Edmonton Real Estate Blog

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National housing starts reached 211,056 units in 2008, a decrease from 228,343 in 2007, according to CMHC’s first quarter Housing Market Outlook, Canada Edition report. Starts are expected to be about 160,250 for 2009 and about 163,350 for 2010. “The new home market is moderating due to a number of key factors,” said Bob Dugan, Chief Economist for CMHC. “The economic downturn will result in a decrease in demand for home ownership leading to a decline in housing starts and existing home sales in 2009. Housing market activity will begin to strengthen as the Canadian economy rebounds in 2010 and the level of housing starts over the forecast period will be more in line with demographic fundamentals.”

Existing home sales, as measured by the MLS®, are expected to decline 14.6% during 2009 to 370,500 units. In 2010 the level of MLS® sales is expected to increase by 9.3% to 405,000 units. The average MLS® price is also expected to decrease over the course of 2009. Average prices nationally are forecast to be $287,900 for 2009, a decline of 5.2%, while 2010 will see little change from 2009 average prices.

As Canada’s national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes — homes that will continue to create vibrant and healthy communities and cities across the country.

Source: Realtors Assc. of Edmonton

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Could the tide be turning for real estate?

It’s probably premature to make that call, but you can’t ignore the encouraging signs – especially when they come in multiples.

First, we saw a surprising 6.5 percent jump in home sales for December. Now we’ve just gotten the latest Pending Home Sales Index, and it’s up 6.3 percent, thanks to double digit gains of 13 percent in the Midwest and the South.

The index is based on signed contracts for home sales that haven’t gone to closing, but that are scheduled to settle in the coming two or three months.

The National Association of Realtors collects the data from Multiple Listing Services around the country, and most economists accept the index as a reliable gauge of where we’re headed in housing activity.

Lawrence Yun, chief economist for the National Association of Realtors, attributed the upward movement to “buyers responding to lower home prices and interest rates” that have improved the affordability equation to its most favorable level in 39 years.

Sales in the coming months might also be powered by something no index can measure: Congress is likely to improve last year’s $7,500 home buyer tax credit by turning it into a non-repayable incentive for new sales this year – all as part of the stimulus package on Capitol Hill.
Though it’s impossible to predict how many more home sales a true credit might stimulate – one that doesn’t have to be paid back to the government like the 2008 version – industry estimates range anywhere from several hundred thousand upward, provided the expiration date runs through this coming December.

On other economic fronts last week, reports of tens of thousands of industry layoffs definitely won’t help housing, but new numbers on inventories of unsold homes just might be a plus. Total homes for sale on the market nationwide dropped nearly 18 percent last month to the lowest level since May of 2007.

Mortgage rates inched up slightly last week, according to the Mortgage Bankers Association, with thirty year fixed rate loans averaging 5.3 percent compared to 5.2 percent the week before. That’s up a notch, but it’s still close to 40-year historic lows.

As we’ve said before on this program: Keep your eyes open for the little statistical improvements in the market that often get ignored by the media: Once they start mounting up, month after month, you’ll know we’re in turnaround mode.

We’re not there yet, but we’re headed in a promising direction.
Source: Kenneth R. Harney, Realty Times

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As of today Feb. 13, 2009 there are 2,514 single family homes listed in Edmonton proper. That is not much different than we have been for the last couple of months.

However what has changed is an increase in sales in the last 30 with 476 sales. That gives up a listing/sales ratio of 5.28:1 which is the lowest ratio since the market started it’s nose dive in valuations back in mid-2007.

And that is getting very close to the 4:1 that we require for the market to stabilize. Considering that last month we were at over 10:1 this is great news and could be indicating that we are close to the market hitting the bottom.

So if you have been thinking of waiting to buy that next home you might want to start looking now.

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The City of Edmonton has taken another big step towards making more affordable housing available by allowing more secondary suites in mature neighbourhoods.

“The City is taking action on this issue, giving more homeowners the option of building a suite in their basement or elsewhere on their property,” says Peter Ohm, Manager, Land Use Policy Planning Branch. “We are also protecting renters by ensuring secondary suites are up to proper building and fire codes.”

New suites will provide much-needed affordable rental housing and can help first time buyers or empty nesters pay their mortgages. Garden suites will also now be allowed at the discretion of the City’s development authority, but only in specific locations, and with conditions that ensure new rental units do not conflict with the integrity of neighbourhoods. The City also wants homeowners with illegal suites to upgrade their suites to meet building and fire codes now that zoning regulations allow substantially more secondary suites to exist legally.

Homeowners can get help building secondary suites through the Secondary Suites Grant Program. The program also provides funding to homeowners who have existing, illegal secondary suites to renovate the suites to meet fire and building codes, provided their properties are able to meet zoning regulations. In exchange for funding, homeowners agree to rent the suite to modest income tenants at 85% of the median market rent for five years.

