RE/MAX Edmonton Real Estate News

Influx of YEG Inventory has Created a Buyer’s Market in the City.

Fall statistics from the EREB, as well as winter projections, are looking stable for the time being with no major market fluctuations. Key market factors affecting Edmonton currently are average days on market and ongoing elevated inventory.

Average days on market continues to rise as inventory remains strong, indicating a healthy buyer’s market. October averaged 57 days overall, up from last year’s 51, and an 8% increase from September. Single family homes were slightly less at 56 days on market, where Condominium listings brought that number up with 61 average days on market. The increasing popularity of duplex/rowhouses continues to show through, dropping from 51 days on market the month previous to 49 for October.

As far as inventory, the largest factor affecting days on market, it “remains robust” according to EREB reports. October recorded 6,641 residential properties listed in the Edmonton CMA total; showing a 48.47% increase from numbers recorded last October, however still a 6.57% decrease from the month previous, in September 2015.

According to Geneva Tetreault, Chair of the REALTORS® Association of Edmonton:

“The influx of inventory, both new and resale, has given buyers a bigger selection and more time to make their choice. There are buyers out there looking to take advantage of low interest rates and the great selection of inventory of all types of property. Sellers need to be competitive in a market with healthy inventory.”

Average residential sale prices for the month were up 1.72% in year-over-year comparisons, whereas total sales saw a 15% decrease. Condo sales saw the largest drop in sales at 17% with an average price reduction of nearly 6%, whereas single family home sales dropped 14% despite a 3% price increase. As noted by Tetrault, ““It is common to see a dip in both sales and prices at this time of year, but condos have definitely been the most affected.” She then goes on to explain:

“The average recorded selling price of single family homes in October was bolstered by the sale of two properties well over the $3.5 million mark. Even without these sales we are continuing to see strong prices in this category. We will likely continue to see average days on market grow as the inventory remains higher than last year and single family sales are down almost 15%.”

Single family homes, the only residential category that didn’t see an October price slip, averaged $438,935, a month over month increase of just over 1.5%. Duplex and rowhouses dropped 1.4% to $359,130, and condominiums decreased by 3.45% to $244, 225. The total residential average for all categories was $371, 756, a negligible 0.78% rise from September.

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“Lower oil prices have created economic uncertainty in Alberta and Saskatchewan. This will hold back growth in housing starts in both of these provinces in 2015 and 2016 before improving economic conditions provide some gains in 2017.”  Lai Sing Louie, CMHC’s Regional Economist stated on Thursday.

“The economic and housing market outlook for the Prairie region continues to be adversely impacted by low commodity prices.”

The Canada Mortgage and Housing Corporation has released their Prairie Highlights from the 4th quarter edition of 2015’s Housing Market Outlook. The document highlights a significant trend in housing starts for 2016, showing a decline in all three of the prairie provinces.

Housing starts are expected to see a decline across the prairies.

[CLICK HERE to read up on Housing Starts and their economic significance as outlined by CNBC.]

While 2015 housing starts are estimated at 48,600 they are expected to dip as low as 32,900 potentially in 2016. Starting in 2017, however, these numbers are projected to increase up to 51,200. Alberta will see the largest decline throughout 2016, while Manitoba and Saskatchewan are predicted to stabilized earlier.

In Alberta specifically, the 2015 number will be closer to 37,200; that’s an 8% decline from 2014. The province will see a 2016 drop to as low as 23,700 or as high as an optimistic 35,900. Economic factors make predictions into 2017 difficult with a large variable range from 23,400 to 37,200.

According the the CMHC Prairie Highlights,

“Economic uncertainty has lowered resale transactions in oil-producing areas. In Alberta, resale transactions are projected to decline approximately twenty per cent in 2015. With oil prices assumed to gradually rise over the next two years, resales are forecasted to gradually improve to range between 53,700 and 63,500 in 2016 and between 54,400 and 65,600 in 2017.”

The larger overall impact of this unique real estate environment means conditions will favour the buyer in Alberta in particular and also Saskatchewan. A major contributing factor includes predictions of lower residential prices. Average sale prices for 2016 are expected to fall between $373,000 and $409,600. A rebounding 2017 is predicting this range to grow from between $379,00 to $419,800.

The following chart published by the CMHC offers a statistical breakdown of prairie province predictions: