RE/MAX Edmonton Real Estate News

The Canada Mortgage and Housing Commission (CMHC) has published results from their most recent quarterly HPAA (House Price Analysis and Assessment) Framework. This report announced the most recent findings on present housing market risks in Canadian Census Metropolitan Areas.

Click here to view our summary on last quarter’s report and compare market changes.

The four areas of risk that are estimated quarterly by the CMHC include overheating, acceleration in growth of house prices, overvaluation, and overbuilding. The report also indicates the consideration of factors such as “demographic, economic, and financial factors such as population growth, change in personal disposable income, and interest rates.”

Overall national assessments show the four categories averaging out to a ‘low risk’ market. Some moderate yet stable overvaluation is occurring as residences are being priced at slightly above personal disposable income and population growth.  Inventory is presenting at low risk, yet is slightly above historical averages. The report indicates that on a national level “overheating and acceleration in house prices are not a concern at this time”.

What does this mean for Albertans specifically? As a province we seem to be very much in line with the national averages, with Edmonton showing slightly better results than the Calgary market.

Details of the CMHC report for Alberta CMA’s

Calgary’s minor risks occur in the area of house prices, which are gaining quicker than personal disposable income, therefore overvaluation is the only factor presenting a moderately increased risk factor. The report attributes these pacing issues with low oil prices impacting income growth and unemployment. Additionally, there has been a slowing of incoming population growth due to “weaker market conditions” in the region.

Edmonton presents no moderate risk factors at this time, despite national and regional issues with overvaluation.  Some economic changes occurring in the region may indicate future risks however. The report again cites lower oil prices slowing employment growth and limiting migration to the city. Ass of yet these factors have yet to show significant statistical impact on the market however.

Though August 2015 sales statistics show a slight decrease of about 0.2% in average residential home prices in month over month comparisons, prices have actually increased since this time last year, but only about 1%. Geneva Tetrault, Chair of the REALTORS® Association of Edmonton explains the comparatively plateauing market,

“Edmonton continues to experience a relatively stable market with respect to year-over-year prices.  A slower pace of sales, combined with growing inventories, are creating favourable conditions for entering the Edmonton market.”

In the single family home category, listings were selling for an average of $439,829 up both from the month previous and year over year, but both increases by only a percentage point or less. The total average for all residential categories was $372,254, showing a 0.2% month over month decrease, but up 1% since last summer’s numbers.

The EREB has stated that “sales continue to lag behind last year” but have emphasized that duplex/rowhouses have managed to remained somewhat economically immune. This invulnerability has been attributed to the abundance of availability in this category of residence, which has been a popular choice amongst builders and developers after the city’s recent emphasis on the necessity for infill projects. Sales are up 1.7% and prices are up 1.53% since this time last year for duplex and row houses. On the other end of the spectrum, condominiums are experiencing the largest decline in sales and average prices year over year, down 7.7% and 2.8% respectively.

“While there is no doubt that oil prices and the resulting economic slowdown have impacted the housing market, Edmonton has been able to weather these changes better than other Alberta markets.” Explains an optimistic Tetrault. “New developments and projects both in the city and outlying areas have kept the housing market moving.”

On the listing front, inventory numbers continue to surprise and impress. Though residential listings are down 6.3% from last month, they are up a whopping 26.9% compared with August of last year. The EREB is reporting just under 5 months supply of inventory currently in the Edmonton CMA with 7,227 listings, a 35% from last summer.

“We have a great selection of inventory this year, a luxury we did not have last year. Sellers may have to wait a little longer to sell their houses but they should still be getting a good price for their house. Buyers can take more time to select their home and have more choice than they would have last year.”

Residential sales saw a decrease of about 5.6% year over year, with single family homes specifically down 4.3%. Days on market was up in August to an average of 54. Single family homes DOM rose to 52, up from July’s 48. Condominiums averaged 56 days, just two more from the month previous, and duplex/rowhouses averaged about 52 days to sell.