 used to be in the triple digits.”

Home automation systems are popular with security-minded people. Titterton recalls one client who installed a home system with cameras so he could make sure his 17 year-old son didn’t drive his Porsche when he wasn’t home.

Owners have the ability to monitor and control their home system or view images from video cameras, from anywhere in the world via a personal computer or iPhone over the Internet. Sensors can detect movement and alert a user by phone or an e-mail message. “With these systems, you can turn off your house lights from beside your bed or from anywhere in the world,” says Titterton.

Systems can be programmed to do just about anything, he says. Sensors can warn of fire, water leaks and sudden temperature drops.

A hard-of-hearing owner can program the system to flash lights in the house instead of having an audio alarm to warn of any impending emergency. It can turn down the audio or shut off the home theatre automatically to warn of a fire or burglary in progress.

People with pre-existing medical conditions, such as a patient hooked up to a portable EKG machine, can program the home system to monitor signals and automatically summon medical personnel if pre-established limits are exceeded. Patients can also carry a panic button with them in case of emergency.

The applications run from life-saving to lifestyle.

“The whole industry is moving to automation,” says Nigel Brown, co-owner of Ruffel & Brown, a window-covering store. “Twenty-five years ago you had to get out of the car to open the garage door. Now there is a greater expectation … that pretty much anything can be automated.”

Curtains, window blinds and shades all can be tied into smart homes. With a touch of a button, curtains close, lights dim, the TV turns on and a DVD loads in a home-theatre system. Window coverings are the latest items to join programmable indoor and outdoor lights to give a house a “lived-in” look, even if owners are away.

A remotely controlled 10-foot motorized track for a curtain, wired into a home

automation system, can cost $1,000 to $1,500. Stand-alone systems, some solar-powered, are also available. Smaller blinds and shades in difficult-to-reach spots with no existing wiring can be powered by batteries.

Brown says sun sensors let you program drapes to close either at night or in strong sunlight.

Smart Home systems are ideal for video and music lovers. By connecting an iPod dock to the system by hardwire, tunes can be played in any room of the house or even outside. A central hard-drive and signal distribution allows video to be viewed on multiple televisions. If somebody comes to the door while a television program is in progress, an image from the front door camera can be displayed on the television.

“Just about anything can be integratable (into the system),” says Titterton. “It doesn’t take more than programming for anything with an integrated circuit.”

Victoria Times Colonist

“Less is only more where more is no good.”

Every so often, someone comes along who just makes you question every purchasing decision you’ve ever made. Like Miami-based designer Marianne Cusato, whose home design philosophy embodies living better with less.

Working with a team of designers, Cusato created the Katrina Cottages: attractive, affordable homes between 300 and 500 square feet. That’s not a typo. I don’t know how big your place is, but my kitchen and eating area is around 300 square feet, and I still trip over my dogs.

Her team’s task was to design an alternative to the FEMA trailers that housed those left homeless after hurricane Katrina. The Katrina Cottages are well-designed and apple-pie cute to boot. They won the Smithsonian Institution’s National People’s Design Award in 2006.

Of course, Cusato’s not the first build-better-not-bigger disciple. Sarah Susanka, author of The Not So Big House, also reveres architectural quality over quantity.

But regardless of whether your home is big or small, its design — far more than its size — determines how well you live. Bigger isn’t always better — though it can be.

Here are some ways Cusato says we can work around common design flaws in newer homes that may negatively affect how we enjoy our spaces.

– Mistake: Dominant garages. As people began to rely more on cars for daily living, garages started taking over the front of the house. Next, people retreated further inside their homes and became less connected with their neighbours and communities.

– Fix: Enhance your street connection. Consider how your home meets the street. It should pull you in. Punch up your home’s curb appeal. Focus on the front door and your porch if you have one. Make the path to your door say, “Welcome.”

– Mistake: Focus on size. To max out square footage, many builders have opted for bigger houses at the expense of high end finishes.

– Fix: Upgrade door handles and knobs that feel flimsy for ones that look and feel solid. Similarly, trade hollow core doors for solid ones.

– Mistake: Tacky add-ons. Among Cusato’s many peeves are tacked on architectural details that are just for looks. Specifically, she’d like to abolish fake shutters and three-foot porches.

– Fix: Use it or lose it. “A home should have nothing gratuitous,” says Cusato. “Either the shutters work or they go.” Even her 300-square-foot cottage has an eight-foot-deep front porch (not included in the square footage). “Keep it authentic.” Now think about that while I go take the fake shutters off my garage.