These changes come after extensive public consultation and will increase the number of homes where secondary suites would be allowed by an estimated 270%. The City has also recently allowed garage suites in more locations.

As part of the bylaw, City Council requested city administration provide a progress report on the program to be presented to council in early 2010.

REALTORS® support these changes as they provide a low cost and expedient method of providing affordable housing throughout the City.

To view and search all Edmonton and area MLS listed homes visit me at http://www.findmyhouse.ca/

Also visit http://www.findmyhouse.ca/ to enter the free draw for a $5,000 travel gift certficate.

Edmonton, February 3, 2009: Residential sales in January are always slow as buyers recover from their holiday excesses and stay bundled up from the cold. January sales were slow at the beginning of the month but picked up steam as the days grew longer. REALTORS® sold 730 residential properties in January compared to 608 in December (sales up 20%). Sales prices were also up in all categories as compared to the previous month.

“Nobody rings a bell when prices hit the bottom,” said Charlie Ponde, president of the REALTORS® Association of Edmonton. “The bottom is evident only after several months of rising prices. One month does not make a trend but the market is certainly welcoming to home buyers.” He pointed to the lowest interest rates in years, the large selection of homes available and recently announced economic stimulus packages as reasons for the increasing market activity. The amount of RRSP savings that can be applied to a first-time home purchase was increased from $20,000 to $25,000 and a tax rebate for home renovation expenses were announced in the recent federal budget. Both measures will encourage home buyers.

The average* price of a single family home in January was $352,689 – up a quarter of a percent as compared to December. Condo prices were up 1.8% to $238,535 and duplex/rowhouses sold on average for $299,222 (a 2.2% price increase). Total residential sales through the MLS® for the month were $231 million – down 43% from the previous January.

Listing activity also increased in January. There were 2,443 residential properties listed in January – an 85% increase over December listings. With 730 residential sales the sales-to-listing ratio was just 30%. At the end of January there were 6,573 properties available on the residential MLS®. At current sales rates this is a nine month supply. Time to sell was up from 65 days-on-market in December to 68 days in January.

“The housing market changes every day and consumers need to work with a REALTOR® who can advise on pricing, sales and negotiation strategies,” said Ponde. “REALTORS® are the only professionals with current sales prices (as compared to asking prices) and can do up-to-date comparisons for properties similar to the one you are attempting to buy or sell.”

Source: Realtors Association of Edmonton

To view and search all Edmonton and area MLS listed homes visit me at http://www.findmyhouse.ca/

Also visit http://www.findmyhouse.ca/ to enter the free draw for a $5,000 travel gift certficate.

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To view and search all Edmonton and area MLS listed homes visit www.FindMyHouse.ca

The number of properties sold via the MLS® in Canada edged down further in December 2008 to reach the lowest level for the month since December 2000, according to CREA.
Seasonally adjusted residential MLS® sales activity numbered 27,357 units in December 2008, a decline of 1.8% compared to the previous month. However, seasonally adjusted activity was up in more than half of Canadian housing markets. Activity declines in Montreal, Calgary and Edmonton more than offset a rebound in the number of transactions in Vancouver, resulting in a small monthly decline in national sales activity.
The small month-over-month decline in national MLS® seasonally adjusted sales activity in December followed double digit declines in September (-14.9%) and October (-12.1%). Activity plummeted 22.2% in the fourth quarter of 2008 to 86,879 units, with seasonally adjusted quarterly declines in activity in all provinces. The sharp drop in fourth quarter activity accounted for over half of the decline in transactions since the peak in 2007.
Year-over-year declines in the MLS® average home price were reported in about half of local markets in December. Lower activity and average prices compared to one year ago remain most pronounced in Canada’s more expensive housing markets. This continues to weigh on the national MLS® residential average price.
The MLS® national average price of homes in December 2008 declined by 11% from where it stood a year ago. The major market price trend was similar to the national trend, down by 9.9% year over year in December 2008.
“Moderating home prices in Canada should not be confused with the downturn in the U.S. housing market,” says CREA President Calvin Lindberg. “But any local real estate market is not immune to global economic challenges, and that is what we face today. Low prices are not the concern as much as the perception of doom and gloom. Buyers are waiting to see if the real estate market has hit bottom, and that is a very complex thing to try and calculate. Most of us will only be affected by the market correction psychologically, because the majority of Canadians will not buy or sell property in the coming year.”
Seasonally adjusted new MLS® residential listings numbered 72,931 units in December, down 3% from levels recorded in November. New listings are trending lower. In December, they stood 8.1% below the peak reached in May 2008.
Resale housing market balance is represented by sales as a percentage of new listings. The rise in the number of new listings in the first half of last year along with declining sales activity, particularly in the fourth quarter, resulted in an increasingly balanced resale housing market over the course of 2008.
Sales as a percentage of new listings in the fourth quarter of 2008 fell to the lowest level since the mid 1990s. New listings are trending down from the peak reached in the second quarter of 2008. If this trend continues, the balance of supply and demand will stabilize in 2009.
“Average prices will remain under downward pressure during the Canadian economic recession,” said CREA Chief Economist Gregory Klump. “Shaky financial market confidence is pulling down business and consumer confidence. The consensus economic forecast predicts the economy will rebound in the second half of 2009, so housing market trends should strengthen next year.”