Marni Jameson, Calgary Herald

Average price up 19% nationally in December, but just 2.65% locally

Sales and prices of existing homes in Canada soared in December, capping a whirlwind 2009 that began weakly and then went on to set record highs for prices, and further stirring debate of a housing bubble.

The Canadian Real Estate Association said Friday that a total of 27,722 homes changed hands in December, up 72 per cent from the same month in 2008, when activity ground almost to a halt in the wake of the global financial crisis.

“Sales activity in 2009 came in like a lamb and went out like a lion,” said CREA President Dale Ripplinger.

CREA said the national average price in December rose to $337,410, up 19 per cent year-over-year. For the year as a whole, the national average price climbed five per cent from 2008 to a record $320,333.

In the Edmonton region, the average residential price in December was $319,201, up 2.65 per cent year-over-year. For the year as a whole, Edmonton’s average price for a single-family home was $364,032 while the average for a condo was $240,322.

After the slowest start since 1996, resales in the Edmonton region reached 19,139 residential sales in 2009 to beat the forecast from the Realtors Association of Edmonton.

The Canadian association reiterated that the national average price was skewed due to activity in Canada’s priciest markets.

Year-to-date activity was still trailing 2008 levels at the end of September 2009, but a 59-per-cent year-over-year gain in the fourth quarter, the best ever, pushed 2009 sales activity above annual levels for 2008, it said.

The robust figures continue to show the housing sector is leading the overall domestic economy out from a long downturn. But the housing market’s strength has also been at the centre of a debate over whether a bubble in sector is forming.

“The raft of data will do nothing to quell talk of a bubble, talk that the Bank of Canada and the Canadian Real Estate Association have studiously downplayed,” said Doug Porter, deputy chief economist at BMO Capital Markets.

“And, before we officially jump on the bubble bandwagon, we would again point out that the reported price change is skewed by the surge in Vancouver and Toronto sales.”

The Bank of Canada, ahead of its interest rate decision next Tuesday, said this week it was premature to talk about such a possibility, a view echoed by Finance Minister Jim Flaherty on Friday.

“I do not see evidence of a bubble right now, but we’re going to keep watching. There are some steps we can take, that we will take if necessary,” Flaherty said Friday.

He pointed to tools the government could use to cool the market, including raising credit requirements for insured mortgages, ensuring cautious lending practices, and reducing the maximum amortization periods of mortgages.

Record-low interest rates have helped fuel the housing boom, while low supply and pent-up demand have also driven up prices.

But Scotia Capital economists Derek Holt and Karen Cordes said “dismissing housing risks is being a tad Pollyannaish.”

They said in a report that it was likely that housing will “experience a more sudden decline in activity in the back half of the year and into 2011.

“The drivers are pointing to signifi-cant softening in both the supply and demand supports, such that downside risks to house prices by 2011-12 are material and merit caution,” the economists wrote in a report.

CREA said December sales records were reported in Ontario, Quebec, Saskatchewan, New Brunswick, and Newfoundland and Labrador.

Average prices set annual records in a majority of local markets in 2009, and in every province except Alberta, the association said.

Seasonally adjusted national home sales totalled 46,805 units in December, concluding the strongest fourth quarter ever. A total of 137,957 homes were sold on a seasonally adjusted basis in the fourth quarter of 2009.

Edmonton Journal

A home may be one of the biggest investments you ever make. Saving up a down payment is just the first step. Find out more.

What factors affect the value of a home?

• Location: Real estate people always say “Location, location, location.” That’s because the area you live in will be the biggest factor affecting your home’s price. It’s smart to buy a home where housing prices are likely to increase. Also, the people who may buy your home from you one day may be willing to pay more for a home that is close to schools, sports centres, stores, services, and so on. Keep that in mind as you look.
• The condition of the home and the property it is on: Does the home need a lot of repairs? How is the roof, plumbing, and electrical wiring? A home in good repair may be worth more. Also, the condition of the outside of the home, the lawn, gardens, driveway, and trees will all affect the value of a home. These are the first things that buyers see, and are together known as curb appeal.
• Renovations and updates: An older home might need some work to keep it safe, modern, and comfortable. If you are buying at a home that has had some renovations, check the quality. When you do work on a home you own, do it as well as you can. Poor work can lower the value.
• The economy: There are some things you can’t control that affect house prices, like interest rates. Higher interest rates mean it costs more for a mortgage, so fewer people buy homes. When that happens, the prices of homes can fall. Lower interest rates, on the other hand, can boost buying and drive prices up. House prices often go up for a while, and then come down a bit. Try to find out as much as you can about how prices are changing, or may change, when deciding to buy or sell a home. Often there will be stories in the paper about housing prices.

How much is my home worth today?

If you’re considering buying a home, or you just bought one, you know how much it’s worth. But if you’ve owned your home for a while, its value has probably changed. Here’s how you can find out how much it’s worth now:

• Call a real estate agent: Ask them for an estimate of your home’s value. You may be able to get an agent to do this for free, because they hope to get your business in the future.
• Ask an appraiser: Your bank or a real estate agent should know a number of appraisers. Banks use them to estimate house values before they approve mortgages. You can also look in the yellow pages. An appraiser will charge a fee for the service.
• Check to see what other homes in your area have sold for recently: Compare your home with similar ones that have sold. Unless you keep up with what’s happening in your area, this information may be hard to get. Ask your real estate agent if you can’t find it yourself.

How much will my home be worth in the future?

To estimate a home’s future value, you will have to do some informed guessing. Start with finding out what has happened to prices in your location over several years.

Source: Canadian Real Estate Association (MLS®)

Remember: There’s no guarantee what housing prices will do

Location and the condition of the home are both important factors, as is the economy as a whole.

A home may be one of the biggest investments you ever make. Saving up a down payment is just the first step. Find out more.

A good investment in a renovation should increase the value of your home by at least the amount of money you spent, or close to it. A bad one doesn’t get you much of your money back. Here are some investments that have proven to return their value, or close to it:

• Low-cost improvements that make your home look better: Painting, new wallpaper, and items like new rugs and curtains help to brighten and improve the look of a home, and add value to your house if they are done close to the time of sale.
• New or improved kitchens and bathrooms: Improvements to your kitchen and bathroom seem most likely to increase the value of your home. Keep in mind that these improvements lose value over time.
• Improvements to the living room and the master bedroom: These are also good investments and will usually return most of the money you spent, if not more.
• Investments in more efficient use of energy: Oil, gas, and hydro costs continue to go up. That’s becoming more of a concern when people are looking to buy a home. You can make your home more energy efficient as an investment in its value. Some government programs help reduce the costs of these projects. Also, consider buying appliances that waste less energy.
• Keeping up with repairs. If you do a little at a time, you can avoid doing a lot of expensive repairs at the same time. A reasonable amount to spend yearly is 1% to 2% of the value of your home.

What are some renovations that don’t add much value to my home?

• Swimming pool: Make sure you want a pool before you invest in a pool. The cost of putting in one won’t show up in the price that you get when you sell a home.
• Costly appliances: Most people won’t want to pay an extra $4,000 for your home to pay for a $7,000 refrigerator instead of a $1,200 refrigerator. If you pay thousands of dollars for top-of-the-line appliances, enjoy them. You probably won’t get your money back if you sell them with your home.
• Costly landscaping: The way your home looks from the street can really help interest buyers. It’s called ‘curb appeal.’ But if you spend $30,000 in landscaping, don’t expect to get it all back. Most buyers probably won’t see or appreciate the value.
• Renovating in an area where homes are being torn down: Tear-down activity involves homes being sold, torn down, and replaced by bigger, more expensive homes. If someone is going to buy your home and tear it down, a renovation won’t return any of your money. The buyer will have no interest in the building, just in the land.

Remember: Don’t assume you will get all your money back from a renovation

The key to renovating is to keep the house in good repair and do the renovations you want to enjoy. If you think you might be selling in the near future, focus on renovations that are more likely to get your money back.

A sold sign is displayed in front of a home in Toronto December 15, 2009. A red-hot housing market fueled by cheap money has helped Canada climb out of recession, but fears are growing that it could be a bubble much like the one that brought the United States to its knees.

OTTAWA – As Canada’s red-hot real estate market shows no signs of slowing down in 2010, analysts are beginning to caution some buyers that their best move may be to step to the sidelines.

“If you’re somebody in a situation that you have only five per cent down and you’re stretching to get in the market with a 35-year amortization, I think that would be a very precarious situation right now,” said BMO Capital market economist Robert Kavcic.

Conversely, he said, “if you’re sitting on a pile of cash and looking to move into the real estate market, it would almost be a no-brainer to just wait for lower prices.”

Notes of caution simmered to the surface this week after realtor Royal LePage forecast home prices would continue to “appreciate significantly” during the early months of the year. Already in 2009, they’re up 19 per cent, according to the Canadian Real Estate Association.

The trouble is that while prices are rising, incomes are not.

Yet rock-bottom borrowing costs continue to lure buyers, and investors are rushing in – despite a shortage of listings – for fear that if they don’t get into the market now, they’ll miss their chance.

“It’s absolutely not debatable that housing prices cannot rise faster than incomes over the long term,” said Will Strange, professor of real estate and urban economics at the Rotman School of Management.