Source:Realtors Association of Edmonton

To view and search all Edmonton and area MLS listed homes visit www.FindMyHouse.ca

Jan. 22 (Bloomberg) — The Bank of Canada said the economy this quarter will plunge instead of stalling, while anticipating a “faster” recovery than in earlier recessions as access to credit and exports rebound.
The central bank slashed its economic growth forecast for the first quarter, saying output will shrink at a 4.8 percent annualized pace after predicting in October that it would be unchanged. Gross domestic product will shrink at a 1 percent pace in the second quarter before expanding through 2010.
“The projected return to balance of the Canadian economy is faster than either of the recoveries following the 1981-82 and 1990-92 recessions,” the Ottawa-based central bank said today in an update to its October Monetary Policy Report. “Canadian credit conditions remain better than those in other major countries” and “exports are also expected to recover next year,” the bank said.
Governor Mark Carney two days ago cut borrowing costs by half a point to 1 percent, the lowest since the central bank was founded in 1934, and said he would “carefully” assess how much more stimulus may be needed. The world’s eighth-largest economy is shrinking because of slower foreign orders for goods such as cars and commodities such as crude oil, combined with the global credit crisis which has made banks reluctant to lend.
Currency Falls
The Canadian dollar weakened 0.7 percent to C$1.2637 per U.S. dollar at 11:53 a.m. in Toronto, from C$1.2551 yesterday.
The economy will contract 1.2 percent this year, marking Canada’s first recession since 1992, and then grow 3.8 percent in 2010, the central bank said. That’s almost double the 2 percent expansion predicted by economists in a Bloomberg News survey.
“We would love the Bank of Canada’s growth projections to turn out correctly, and maybe they will, but fear they are too optimistic on 2010,” Derek Holt, an economist with Scotia Capital Inc., wrote today in a note to clients. The bank may be “erring on the side of a relatively sanguine view of Canadian credit markets,” he said.
Exports will shave 2.6 percentage points off of economic growth this year, then add 2.1 percentage points in 2010, aided by a weaker currency and a rebound in U.S. demand, the bank said.
Even amid the financial crisis that has crippled access to credit in the world’s biggest economies, lending to businesses in Canada “grew at a solid pace” through November and household credit “has slowed only moderately,” the central bank said. The cost of borrowing for commercial lenders has fallen by 1 percentage point since October, the bank said, citing reductions in its own benchmark interest rate.
Gaining ‘Traction’
Also, actions taken by Canada and other countries to shore up credit markets and economies “are starting to gain traction,” the central bank said.
The report repeated that the Bank of Canada will assess “to what extent further monetary stimulus will be required” to meet its chief goal of keeping inflation at 2 percent.
Inflation will decline by 0.6 percent in the second quarter and 1 percent in the third and won’t return to the bank’s target until the first half of 2011, the bank said.
Consumer prices haven’t dropped for two or more consecutive quarters since 1953, according to Statistics Canada.
The Bank of Canada didn’t refer to its projection as a bout of deflation, saying risks to its inflation forecast are “roughly balanced.”
Further Tools
Deflation can freeze spending by business and consumers if they hold off on purchases in anticipation of ever-lower prices. Reversing deflation can be harder than inflation because central banks can only cut interest rates so low to encourage demand.
There was also no reference in the report to whether the central bank may eventually use policy tools other than interest-rate cuts to boost credit markets in Canada.
Carney, 43, said after his Oct. 23 forecast paper that Canada doesn’t need to consider buying direct stakes in banks as in the U.S. and some European countries, where governments are trying to catch up to Canadian lenders’ level of capitalization. In December, he said after a speech that it was “premature” to discuss such moves.
Still, Bank of Canada officials and Finance Minister Jim Flaherty have said the country’s banks, rated the soundest last year by the World Economic Forum, have scope to expand lending.
The next rate decision is scheduled for March 3.
The 1 percent policy rate that the Bank of Canada set two days ago is lower than a previous record of 1.12 percent in 1958 when the rate was based on treasury-bill yields.
To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net. Last Updated: January 22, 2009 11:57 EST