Sooner or later, incomes have to rise, or home prices fall, for balance to be attained.

Many analysts argue that home prices are not yet out of line with the incomes it takes to pay for them, Strange said. Yet with the job market still weak, and unlikely to drive new employment and higher wages, odds are that if something’s got to give, it will be prices.

“If I didn’t personally have most of my wealth tied up in housing, this would not be the time that I would choose to jump in,” Strange cautioned.

At the same time, interest rates have nowhere to go but up, which could leave some buyers in a position similar to U.S. homeowners, who had houses worth less than their mortgages after the subprime bubble burst and prices crashed.

“We’re certainly urging people to error on the side of caution,” said Bruce Cran, president of the Consumers’ Association of Canada.

“If you’re paying an amount of money, whatever that might be, that you couldn’t sustain if interest rates rose by say 25 or 30 per cent – I can see that being a problem for a lot of people.”

Canada’s not headed for anything similar to the U.S. subprime mess because lending standards here are higher and because people can’t just walk away from their homes as they can in the U.S., other than in Alberta.

But there may yet be an economic impact if home prices turn down, as home values relate directly to the economy, fuelling spending as they rise and tightening personal budgets as they fall, Strange said.

For now, many observers are predicting, as does Royal LePage, that the market will find its balance later this year as rates rise and more listings come on the market.

In the meantime, there are still many good reasons to buy a house, Strange said, “but don’t buy it because you think the price is going to go up.”

The Canadian housing market is getting dangerously close to “bubble territory” and is likely headed for a correction in the second half of 2010, according to a top economist.

“We are certainly at risk of a full-blown bubble,” said BMO Nesbitt Burns deputy chief economist Doug Porter, who expects to see a “modest” market correction next year with prices taking a hit.

The extent of the correction depends on how much prices increase in the next six months, he said. After dropping at the start of the year, resale house prices have surpassed the peaks of the past year. Research by the bank to be released Wednesday says housing valuations are likely “richer than equity valuations” in the current market.

“The higher we climb, the bigger the risk of a correction,” Porter said.

He said characteristics of a bubble economy include speculative buying, a massive amount of credit on the market, and sales and prices of homes “going north without the economy tagging along.”

Cities such as Vancouver and Toronto, which have had significant activity, stand the most risk of a correction, he said. “You are seeing a lot of line ups at sales centres and speculative buying in those cities.”

Existing home sales rose for the third straight month in November, up 73 per cent from 2008, according to figures released Tuesday.

A total of 36,383 homes sold in November, according to the Canadian Real Estate Association. That figure is just under a percentage point short of equalling the November record for home sales set at the peak of 2007. The average price of a home was up 20 per cent year over year to $368,665.

In Toronto, sales hit 7,466, about double the total from last November, when the financial crisis set in.

The volatility means homebuyers continue to be nervous about the economy, according to a poll released Tuesday by Royal LePage of their 1,225 agents across Canada.

“This kind of unsustainable volatile market really creates uncertainty in people’s minds,” said Phil Soper, president and CEO of Royal LePage.

According to the poll, 38 per cent of Royal LePage agents say economic factors such as job security are the number one issue with buyers. Another 23 per cent said their clients fear they wouldn’t be able to get the price they wanted for their home, and 12 per cent said some customers are hesitant to sell because the market had not hit bottom. About 20 per cent said they had no concerns from clients.

Soper says that unlike the U.S., rapid price rises have been “a matter of weeks” during the second half of the year, compared with south of the border, where the bubble developed over more than four years.

“The market has a way of sorting through things and we hope it’s in a measured way. As affordability erodes one thing you will see is that more people won’t qualify for lending and activity will ease off,” said Soper.

Some good news for buyers is that the return of strong demand means that more sellers are returning to the market. Seasonally adjusted new listings rose 5 per cent on a month over month basis in November, the biggest monthly increase since January of last year.

Tony Wong
BUSINESS REPORTER

OTTAWA – Canadian home sales jumped 73 per cent in November from a year earlier as the real estate market continued to recover from the economic downturn.

The Canadian Real Estate Association said Tuesday that 36,383 residential properties were sold last month, with Ontario and Quebec setting sales records for November.

“The current strength of housing demand stands in sharp contrast to weak activity recorded one year ago,” CREA said in its report, adding that activity was just 4/10 of a per cent below the highest level for the month recorded in November 2007.

“National home sales activity last month shows how strongly the housing market has rebounded since the beginning of the year,” said CREA president Dale Ripplinger. “As we predicted last April, the rebound in resale housing activity led the overall Canadian economy out of recession.”

The national residential average price was $337,231 in November, up 19 per cent from a year earlier.

Financial Post

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